Michael Calleja | Senior Compliance Services Executive | Malta As we find ourselves in that pivotal time of year where subject persons traditionally undertake the important task of updating their Business Risk Assessments (BRAs), Customer
Quality of Suspicious Activity Reports (SARs)
The benefit of effective intelligence is clearly that it enables recipients to execute a task in an effective manner. In order to provide an optimal service, it is therefore unsurprising that the Financial Intelligence Service (‘FIS’) or any other competent law agency would seek information of this nature. Just over a year ago (October 2019), the FIS issued guidance to licensees (the ‘Guidance’) with the aim of assisting an improvement in the quality of SARs (Suspicious Activity Reports) being submitted. Recently, the FIS has written to the Boards of Banks and Fiduciaries requesting them to review the SARs which have been made to the FIS since issuance of the Guidance.
The recipients of the letter from the FIS have to confirm to the FIS by end of April 2021 that they have undertaken a review of the SARs submitted since October 2019 and all action points and improvement to internal controls, procedures and policies arising from such a review have been implemented. Additionally, Boards have to confirm to the FIS by end of January 2021 that they have read and action accordingly the THEMIS notices issued by the FIS and that Boards will be provided with a summary of the THEMIS notices on at last a quarterly basis.
The FIS is essentially asking Boards to assess if due regard has been made to the Guidance when submitting SARs. In point of fact, the Board remains responsible for ensuring that their MLROs are providing the FIS with a full account of the circumstances and grounds (suspected underlying criminality) for suspicion in line with Chapter 13 of the Handbook on Countering Financial Crime and Terrorist Financing. Firms should see the letter from the FIS as a welcome opportunity to engage meaningfully with the FIS.After all, we share a common objective in wishing to protect the Bailiwick against money laundering, terrorist financing and proliferation financing. It would be a lost opportunity and indeed a step in the wrong direction, if a response to the letter was treated as a tick box exercise.
The letter from the FIS should prompt Board members to ask themselves a number of questions, including:
- Do they know how many SARs have been made?
- What were the reasons for suspicions?
- Is sufficient intelligence being provided to the FIS?
- Is the MLRO sufficiently empowered to carry out his or her functions?
- What’s the most effective way to keep the Board apprised of the SARs submitted and the content of THEMIS notices?
- Does the Board understand its responsibility in ensuring that the MLRO provides the FIS with accurate disclosures?
- Importantly, is the Board aware of the consequences of having a weak or non-existent controls around SARs management?
As a recognised leader in the Compliance and Risk Management space, Aspida has a detailed understanding of what effective intelligence looks like and can support businesses to answer the above questions. Aspida will be running a series of seminars and workshops with leading speakers and guests to bring together major stakeholders in the industry with an aim to discuss the common challenges which the industry faces when it comes to SARs and how best to address those challenges.
Aspida can also undertake reviews of SARs on behalf of Boards, provide advice on how to improve internal policies and procedures around SARs management and provide training to Boards and MLROs on how to comply with the Guidance.
Should you have any questions on the above, please contact Aspida Advisory Services.
Michael Calleja | Senior Compliance Services Executive | Malta Introduction Sanctions serve as a pivotal instrument in the international legal arsenal, utilized by nations and international coalitions to enforce legal standards, safeguard national interests, and
On the 15th of January 2024, the Financial Intelligence Analysis Unit (FIAU) released a pivotal document titled ‘Enforcement Factsheet: A Compilation of Regulatory Actions – 2021/2022’. This publication, available on the FIAU’s website, serves as a comprehensive guide to the enforcement process undertaken by the FIAU in monitoring compliance with Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) obligations by Subject Persons (SPs).