What action must be taken when knowledge of money laundering is suspected?

When there is a suspicion of money laundering, the appropriate action is to submit a suspicious activity report (SAR). This is a formal way to notify the authorities about any transactions or activities that appear to be linked to money laundering or other financial crimes. A SAR is designed to provide critical information that can help law enforcement investigate potential criminal activity effectively.

Submitting a SAR ensures that the suspicion is documented and reviewed by the relevant authorities, who are equipped to take appropriate investigative action. This process is crucial in maintaining compliance with legal obligations related to anti-money laundering regulations and helps protect both the reporting entity and the financial system from misuse.

While informing the police directly might seem plausible, it is generally not the recommended first step in such circumstances, as law enforcement expects to receive reports through established channels such as SARs. A strategy document is not necessary at the point of suspicion; it's more about actioning those suspicions legally. Reporting internally might be a preliminary step, but it does not fulfill the legal requirement to notify authorities about suspicious financial activities.