Understanding SAR Compliance for VASPs and CASPs Across the EU: A Polish Example

In today’s digital financial ecosystem, Virtual Asset Service Providers (VASPs) and Crypto-Asset Service Providers (CASPs) play a crucial role in ensuring security and transparency. Across the EU, compliance with anti-money laundering (AML) regulations is essential for both businesses and regulators. A key component of this compliance framework is the Suspicious Activity Report (SAR). Filing SARs is critical in combating financial crime, protecting business integrity, and meeting the requirements of EU-wide AML regulations.

This article explores what SARs are, how they apply across the EU, and how to ensure compliance, with Poland as a practical example for SAR procedures.

What is a Suspicious Activity Report (SAR)?

A Suspicious Activity Report (SAR) is a formal document submitted to relevant authorities when a VASP (Virtual Asset Service Provider) or CASP (Crypto-Asset Service Provider) identifies suspicious behavior that may indicate a client is involved in illegal activity. Suspicious activities can range from money laundering to fraud or identity theft.

For businesses like VASPs, submitting SARs is a vital part of their AML (Anti-Money Laundering) compliance. Not reporting suspicious behavior could expose the company to legal risks, financial penalties, and significant damage to its reputation.

 

What Constitutes Suspicious Activity?

Suspicious activity can manifest in various ways, and recognizing the red flags is critical. Some typical behaviors that may trigger a SAR include:

• Unexplained large transactions: Clients making unusually large deposits or withdrawals without a clear business purpose.
• Transactions involving high-risk jurisdictions: If a client transfers funds to or from a country known for money laundering or terrorism financing.
• Frequent small transactions: Clients conducting multiple smaller transactions to avoid triggering reporting thresholds (a process called “structuring”).
• Behavior inconsistent with client profile: A client who suddenly begins making high-value transactions when their profile suggests modest financial activity.

Who is Responsible for Filing SARs?

At VASPs, the Management Board and the Money Laundering Reporting Officer (MLRO) bear the ultimate responsibility for ensuring SARs are filed when necessary. The MLRO is responsible for identifying suspicious activities, conducting internal investigations, and escalating the case to the authorities if warranted.

Information Needed for Filing a SAR

For VASPs to meet their compliance obligations, it’s essential to collect specific client information from the start of the business relationship. This ensures that the necessary data is readily available when a SAR needs to be filed.

Information for Natural Persons

When dealing with natural persons (individual clients), the following details must be collected:

• Full name and surname
• Nationality
• Personal identification number (e.g.PESEL number for Polish citizens)
• Date of birth
• Residential address
• ID number and expiry date (ideally, a photo of both sides of the ID)

Information for Legal Entities

For companies or legal entities, VASPs must gather additional information:

• Company name
• Tax identification number
• Registry number
• Country of registration
• Date of registration
• Representatives’ and UBOs’ (Ultimate Beneficial Owners) personal details (same as required for natural persons)

Gathering and maintaining this information from the beginning of the business relationship ensures that VASPs can respond quickly and accurately if suspicious activity arises.

Reporting SARs: EU Requirements with a Focus on Poland

While SAR filing requirements are part of an EU-wide regulatory framework, the exact process can vary by country. Using Poland as an example, we can see how local regulations apply within the broader EU framework. In Poland, SARs are filed based on specific articles of the Polish AML Act—Articles 86, 89, 90, and 74. Each article addresses distinct types of suspicious activity.

Selecting the Right Article for SARs in Poland

When filing a SAR in Poland, VASPs must choose the single article that best describes the suspicious activity:

1. Article 86: Money Laundering
   Used when there’s a suspicion of money laundering, such as large, unexplained transfers.
2. Article 89: Prevented Crimes
   Applied when a VASP detects and prevents a crime, such as blocking fraudulent transactions.
3. Article 90: Unprevented Crimes
   Used when a crime has already occurred, and the VASP could not prevent it, like when a stolen ID is used.
4. Article 74: Suspicious Behavior
   For unusual activity that raises concerns but may not constitute a crime, such as sudden large transactions from a typically low-activity account.

Filing Process: Poland’s SAR Requirements as an Example

In Poland, SARs are filed under the above articles to both the General Inspector of Financial Information (GIIF) and the relevant Prosecutor’s Office, following a two-step process:

1. Notification to GIIF: Submitted electronically, detailing the suspicious activity.
2. Notification to Prosecutor: For Articles 86, 89, and 90, a written report is also sent to the Prosecutor’s Office.

For Article 74 SARs, only the GIIF is notified, which reduces additional administrative steps.

This filing process provides a practical model for understanding how SAR reporting obligations may look across EU countries, as most member states have similar dual-reporting mechanisms.

Consequences of Failing to File a SAR

Failure to meet SAR filing obligations can result in severe consequences across the EU. Both the Management Board and the MLRO can face personal liability if SARs aren’t filed when warranted. Penalties include:

• Financial fines from regulatory bodies
• Personal liability for board members and MLROs
• Reputational damage, which can deter clients and investors

Across all EU jurisdictions, meeting SAR obligations is crucial to avoiding these consequences and safeguarding the company’s standing.

Conclusion: SAR Compliance for VASPs and CASPs Across the EU

Suspicious Activity Reports (SARs) are essential for AML compliance across the EU. While Poland’s AML regulations provide a clear example of how SARs work, similar processes apply in other EU countries, with each jurisdiction adapting the process slightly to fit its legal landscape.

By remaining vigilant, gathering essential client information early, and understanding the reporting requirements, VASPs and CASPs can ensure compliance with AML standards, protect themselves from legal penalties, and support the overall integrity of the EU’s financial ecosystem.

At Complium, we specialize in AML compliance for VASPs and CASPs across multiple EU jurisdictions. Whether you need help navigating SAR requirements or aligning with local regulations, our team can help you meet every standard efficiently and effectively.

If you need help with SAR compliance or any other regulatory issues, contact us today for a FREE consultation.