Money laundering is an act in which people are involved in illicit financial transactions to conceal funds illegally. However, in most countries, there are regulations requiring banks and other financial firms to inform the authorities of money laundering and other fraudulent activity. Thus, employees of financial companies must submit a Suspicious Activity Report (SAR) to the Financial Crimes Enforcement Network (FinCEN). Besides, you can inform local law authorities or the financial institution itself of suspicious money laundering regardless of whether or not you’re employed by a bank or other financial institution.
Therefore, if any person witnesses any anonymous activities, it is essential to file a report. In this blog, you will learn about some ways about how to report money laundering.
What is Money Laundering?
Money laundering is the transfer of illegitimate money through financial organisations or other companies. An illustration of this is when money that has been gained illegally is transferred via several banks and companies in order to hide its true source. This term covers illegal money laundering practices including dealing in cash and financial assets that are used to conceal the consequences of crime.
2 Ways to Report Money Laundering
Whenever you observe any red flags for money laundering, there could be two ways you can file money laundering reporting. Firstly, you can convey this information to the financial organisation in which the action is taking place. Secondly, you can file a report through the SAR form. Let’s explore each of the ways and prevent the financial firm from further loss.
Reporting to the Financial Institution
i. Organise All information
If you come across any doubtful or immoral conduct of a financial institution employee and wonder how to report money laundering, you have the option to report it to the organisation itself. But, before directly informing them, taking notes about the occurrence or transaction you wish to report can be helpful. It will help you in recollecting essential information and ensure that you don’t overlook anything, especially if you have to make your report via phone. Thus, keeping notes is a practical way of money laundering reporting.
ii. Submit an Online Report
To report suspicious activity involving employees of financial institutions, companies usually offer an online form for your convenience. Utilising these forms will provide you with extra confidentiality. Writing your report also allows you to review all the details you have collected and make sure nothing is missed. Therefore, submitting your report in writing is an effective way to ensure that you have included all relevant information.
iii. Contact the Company Directly
Other than reporting money laundering incidents via online form, you can often use a dedicated fraud hotline provided by the institution. You can typically locate this number on their website. By using the institution’s hotline, you can easily report any illicit activity while ensuring that your identity is protected.
Filing a Suspicious Activity Report
On the other hand, if you are unable to file money laundering reporting directly to the organisation, you can utilise a Suspicious Activity Report. It involves several steps:
i. Gather the Information
Gather the criminal information that is available in the records of the customer’s banking or investment account. This data will include basic information about the customer, any other parties involved in the transaction, the amount of the transaction, and the date and time it occurred. By providing this information to FinCEN, you can help prevent and combat financial crimes.
ii. Access BSA Reporting System
Financial institutions are required to use the electronic filing system provided by the Financial Crimes Enforcement Network to submit reports of suspicious activity. Your employer will have an e-filing account to access this system, but access may be restricted to specific bank managers. By using FinCEN’s electronic filing system, financial institutions can effectively report suspicious activity, helping to prevent and combat financial crimes.
iii. Complete the SAR Form
When filling out the Suspicious Activity Report (SAR) form, you are required to enter specific information about the transaction that you gathered earlier. Additionally, you must provide details about the customer and any other parties involved, including account numbers, addresses, or any other entities associated with the account. Providing this information is essential for money laundering reporting. Therefore, accurately and comprehensively filling out the SAR form is crucial.
iv. Submit the Form
SAR forms can be submitted individually or in bulk through the BSA E-Filing system. It is mandatory for financial institutions to submit a SAR within 30 days of a suspicious transaction taking place. Furthermore, you must retain any supporting documents or business records related to the SAR for five years from the filing date, along with the financial institution’s copy of the SAR. The regulatory authorities and law enforcement will review the SAR and may contact you or your employer for further details on the transaction or the customer involved. Submitting and retaining SAR forms properly is necessary for effectively combating financial crimes.
Final Words
If you wonder how to report money laundering, then there are numerous ways to do so. You can either file a report directly to the financial institution or by submitting a suspicious activity report to law enforcement. In this KYC AML Guide, we explained both ways in detail along with the steps and procedures to help you report money laundering and other anonymous transactions. Through this, you will be able to protect the financial firm from experiencing further loss and combat these fraudulent activities.
