In its recently published The SAR Activity Review — Trends, Tips & Issues, Issue 14, FinCEN highlighted how it discovered a gift shop was operating as an unlicensed money transmitter. Three different banks filed five Suspicious Activity Reports (SARs) during 2005 on the shop’s owner, citing the unusual pattern of his financial transactions.

According to prosecutors, the report says, the shop owner transmitted funds off-shore to an unnamed Eastern European country on behalf of the store’s customers. The unidentified man made large, structured cash deposits to accounts he maintained at various banks. He would then wire money from those accounts to the Eastern European country. At one point, he generated enough wealth from his illegal activity to purchase a $20,000 automobile in cash with mostly $100 bills.

Despite warnings from the banks that closed his accounts, the shop owner continued to violate U.S. federal law by simply shifting his transmitting activities to other banks to avoid detection. Eventually, however, he was caught. Earlier this year, the shop owner received a one-year sentence plus two years of supervised release for running an unlicensed money transmitting business.

SARs are vital links in catching money laundering and the crimes that it attempts to disguise. While a single bank’s SAR filings may not cause the authorities to initiate a criminal investigation, FinCEN has the advantage of being able to use multiple sources in order to piece together a more complete picture of a money launderer's criminal activity than an individual institution would be able to generate. This is precisely why it’s imperative that SARs be filed accurately and completely whenever a suspicious activity cannot be easily explained away.