Criminality and suspicious activity reports
| Published date | 03 July 2017 |
| Pages | 461-471 |
| Date | 03 July 2017 |
| DOI | https://doi.org/10.1108/JFC-03-2017-0019 |
| Author | Robert Michael Axelrod |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial crime |
Criminality and suspicious
activity reports
Robert Michael Axelrod
Deloitte Transactions and Business Analytics LLP, Parsippany,
New Jersey, USA
Abstract
Purpose –This paper aims to suggest alternative suspicious activity analyses to improve the focus of
nancial institution reporting to law enforcement and to identify some limitations in the current practice.
Design/methodology/approach –This paper employs the consideration of US and Financial Action
Task Force policies and text sources of suspicious activity reporting in the anti-money laundering context in
light of how the reports are used. Furthermore, there is consideration of condentiality and privacy
constraints on public and private sector in assessing strategies to make the reporting process more effective
and aiding the discovery and investigation of crime.
Findings –The current suspicious activity reporting process takes advantage of the business acumen of
nancial institutions to identify unusual or unexplained behavior that may assist law enforcement in criminal
investigations and prosecutions. It is successful in that regard. However, the process has not been tuned to
identifying criminal behavior through systematic feedback. As an alternative to feedback, analysis of criminal
organizations vis-a
`-vis the transactions that ow through a reporting institution is suggested as a means to
creating better tuning. The analysis could be accomplished either by law enforcement or by select institutions;
but in either case, hurdles of condentiality and/or privacy would have to be overcome.
Originality/value –Creating a process for law enforcement and/or reporting institutions to map known
criminal activity on a transaction set would allow a new assessment of the role of nancial institutions in this
regard, and may allow policymakers to reassess whether the nancial institutions’ efforts currently required
would be more productive if redirected to focus more on criminal as opposed to merely suspicious activity.
Keywords Money laundering, Law enforcement, Optimization, Feedback, Informal cooperation,
Suspicious activity report
Paper type Research paper
Introduction
Formal and informal reporting of suspicious behavior could be improved through
comprehensive sharing of data as well as feedback between law enforcement and nancial
institutions, but the benets of such sharing are not demonstrated because it has not
occurred systematically. This article considers some ways to further align the law
enforcement and private sector perspectives and discusses how they may occur, to some
extent, in the present reporting environment. The US perspective is applied, but overlaps
substantially with most international approaches for purposes of this paper, given the role of
the Financial Action Task Force (FATF) in setting a reporting framework.
FATF sets criteria for the adequacy of anti-money laundering programs for its member
countries, which are the vast majority of the largest and most populous countries in the
world, as well as other countries. The framework requires covered nancial institutions to
report to law enforcement [typically the country’s Financial Intelligence Unit (FIU)] when
suspicious activity is detected. The “reason to suspect criminal activity”[1] standard as the
FATF denition of suspicious activity leaves some ambiguity for reporting institutions as to
when they have such reasons, would seem to fall far short of actually assessing the presence
of criminal activity. In the USA, the gap between actual criminal activity and something less
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1359-0790.htm
Activity
reports
461
Journalof Financial Crime
Vol.24 No. 3, 2017
pp.461-471
©Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-03-2017-0019
To continue reading
Request your trial