A Suspicious Activity Report (SAR) is required when a financial institution detects activity that raises suspicion of money laundering, terrorist financing, or fraud.
Option A (Correct): Inability to verify customer identification documents is a red flag for potential financial crime and may require reporting to the Financial Intelligence Unit (FIU).
Option B (Incorrect): PEPs require enhanced due diligence (EDD), but their involvement alone does not automatically trigger a SAR.
Option C (Incorrect): Dealers in precious metals/stones are high-risk, but being in this industry alone does not warrant an automatic SAR.
Option D (Incorrect): Crypto-to-fiat transactions are not inherently suspicious, but they require monitoring for unusual activity.
Key SAR Filing Triggers:
Transactions that do not match the customer's expected activity.
Incomplete, fraudulent, or unverifiable customer identification.
Use of shell companies or unusual intermediaries.
Large or structured transactions with no apparent legitimate purpose.
Best Practices for SAR Compliance:
Implement robust customer due diligence (CDD) processes.
Monitor transaction behavior against expected patterns.
Follow jurisdictional SAR filing deadlines to avoid penalties.
Reference:
FATF Recommendation 20 (Reporting Suspicious Transactions)
6th EU AML Directive (6AMLD) on Suspicious Transactions Reporting
FinCEN SAR Filing Guidelines