Top-secret bank records called Suspicious Activity Reports or SARs expose the human cost of laundered money.
By Pia Tuan
Philippine Center for Investigative Journalism
A “Suspicious Activity Report” or SAR is a document submitted by banks that help financial authorities monitor possible illicit transactions.
According to the U.S. Financial Crimes Enforcement Network (FinCEN), SARs are part of anti-money laundering statutes and regulations and cover unusual or suspicious activity that might signal illegal or criminal transactions. Customers are not informed when a SAR is filed.
The U.S. Bank Secrecy Act (BSA) of 1970, also known as the Currency and Foreign Transactions Reporting Act, requires financial entities in the U.S. to assist government agencies in detecting and preventing money laundering and other financial crimes, as well as abuse or violations of the law.
Under the BSA, financial institutions such as trust companies, insurers and banks must know who their customers are and maintain records of their transactions, as well as monitor and report unusual behavior or activity.
Authorities use SARs to identify customers involved in money laundering, fraud or terrorist funding. Engaging in insider trading and tax evasion are also grounds for filing SARs.
In the U.S., SARs must be filed with FinCEN, a division of the U.S. Treasury and the designated administrator of the Bank Secrecy Act.
Other countries have their own financial watchdogs. SARs are filed with the National Crimes Agency (NCA) in the United Kingdom and the Australian Transaction Reports and Analysis Centre (AUSTRAC) in Australia.
The Philippine equivalent of the SAR is the Suspicious Transaction Report (STR). Banks, insurance companies and money remittance firms, otherwise known as “covered persons” or “covered institutions,” are required to submit this document to the Anti-Money Laundering Council (AMLC).
An STR may cover any transaction, regardless of amount, with any of the following circumstances:
- it has no legal or trade obligation, purpose, or economic justification;
- the client has no proper identification;
- the amount does not correspond to the business or financial capacity of the client;
- it has been structured to avoid reporting requirements under Republic Act No. 9160 or the Anti-Money Laundering Act of 2001;
- it deviates from the profile of the client and/or the client’s past transactions with the covered person;
- it is related to any unlawful activity, any money laundering activity, or any offense that has been committed, is being committed, or is
- about to be committed; or
- its circumstances are similar to any of the preceding situations.
The AMLC functions as the country’s anti-money laundering and counter-terrorism financing agency and financial intelligence unit. It can investigate money-laundering cases and bring charges to court.
STRs filed by covered institutions are used by the AMLC not only to prevent financial crimes; they also become the basis for quality reviews and other studies published by the agency.
For example, in 2017, the National Risk Assessment on Money Laundering and Terrorist Financing of the Philippines, conducted by the AMLC, found that the money laundering threat in the Philippines was high.
These threats involved tax crimes; smuggling; copyright infringement or intellectual property law violations; illegal manufacture and possession of firearms, ammunition and explosives; environmental crimes; investment fraud and estafa; violation of the dangerous drugs law; and plunder and violations of Republic Act No. 3019 or the Anti-Graft and Corrupt Practices Act, according to the assessment.
A recent study based on STRs from 2013 to 2019 found a rising level of threat from money laundering and other fraudulent activities, particularly in internet-based casinos, involving P14 billion in funds. PCIJ, September 2020