Dutch Chief Prosecutor Challenges Banking Officials’ Doubts on SARs Effectiveness

The notion among senior banking officials that Suspicious Activity Reports (SARs) are ineffective is unfounded, according to Dutch Chief Public Prosecutor Michiel Zwinkels. He asserted that investigators frequently depend on SARs to gain insight into criminal activities.

“Banks are very critical of the fact that they have to report so many unusual transactions: that would lead to nothing. That is a misconception,” Zwinkels stated in an interview with NRC. He emphasized that while not every report results in a criminal investigation, SARs play a crucial role in understanding criminal ecosystems.

Banks across several countries have expressed frustration over the volume of SARs they must submit. They argue that while some reports contribute to investigations, the majority remain unused or are ultimately deemed false alarms. The Canadian Bankers Association (CBA) recently advocated for an overhaul of Canada’s anti-money laundering (AML) framework, describing SARs as an inefficient and bureaucratic requirement. Meanwhile, Germany’s financial intelligence unit, FIU Deutschland, has also pushed for improving the quality of the SARs it receives.

Zwinkels believes many critics fail to recognize the importance of SARs. “Based on those many millions of reports, the Financial Intelligence Unit [where banks report unusual transactions] has discovered a system of money laundering,” he explained.

Dutch authorities have successfully used SARs to uncover fraudulent schemes, including the ‘Cash Compensation’ model. This particular method involves falsifying invoices to launder criminal funds. Just last week, a Dutch court sentenced a brother and sister to prison for moving €4.5 million through this scheme.

“Drug criminals often have cash they want to get rid of,” Zwinkels said. “This works in labor-intensive sectors like construction, horticulture, and transport, where migrant workers are often paid partly in cash to avoid taxes.”

He also cautioned that criminals are continuously adapting their methods to evade detection. “Since cash transaction limits are lower, we now see more small transactions,” he noted. “Instead of buying a car for €100,000 in cash, criminals lease it and pay the monthly installments in cash.”

Zwinkels pointed out that this shift in criminal behavior has led to the increasing prevalence of alternative financial arrangements. “These lease or hire purchase transactions are becoming more common,” he observed, highlighting the evolving tactics used by criminals to circumvent financial monitoring systems.

By fLEXI tEAM