On March 9, 2023, the ACAMS NY Chapter held an event called “Making Your SARs Stars,” which was sponsored by PWC. The discussion included the following panelists (pictured below from left to right): Nirvana Patel (Managing Partner, Unicore Growth Partners); Meryl Lutsky, Esq. as moderator, (General Counsel & Chief Compliance Officer, T&M USA, LLC and Co-Chair, ACAMS New York Chapter); Michael Lammie (Principal, Financial Crimes Unit, PwC); and John H. Humphrey, CAMS (Supervisory Intelligence Analyst, Financial Crimes Intelligence, FBI New York).
The conversation began with tips for constructing a good SAR that will be valuable for law enforcement. These tips included: 1) Use BLUF (Bottom Line Up Front) to clearly communicate why the SAR is being filed, based on the facts included in the narrative; another way of looking at this is using an inverted pyramid style of writing to communicate the suspicious activity identified; 2) detail the steps taken by the financial institution during the investigative/activity review process (e.g., use of 314(b), customer interactions/statements); and 3) inclusion of key terms, such as FinCEN Advisory codes, which will enable law enforcement consumers to most effectively query the data.
The discussion moved on to cover recent trends in SAR filing, which overwhelmingly demonstrates an increase in various types of fraud. Interestingly, due to the focus on COVID-related typologies, many financial institutions have fallen behind on strengthening preventive controls regarding traditional fraud schemes. An additional hurdle is that AML and fraud investigations are often run by separate teams with different analytical backgrounds. Fraud investigations, for example, increasingly require the identification of large criminal rings, such as money mule networks. The timing for AML and fraud investigations and SAR filing is also inherently different.
Panelists also covered an often-raised topic, which is SAR feedback. According to a recently released GAO report, the feedback loop to financial institutions is weak because FinCEN receives limited data from law enforcement on when and how SARs are used. From the law enforcement and prosecutorial perspective, it’s difficult to pinpoint the value of SARs, which are used at various stages throughout the investigations and enforcement process. Panelists therefore discussed best practices on how financial institutions can generate internal feedback based upon public case information and subpoenas.
Key takeaways from the panelists include: defining strong internal processes that are consistently executed; creating feedback loops to drive internal improvements; and including key information in SARs, such as the reason for filing the information and FinCEN Advisory codes.