Making SARs More Effective: Broader Based Feedback From Law Enforcement Needed by Financial Institutions

BY ROBERT M. AXELROD I f the purpose of criminal laws is to define crime, lay the groundwork for criminal prosecutions, and, ultimately, reduce criminal behavior, the functionality of the money laundering laws (and their associated regulations) should be evaluated at least in part by how effective they are at facilitating criminal prosecutions. For that purpose, the Suspicious Activity Report (‘‘SAR’’) that covered financial institutions must file when potential criminal or ‘‘unusual’’ activity is identified, plays a starring role. Law enforcement can use the information and analysis in SARs to initiate or support investigations and prosecutions of criminal activity. Institutions can file more effective SARs if they know overall the following: Was the activity they identified as suspicious frequently helpful in furthering a criminal investigation? That information is not presently available to them. For this goal, no specific SAR by SAR scorecard for the institutions would be necessary, only an overall understanding of how effective their SAR filing process has been.