Suspicious Operation Report (SOR)

By: Roberto Morales, Compliance Manager and Officer

The Suspicious Activity Report (SAR) is a fundamental tool in the prevention of money laundering and terrorist financing.

The usefulness of suspicious activity reports lies in several important aspects, which we mention below:

The Suspicious Activity Report (SAR) allows organizations to identify and report transactions that may be related to money laundering, terrorist financing, or other financial crimes. This facilitates the early detection of potential illicit activities before they can be completed or cause harm to the organizations.

They are a crucial part of regulatory compliance for many organizations and other regulated entities. These organizations are legally obligated to report any suspicious activity to the relevant authorities according to local regulations. They serve as the mechanism for collaborating with law enforcement agencies and financial intelligence units. These reports provide valuable information that can be used by authorities to investigate and prevent criminal activities. In our country, it serves as the shield to inform the authorities.

Submitting a suspicious activity report helps protect the reputation and integrity of the organization. By reporting suspicious transactions, institutions demonstrate their commitment to preventing money laundering and complying with regulations, which can mitigate the risk of being used for illicit activities. Identifying and reporting suspicious transactions can help prevent financial losses, fines, or even more severe penalties, including criminal ones, if determined.

Suspicious transaction reports are issued with the purpose of providing a detailed and transparent assessment of activity that may be subject to money laundering or other illicit activities. All parties involved are urged to take appropriate measures as necessary to mitigate any identified risks and ensure proper regulatory compliance.

The initial notice of an unusual transaction may come from an alert from a transaction monitoring system or from an internal notice, which may come from a colleague who has noticed something irregular in the activity of a counterpart; this is reinforced with constant training. The compliance officer conducts and documents the analysis of the unusual operation, and if it is concluded that an irregular operation is present, it is classified as suspicious and must be reported to the authorities.

In summary, the Suspicious Transaction Report is an essential tool in the fight against money laundering and other illicit activities. It provides a way to detect, report, and prevent criminal activities, comply with regulations, and protect the integrity of the financial system and the institutions involved. If you need more information about this report, please do not hesitate to contact me at my email rmorales@romeropineda.com