COMPLIANCE
Restoration
The road map to successfully selling a “ beater ” of a SAR is in the math . So how does the private sector sell the unsellable SARs / CARs to LE ? Buckle up , here comes the calculation methodology .
The private sector has long since known the value of future loss avoidance . It is what keeps them in the black and profitable . LE can leverage this same methodology by simply using the calculations to show what the scaled-down outputs would have been if they had not been intercepted by the private sector detection systems .
Future loss avoidance calculation methodology
If the loss per day equals the total fraud amount divided by the number of days it took to detect the fraudulent activity , LE can take that value and multiply it by 365 days ( one year , aka the average length of a criminal scheme ). When this value ( the future loss avoidance amount ) is multiplied by 1.5 ( one-and-a-half years ), the average length of the more commonly observed criminal fraud schemes before detection , LE can review the overall intended scope of the fraud scheme . By extrapolating these values , the LE investigators are no longer evaluating just a low dollar SAR . The investigators can now consider a potentially significant fraud scheme , one worthy of resource investment , and one without a guaranteed fear of prosecutorial rejection . Let us look at a hypothetical fraud scheme scenario :
A fraud detection monitoring system flags a suspected criminal scheme worth $ 10,000 that occurred in an FI between June 1 , 2024 , and June 10 , 2024 . Following this identification , the financial crime compliance analyst places a hold on the account and initiates an immediate closure / termination of the client relationship . The criminal activity had a duration of 10 days with an average loss of $ 1,000 a day . Had there not been intervention , the money laundering scheme value could have reached $ 365,000 ($ 1,000 a day multiplied by 365 days in a year ). For the FI , the detection and subsequent decision-making results in a future loss avoidance amount of $ 355,000 ( the potential savings value less the actual loss ). For LE , the entire $ 365,000 represents one year ’ s worth of criminal activity ( an intended theft value ). Per an Association of Certified Fraud Examiners 2024 report on occupational fraud , “ the median duration of the occupational frauds in our study was 12 months ― meaning the typical perpetrator was able to commit their scheme for a full year before being detected .” 2 However , the report recognized that “ billing , check and payment tampering , expense reimbursement schemes , financial statement fraud , payroll , and skimming schemes all typically lasted 18 months before detection .” 3 By applying these statistics and measuring the anticipated
scope of the intended fraud , the loss value would have been a minimum of $ 365,000 but potentially $ 547,500 , depending on the type of intended fraud scheme . Either value is significantly greater than the $ 10,000 SAR value and far more worthy of an LE officer ’ s attention .
Conclusion
When LE puts the “ pedal to the metal ” and bypasses SAR reports with low dollar values they are clearly going in the wrong direction . LE should remember that SARs with descaled outputs have unlimited investigative potential . Now is the time to “ stop on a dime .” It might be worth it .
ACAMS Today law enforcement contributor , VA , USA , editor @ acams . org
Disclaimer : The views expressed are solely those of the author and are not meant to represent the opinions of employers .
1
“ 9-27.001 ― Principles of Federal Prosecution Preface ,” U . S . Department of Justice , https :// www . justice . gov / jm / jm-9-27000-principlesfederal-prosecution # 9-27.001
2
“ Occupational Fraud 2024 : A Report to the Nations ,” Association of Certified Fraud Examiners , https :// www . acfe . com / - / media / files / acfe / pdfs / rttn / 2024 / 2024-report-to-the-nations . pdf
3
Ibid .
48 acamstoday . org