Analysis of Suspicious Activity Report (SAR)

Inquiries Received by FinCEN?s Regulatory Helpline By FinCEN?s Office of Outreach Resources

FinCEN operates a Regulatory Helpline that provides assistance for institutions seeking clarification of their BSA requirements and obligations. The following information highlights the types of questions institutions raised with the Regulatory Helpline about suspicious activity reporting during a changing period of U.S. financial and economic activity. During the period of July 1, 2008 through June 20, 2009, the Regulatory Helpline received 1,634 inquiries from a variety of institutions located across the country.11













Suspicious Activity Report (SAR): Sharing and Disclosure
Institutions frequently seek the guidance of FinCEN?s Regulatory Helpline when law enforcement and regulatory authorities request SAR information and supporting documentation. To aid institutions in responding to such requests, FinCEN issued guidance in June 2007 entitled, Suspicious Activity Report Supporting Documentation (FIN-2007-G003). The guidance explains:

1. When and how to disclose SAR information to appropriate aw enforcement and supervisory agencies;
2. What constitutes supporting documentation; and,
3. Whether a legal process is required for the disclosure of supporting documentation to appropriate requesters.

One common industry question relates to the proper disclosure of SAR information. It may involve instances when SAR information is requested to support a civil case or when someone other than an appropriate law enforcement or supervisory authority makes the request. Guidance on this subject is available in a previous SAR Activity Review (see The SAR Activity Review Issue 7 (August 2004), Section 4).

SAR Filing Requirements
Financial institutions frequently seek clarification regarding when an institution has an obligation to file a SAR. Because filing a SAR is an inherently risk-based decision based upon specific facts and circumstances, institutions should have policies, procedures and processes for referring unusual activity from all business lines to the personnel or department responsible for evaluating such activity. Within those procedures, institutions should establish a clear and defined escalation process from the point of initial detection to disposition of the investigation. To assist in this internal effort, institutions may refer to resources such as the FFIEC BSA/AML Examination Manual, Suspicious Activity Reporting Overview, SAR Decision-Making Process. Some of the common questions regarding SAR filing requirements include:

Q: Explain the definitions and characterizations of suspicious activity in the SAR form.

Institutions can find helpful explanations for the various characterizations of suspicious activity that appear in Item 35 of the depository institution Suspicious Activity Report form in The SAR Activity Review Issue 12 (October 2007), Section 4.

Q: Clarify the application of the SAR thresholds and whether to file on attempted transactions.



Institutions are required to file on transactions conducted or attempted by, at, or through the institution (or an affiliate) and aggregating above a certain threshold (based on the specific industry),15 if the institution knows, suspects, or has reason to suspect that the transaction:

• May involve potential money laundering or other illegal activity (e.g., terrorism financing),
• Is designed to evade the Bank Secrecy Act (BSA) or its implementing regulations,
• Has no apparent business or lawful purpose or is not the type of transaction in which the particular customer would normally be expected to engage; and the bank knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction.

Assistance with the SAR Form
Institutions routinely pose questions regarding the appropriate way to complete certain fields on the SAR forms. The following guidance pieces provide helpful answers for form assistance:

• SAR Narrative Guidance Package
  
• Guidance - Suggestions for Addressing Common Errors Noted in Suspicious Activity Reporting
  
• Line Item Instructions for the Depository Institutions SAR
  
• Date to Use When Correcting Previously Filed SARs
  
• Insignificant SAR Filing Errors
  
  

FinCEN?s Regulatory Helpline provides helpful assistance for institutions seeking clarification of their Bank Secrecy Act requirements. Institutions can reach the Regulatory Helpline at 800-949-2732.

11 All information provided in this publication has been aggregated to ensure each individual requestor?s confidentiality.

12 This category includes money transmitters; currency dealers and exchangers; check cashers; issuers, sellers, and redeemers of traveler?s checks, money orders, and stored value; and, (for certain activities) the United States Postal Service.

13 This category includes inquiries from undetermined institution types and requests from law enforcement regarding general SAR requirements.

14 This category includes all other non-bank financial institutions and businesses, such as mutual funds, commodity trading advisors, pawn shops, jewelers, real estate companies, vehicle sellers, and other businesses.

15 Further clarification of industry-specific requirements can be found under 31 C.F.R. Part 103 and on the industry-specific SAR forms.

Excerpted from SAR Activity Review Issue 16, page 30