Suspicious activity report

In United States financial regulation, a suspicious activity report (or SAR) is a report made by a financial institution to the Financial Crimes Enforcement Network (FinCEN), an agency of the United States Department of the Treasury, regarding suspicious or potentially suspicious activity.

Reporting

SAR reports include detailed information about transactions that are or appear to be suspicious. While many institutions file thousands of SARs a year, very few people will have a SAR filed with their name included. 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 (BSA). 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.^{[citation needed]} 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.^{[citation needed]}

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.

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.^{[citation needed]}

Many different types of finance-related industries are required to file SARs. These include:

• depository institutions (for example, banks and credit unions)
• securities and futures dealers (for example, stock brokers and mutual fund brokers)
• money services businesses (for example, check cashing services, currency exchange bureaus, and money order providers)
• casinos and card clubs
• dealers in precious metals and gems (for example, jewelery dealers)

Also required to file:

• individuals who transport more than $10,000 into or out of the United States
• shippers and receivers involved in the transfer of $10,000 into or out of the United States.
• businesses that receive more than $10,000 in a 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

The SAR has several versions, many focused on specific industries.

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

An institution can file SARs through the mail (paper forms are Adobe Acrobat screen fillable), electronically through FinCEN's BSA E-file program, or through a magnetic media format on either a cartridge or 3.5" floppy disk.

A SAR has five sections each containing information about the filing institution or the activity in question:

Part I

The filing institution's name, address, tax ID number, location of the activity and any account numbers involved with the suspicious activity.

Part II

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 III

The date range of the activity, total dollar amount and a list of any law enforcement agency that has been contacted while investigating the activity.

Part IV

Usually contains the contact information for the financial institution's compliance officer or equivalent.

Part V

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.

See also

• Money laundering
• Tax evasion
• Terrorist financing
• Structuring

External links

• FinCEN: Financial Crimes Enforcement Network — official site