Reporting Requirement
Under the Bank Secrecy Act, financial institutions are legally obligated to file SARs when they detect suspicious activity that may indicate criminal behavior (https://www.occ.treas.gov/topics/supervision-and-examination/bank-operations/financial-crime/suspicious-activity-reports/index-suspicious-activity-reports.html). These activities include money laundering, tax evasion, and fraud.
Key Facts
- Reporting Requirement: Financial institutions are required by law to file a SAR if they detect any suspicious activity that may indicate criminal behavior, such as money laundering, tax evasion, or fraud.
- Timely Filing: A bank must file a SAR no later than 30 calendar days after the initial detection of suspicious activity. If a suspect is not identified at the time of detection, the bank may have an additional 30 calendar days to file the report while trying to identify the suspect. In no case should reporting be delayed more than 60 calendar days after the initial detection.
- Financial Crimes Enforcement Network (FinCEN): Banks send their SAR reports to FinCEN, which is part of the U.S. Financial Intelligence Unit and a division of the United States Treasury. FinCEN is responsible for investigating the reported incidents.
- Investigation: Once FinCEN receives a SAR, it initiates an investigation into the reported suspicious activity. The investigation may involve analyzing the data, identifying trends, and potentially sharing the information with other law enforcement agencies.
- Use by Law Enforcement: SARs are used by law enforcement agencies to identify financial links to illicit activities. They can query FinCEN’s database for name matches to existing suspects and their known associates, helping to supplement ongoing investigations.
- Use by Bank Supervisory Agencies: Bank supervisory agencies, such as the Federal Deposit Insurance Corporation (FDIC), rely on SARs to detect and respond to fraud. SARs can alert these agencies to potential fraud cases, allowing them to take appropriate action.
Timely Filing
Banks must file SARs promptly, no later than 30 calendar days after the initial detection of suspicious activity (https://www.fool.com/the-ascent/banks/articles/heres-what-happens-when-your-bank-files-a-suspicious-activity-report/). If a suspect cannot be identified at the time of detection, the bank may have an additional 30 calendar days to file the report while attempting to identify the suspect. However, reporting should not be delayed more than 60 calendar days after the initial detection.
Financial Crimes Enforcement Network (FinCEN)
Banks submit their SAR reports to FinCEN, a division of the United States Treasury (https://www.fdic.gov/regulations/examinations/supervisory/insights/siwin07/siwinter2007-article03.html). FinCEN is responsible for investigating the reported incidents.
Investigation
Upon receiving a SAR, FinCEN initiates an investigation into the suspicious activity (https://www.fool.com/the-ascent/banks/articles/heres-what-happens-when-your-bank-files-a-suspicious-activity-report/). This investigation may involve analyzing the data, identifying trends, and potentially sharing the information with other law enforcement agencies.
Use by Law Enforcement
Law enforcement agencies use SARs to identify financial links to illicit activities (https://www.occ.treas.gov/topics/supervision-and-examination/bank-operations/financial-crime/suspicious-activity-reports/index-suspicious-activity-reports.html). By querying FinCEN’s database for name matches to existing suspects and their known associates, SARs help supplement ongoing investigations.
Use by Bank Supervisory Agencies
Bank supervisory agencies, such as the FDIC, rely on SARs to detect and respond to fraud (https://www.fdic.gov/regulations/examinations/supervisory/insights/siwin07/siwinter2007-article03.html). SARs can alert these agencies to potential fraud cases, allowing them to take appropriate action.
Sources
- Here’s What Happens When Your Bank Files a Suspicious Activity Report
- Suspicious Activity Reports (SARs)
- Connecting the Dots…The Importance of Timely and Effective Suspicious Activity Reports
FAQs
What is a SAR?
A SAR is a report filed by a financial institution to the Financial Crimes Enforcement Network (FinCEN) when it detects suspicious activity that may indicate criminal behavior, such as money laundering, tax evasion, or fraud.
When must a bank file a SAR?
Banks must file a SAR no later than 30 calendar days after the initial detection of suspicious activity. If a suspect cannot be identified at the time of detection, the bank may have an additional 30 calendar days to file the report while attempting to identify the suspect. However, reporting should not be delayed more than 60 calendar days after the initial detection.
What information is included in a SAR?
SARs include information such as the identity of the suspect, the nature of the suspicious activity, the amount of money involved, and the date and location of the activity.
Who investigates SARs?
SARs are investigated by FinCEN, a division of the United States Treasury. FinCEN may also share the information with other law enforcement agencies.
How are SARs used by law enforcement?
Law enforcement agencies use SARs to identify financial links to illicit activities. By querying FinCEN’s database for name matches to existing suspects and their known associates, SARs help supplement ongoing investigations.
How are SARs used by bank supervisory agencies?
Bank supervisory agencies, such as the FDIC, rely on SARs to detect and respond to fraud. SARs can alert these agencies to potential fraud cases, allowing them to take appropriate action.
What happens if a bank fails to file a SAR?
Banks that fail to file SARs may face civil penalties and other enforcement actions.