SAR reporting helps to detect money laundering and other financial crimes and ensures reporting entities remain compliant with regulatory requirements. The agency responsible for overseeing SAR reporting in New Zealand is the Financial Intelligence Unit (FIU).

SAR reporting is usually triggered by a red flag, which is a warning sign that potentially may indicate suspicious activity. Reporting entities must remain vigilant and monitor their customers’ activities for any red flags that could indicate illicit behavior.

There are several red flags you should be on the lookout for when monitoring customer activities for potential suspicious activity. These red flags can vary based on the sector your business is part of and the nature of the customer relationship.

Common red flags include:

• Unusual transactions: Transactions that are unusual for a customer’s profile, such as a large cash deposit or withdrawal from an account that has not previously made such transactions. 
• Unexplained transactions: Transactions that lack a clear purpose or explanation, such as a transfer from an unknown third party with no apparent business relationship. 
• High-risk customers: Customers that operate in high-risk industries or have a history of criminal or terrorist activity. 
• Customer due diligence failures: Failure to collect sufficient customer due diligence information or failure to update that information regularly. 
• Multiple transactions: A series of transactions that are structured to avoid regulatory reporting requirements or to obscure the true nature of the transactions. 
• Geographical risks: Transactions that involve high-risk countries or jurisdictions, or countries that are subject to international sanctions. 
• Political exposure: Transactions that involve politically exposed persons (PEPs) or their family members. 
• Suspicious behavior: Unusual customer behavior that cannot be easily explained, such as frequent and unusual transactions, or unusual requests for confidentiality. 

Effective AML programs must include robust customer due diligence procedures, monitoring and reporting systems, and staff training. By staying alert and identifying potential red flags, reporting entities can contribute to the fight against money laundering and terrorist financing protecting the integrity of the financial system.  

Give our team a call today with any questions – we are here to help.