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The FinCEN Leaks: What Do They Mean for You

Nov 02, 2020 Red Flag Alert Updated On: October 11, 2023
The FinCEN Leaks: What Do They Mean for You

The FinCEN Files are a series of 2,500 documents – most of which are suspicious activity reports (SARs) – that were leaked to Buzzfeed News and shared with the International Consortium of Investigative Journalists.

The files reveal the scale of money laundering that takes place globally, with many large financial institutions connected with moving or receiving illegal wealth.

SARs Back in the Spotlight

The scale of money laundering revealed by the FinCEN files is shocking and comes at a time when authorities around the world are cracking down on illegal wealth.

It has also served to highlight the importance of SARs in uncovering illegal activity that would otherwise have gone unnoticed. SARs are used to inform authorities of situations where money laundering or terrorist financing may be taking place.

Professional services – including solicitors, accountants and estate agents – are all required to submit a SAR if they suspect that a customer may be undertaking such activities.

Submitting SARs is more than a simple regulatory requirement – it’s written into law under Part 7 of the Proceeds of Crime Act 2002 (POCA) and the Terrorism Act 2000.

By submitting a SAR you are protecting yourself and your business from the risks posed by money laundering.

Know Your Customers

The two laws underpinning SARs are supported by anti-money laundering (AML) regulations, which require certain professions to have systems and processes in place that allow them to prove beyond reasonable doubt the legitimacy of their customers. If they do have any doubts, they must file a SAR.

Unfortunately, many companies still either aren’t aware of the regulations or have yet to implement the required systems.

Companies that don’t comply with the regulations could face a fine of EUR 5m or 10% of their annual turnover.

The best way to protect your business is to make sure you comply.

Under the Fourth and Fifth Anti-Money Laundering Directives, companies are required to perform in-depth know-your-customer checks. These involve:

● Conducting due diligence on customer identity and the legitimacy of funds used.

● Implementing a more rigorous due diligence process when the buyer or seller is a politically exposed person – for example, a senior political figure or an individual from a blacklisted country.

● Appointing at least one fully trained Money Laundering Officer per business to be responsible for overseeing AML processes.

● Training staff so that they are aware of money laundering, how to spot the signs and how to report it.

● Maintaining accurate and timely records that can be quickly accessed if required.

Simple, Comprehensive Compliance

To help businesses navigate these regulations and remain compliant, Red Flag Alert has developed a market-leading AML service. As the UK’s most detailed business intelligence platform, we give you the tools you need to evaluate, manage and monitor AML risk effectively. The service was developed in conjunction with Begbies Traynor plc and GB Group plc, and we’re confident it’s the simplest and most comprehensive solution on the UK market.

Our AML service allows you to:

- Assess the AML risk posed by any business

- Update your records to remain compliant

- Investigate a business where necessary

- Monitor current clients to know when new AML risk emerges

- Quickly and easily determine beneficial owners

- Understand complex organisational structures

- Update your CRM in real time using our API

- Develop a risk-based approach using real-time data

- Onboard new clients quickly while remaining compliant

Learn more about how Red Flag Alert helps your credit control function protect your business from financial risk and comply with regulations, why not book a demo?

Published by Red Flag Alert November 2, 2020

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