28 Most Asked Questions about Suspicious Activity Reports (SARs)

The Financial Crimes Enforcement Network (FinCEN) received more than 12 million SARs from 2011 to 2017 and more than two million in 2019 alone – International Consortium of Investigative Journalists 

What is a Suspicious Activity Report (SAR)?

A Suspicious Activity Report (SAR) is a tool for the United States financial institutions to assist the government agencies in detecting and preventing financial crimes. When an institution comes across an irregular transaction or possible criminal activity, the institution must report it. SAR is a mechanism set in place to alert the authorities of any potential financial fraud. The investigating agencies don’t use SARs as concrete evidence against the suspect. Instead, they use SARs as a basis of the investigation to find proof.

What is the history of Suspicious Activity Report (SAR)?

SAR was initially called a Criminal Referral Form. The Bank Secrecy Act (also known as ‘The Currency and Foreign Transactions Reporting Act of 1970’) requires financial institutions to disclose any suspicious economic activity. SAR became the standard form of reporting suspicious activity in 1996. The USA Patriot Act further expanded SAR requirements to help combat domestic and global terrorism.

What is the definition of suspicious activity in banking?

Suspicious activity is any conducted or attempted transaction or pattern of transactions that you know, suspect, or have reason to suspect meets any of the following conditions:

  • The activity involves funds derived from illegal activity
  • The activity that by design hides assets derived from illegal activities to evade federal law or avoid reporting requirements
  • The activity is to evade the Bank Secrecy Act requirements
  • There is no business or apparent lawful purpose
  • The activity involves insider abuse of a financial institution or facilitates criminal activity

Which institutions need to file SAR?

All financial institutions operating in the United States, including insured banks, savings associations, savings association service corporations, credit unions, bank holding companies, nonbank subsidiaries of bank holding companies, Edge and Agreement corporations, stock and mutual fund brokers, and various money service businesses (check-cashing companies, money order providers, etc.), and United States branches and agencies of foreign banks, are required to make this report.

In addition, the casinos and card clubs, precious metals or gems dealers, insurance companies, and those involved in the mortgage business all fall under the stipulations of the Bank Secrecy Act (BSA).

What are the triggers for a SAR?

The primary triggers for a SAR are:

  1. The daily aggregate amount of cash transactions exceeding $10,000
  2. Detection of any suspicious activity that signals criminal activity like money laundering, tax evasion, etc.
  3. International money transactions over a particular value
  4. If there is a repeated pattern 

What are the examples of typical patterns of suspicious activity?

Here are some of the common examples indicating suspicious activity:

  1. Lack of evidence of legitimate business activity, or any business operations, undertaken by the parties to the transaction(s);
  2. Unusual financial nexuses and transactions o