Suspicious activity isn’t always obvious. Warning signs can vary depending on the customer and circumstances, and it’s not always a completed transaction that raises concerns. An attempted transaction or other activity can also give rise to suspicion.
Staff don’t need to prove that financial crime has occurred before raising a concern. What matters is that they recognise potential warning signs and know when to speak up.
This is where training makes a difference. Staff need to be familiar with the red flags relevant to their work and understand what to do when something doesn’t seem right.
Knowing what to do next
Recognising suspicious activity is only useful if concerns are passed on to the right person.
Your AML/CFT procedures should make it clear how staff raise concerns, who is responsible for assessing them and how decisions are documented.
It’s also important that staff understand the need for discretion. Discussing a suspicion with a customer could risk alerting them to a potential investigation or report.
Once there are reasonable grounds for suspicion, the reporting timeframe matters.
Under the AML/CFT Act, most reporting entities must submit a suspicious activity report (SAR) as soon as practicable, but no later than three working days after forming their suspicion. Law firms have up to five working days. These are maximum timeframes, not targets to work towards.
Three questions to ask about your SAR processes
A useful way to check whether your approach is working is to consider:
- Would our staff recognise suspicious activity? Are they familiar with the warning signs relevant to their roles, including situations where no transaction has taken place?
- Would they know how to raise a concern? Is the escalation process clear, and do staff know who to contact and what information to provide?
- Could we demonstrate how a concern was handled? Do we keep appropriate records of concerns raised, decisions made and any reports submitted?
If you’re unsure about any of these, it may be worth revisiting your procedures or providing a refresher for your team.
Help your team recognise and respond to suspicious activity
Strategi Institute’s Red flags: spotting suspicious activities and steps to take online CPD module provides practical guidance on recognising warning signs and knowing what steps to take when something doesn’t seem right.
The 30-minute module provides 0.5 CPD hours and is available through Radar, Strategi Institute’s online learning platform.
Already using Radar? Log in and search for Red flags: spotting suspicious activities and steps to take.
Not using Radar? Find out how you and your team can access the module.