Financial Intelligence Unit-India (FIU-IND) and SAR

Subject: IR

Context:

Swiss Leaks, Panama Papers, now SARs are bank reports that alert law-enforcement agencies

Concept:

• The FinCEN Files refer to a set of over 2,100 “Suspicious Activity Reports” (SARs) filed by banks with the United States Department of the Treasury’s Financial Crime Enforcement Network, the agency that serves as the leading global regulator in the battle against money laundering.
• The files identify at least $2 trillion in transactions between 1999 and 2017 flagged as possible evidence of money laundering or other criminal activity by compliance officers of banks and financial institutions.
• SAR or Suspicious Activity Report is a document filed by banks and financial institutions to report suspicious activity to US authorities, in this case, FinCEN. These are confidential, so secret that banks are not allowed to confirm their existence. Indeed, even the account holder is unaware when an SAR is filed related to a transaction in that account.
• A SAR is not an accusation, it is a way to alert regulators and law enforcement to possible irregular activity and crimes.

Financial Intelligence Unit-India

• Financial Intelligence Unit-India (FIU-IND) performs the same functions as FinCEN in the US.
• Under the Finance Ministry, this was set up in 2004 as the nodal agency for receiving, analyzing and disseminating information relating to suspect financial transactions.
• The agency is authorised to obtain cash transaction reports (CTRs) and suspicious transaction reports (STRs) and cross border wire transfer reports from private and public sector banks every month under the Prevention of Money Laundering Act (PMLA).
• It is mandatory for banks in India to furnish a monthly CTR to the FIU on all transactions over Rs 10 lakh or its equivalent in foreign currency or a series of integrally connected transactions that add up to more than Rs 10 lakh or its equivalent in foreign currency.
• The STRs and CTRs are analysed by FIU and suspicious or doubtful transactions are shared with agencies like the Enforcement Directorate, the Central Bureau of Investigation and the Income Tax for the purpose of launching probes to check possible instances of money laundering, tax evasion and terror financing.