In most member nations of the Financial Action Task Force (FATF), the primary international anti-money laundering standards-setting body, when a financial institution suspects a transaction is potentially criminal, it is required to file a detailed suspicious activity report (Sar) with its supervisory agency. An institution that has filed a Sar is also not generally allowed to disclose the report. This is to avoid tipping off the subject or otherwise interfering with an actual or potential investigation.
These rules are fairly straightforward for financial institutions operating strictly within one jurisdiction. But compliance is more difficult in cross-border transactions, where disclosure rules for Sars vary or conflict between jurisdictions. Recent pronouncements by the US Treasury Department illustrate – and potentially further complicate – the challenges that arise when an international financial institution detects suspicious activity in cross-border transactions. This has pointed to the need for increased transparency and harmonisation of international standards.