New Guideline: Suspicious Activity Reports (SAR)

The FIU have issued a Suspicious Activity Reporting Guideline to help clarify the obligation to report SARs under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act).

This guideline states:

Introduction

This guidance has been issued to clarify the obligation to report suspicious activity under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act)

It aims to increase awareness on indicators of suspicious activity and inform reporting entities about the technical requirements to report suspicious transactions and activity.

Background

Reporting entities are defined in section 5 of the AML/CFT Act. The AML/CFT Act requires reporting entities to conduct a risk assessment and establish an AML/CFT programme. The AML/CFT Programme must include adequate and effective policies, procedures and controls for preventing and detecting money laundering and terrorism financing and for reporting suspicious activity to the Financial Intelligence Unit (FIU). Dealers in high value goods are also included in the legislation but have lesser AML/CFT obligations.

Purpose

This guidance has three main objectives:

1. To explain the basics of money laundering and terrorism financing;

2. To help reporting entities identify suspicious activities by providing specific typologies

and indicators;

3. To help reporting entities comply with Suspicious Activity Reporting (SAR) obligations

by specifying when reports must be made, in what circumstances, what details to include, and how to report them.

In many cases reporting entities will be unaware what the underlying criminal activity is. However, by screening transactions and activities for known indicators and typologies, a reasonable suspicion that the transaction or activity is relevant to criminal offending may arise. In these cases a SAR must be submitted to the FIU.

Scope

The AML/CFT regime is based on effective risk management. Reporting entities need to assess the money laundering and terrorism financing risks faced by their business operations and establish appropriate mitigations and controls. However, the risks are contextual to international, national, sectoral environments, and to different customer channels and service environments, some of which are not visible to reporting entities and some of which are not visible to government agencies.

International and national-level money laundering and terrorism financing (ML/TF) risks are described in the National Risk Assessment (NRA) which is available on Police’s website. At the sector level, supervisors (Department of Internal Affairs (DIA), Financial Markets Authority (FMA) and Reserve Bank of New Zealand (RBNZ)) produce sector-specific guidance. Sector supervisors provide reporting entities with more detail on which reporting entities attract AML/CFT obligations and the nature of those obligations.

  • FIU National Risk Assessment

  • RBNZ Sector Risk Assessment

  • DIA Phase I Risk Assessment

  • DIA Phase II Risk Assessment

  • FMA Sector Guidance

Finally, reporting entities are required to have adequate and effective policies, procedures, and controls for reporting on suspicious activity. This SAR guideline document focusses specifically on the factors visible to supervisors and the FIU that should be considered for SAR reporting. Reporting entities should consider this guidance document in developing internal policies, procedures, and controls on suspicious activity reporting. It will be amended as needed over time as ML/TF risks change.

Read the Guidance here. (via FIU)

NationalDean Crowle