The reporting of suspicious activity is the single most important tool of the Bank Secrecy Act that a financial institution can use. All suspicious activity reports are submitted electronically through the FinCEN website from all over the United States. This gives law enforcement officers access to tons of data. FinCEN is known as a Financial Intelligence Unit. It is the FIU for the United States and there are Financial Intelligence Units all over the world. They work together in assisting law enforcement officers on international money laundering and terrorist financing investigations. The main function of an FIU is to receive, analyze and disseminate all the information received on those suspicious activity reports. Yearly FinCEN publishes SAR Stats on their website, along with Trend Data.

All financial institutions should have a designated compliance officer. This is one of the five pillars of a good AML/CFT program. The compliance officer needs to be able to effectively communicate with all employees at all levels in the financial institution. And there needs to be clear instructions on how suspicious activity is to be reported to the compliance officer from all departments within the financial institution. It is not a good idea to allow all employees access to the suspicious activity reporting system. There needs to be a process in place for all suspicious activity to go through the compliance officer/department to determine if a report needs to be filed with FinCEN. Remember, SAR’s are confidential, and a financial institution is prohibited from disclosing even the existence of a SAR.

What are the thresholds for filing a SAR? If an employee is involved, the threshold is zero. If there is a suspect, the threshold is $5,000.00. If there is no suspect, the threshold is $25,000.00. And if the suspicious activity is BSA related, the threshold is also $5,000.00. The narrative is a very important piece to the SAR filing. Make sure it is clear and makes sense. Have someone else read it to make sure it explains why you find the activity you are filing on is suspicious.

There are many reasons for filing a SAR. It could be a customer who changes or cancels a transaction to avoid having a Currency Transaction Report filed. There are all kinds of fraud, such as ACH, check, consumer loan, debit/credit card, healthcare, mortgage, tax refund or Ponzi scheme. There are illegal gaming activities. Some money laundering concerns would be exchanging bills, the physical condition of bills, the source of funds, suspicious wires, or electronic funds transfers. Maybe the identification provided is questionable. It could involve human smuggling or human trafficking, or even elder abuse. There could have been a cyber event against your institution or one of your customers, identity theft, forgery, or embezzlement/theft.

Whatever the reason is for filing the SAR, your institution must continue to monitor the activity and file additional SAR updates every 90 days until the suspicious activity stops. Also, examiners like for financial institutions to have a High-Risk list. So, any customer a SAR is filed on should automatically go on that list. And remember, it is not our job to decide guilt or innocence. It is our job to see and report ANY suspicious activity.