In financial regulation, a suspicious activity report is a report made by a
financial institution about suspicious or potentially suspicious activity. The
criteria to decide when a report must be made varies from country to country but
generally is any financial transaction that does not make sense to the
financial institution, is unusual for that particular client or appears to be
done only for the purpose of hiding or obfuscating a transaction. The report is
filed with that country's financial crime enforcement unit, which is
typically a specialist agency designed to collect and analyse transactions and
report these to relevant law enforcement units. Front line staff in the financial
institution have the responsibility to identify transactions that may be
suspicious and these are reported to a designated person that is responsible
for the reporting the transaction. The financial institution is not allowed to
inform the client or the parties to the transaction that a SAR has been lodged.
For example in United States suspicious transaction reports must be reported to
the Financial Crimes Enforcement Network, an agency of the United States
Department of the Treasury. In Australia the SAR must be reported to Australian
Transaction Reports and Analysis Centre, an Australian government agency. Most
countries have laws that require financial institutions to report
transactions and will have a designated agency to receive these. The agency is
typically part of the law enforcement or financial regulatory department of that
country. Reporting
SARs include detailed information about transactions that are or appear to be
suspicious. The goal of SAR filings is to help the Federal government identify
individuals, groups and organizations involved in fraud, terrorist financing,
money laundering, and other crimes. The purpose of a suspicious activity
report is to report known or suspected violations of law or suspicious activity
observed by financial institutions subject to the regulations of the Bank
Secrecy Act. In many instances, SARs have been instrumental in enabling law
enforcement to initiate or supplement major money laundering or terrorist
financing investigations and other criminal cases. Information provided in
SAR forms also presents FinCEN with a method of identifying emerging trends
and patterns associated with financial crimes. The information about those
trends and patterns is vital to law enforcement agencies and provides
valuable feedback to financial institutions.
FinCEN requires a SAR to be filed by a financial institution when the financial
institution suspects insider abuse by an employee; violations of law aggregating
over $5,000 where a subject can be identified; violations of law
aggregating over $25,000 regardless of a potential subject; transactions
aggregating $5,000 or more that involve potential money laundering or violations
of the Bank Secrecy Act; computer intrusion; or when a financial
institution knows that a customer is operating as an unlicensed money
services business. Each SAR must be filed within 30 days of
the initial determination for the necessity of filing the report. An
extension of 30 days can be obtained if the identity of the person conducting
the suspicious activity is not known; however, at no time should an SAR be
delayed longer than 60 days. The Bank Secrecy Act specifies that each firm
must maintain SARs for a period of five years from the date of filing.
Reporters The report can start with any employee
of a financial service. They are generally trained to be alert for
suspicious activity, such as people trying to wire money out of the country
without identification, or someone with no job who starts depositing large
amounts of cash into an account. Employees are trained to communicate
their suspicion up their chain of command where further decisions are made
about whether to file a report or not. Many different types of finance-related
industries are required to file SARs. These include:
depository institutions securities and futures dealers
money services businesses casinos and card clubs
dealers in precious metals and gems insurance companies
mortgage companies and brokers Other related forms
There are other forms that FinCEN requires businesses and individuals to
file. These include: individuals who transport more than
$10,000 in currency into or out of the United States
shippers and receivers involved in the transfer of $10,000 in currency into or
out of the United States businesses that receive more than
$10,000 in currency in a single transaction or in related transactions
people who have control over more than $10,000 in financial accounts outside of
the U.S. during a calendar year Confidentiality
Unauthorized disclosure of a SAR filing is a federal criminal offense.
An individual or organization is precluded from discovering the existence
of a SAR filed that includes their name. Financial institutions undertake an
investigation process prior to filing a SAR to assure that the information
reported is appropriate, complete, and accurate. This process will often
include review by financial investigators, management and/or
attorneys prior to filing. SAR filing options
Effective July 1, 2012 all SAR Reports must be filed through FinCEN's BSA
E-filing System. A SAR has five sections each containing
information about the filing institution or the activity in question:
Part I - Subject Information Any name, address, social security or
tax ID's, birth date, drivers license numbers, passport numbers, occupation
and phone numbers of all parties involved with the activity.
Part II - Suspicious Activity Information
Date Range and codes for the type of Suspicious Activity
Part III - Information about Financial Institution where Activity Occurred
Part IV - Filing Institution Contact Information
Usually contains the contact information for the financial institution's
compliance officer or equivalent and list of any law enforcement agency that
has been contacted while investigating the activity..
Part V - Suspicious Activity Information - Narrative
A written description of the activity. Penalties for non-compliance
Financial institutions and their employees face civil and criminal
penalties for failing to properly file suspicious activity reports, including
any combination of large fines, regulatory restrictions, loss of banking
charter, or imprisonment. History
The requirement for the suspicious activity report and its accompanying
implied gag order was added by the Annunzio-Wylie Anti-Money Laundering Act
§ 1517(b). See also
Casino regulations under the Bank Secrecy Act
Money laundering Tax evasion
Terrorist financing Structuring
References External links
FinCEN: Financial Crimes Enforcement Network — official site