What Is the Suspicious Activity Report?
The Suspicious Activity Report (SAR) is a tool provided under the Bank Secrecy Act (BSA) for monitoring suspicious activities that would not ordinarily be flagged under other reports (such as the currency transaction report). Suspicious Activity Reports can cover almost any activity that is out of the ordinary. An activity may be included in the Suspicious Activity Report if the activity gives rise to a suspicion that the account holder is attempting to hide something or make an illegal transaction.
Understanding Suspicious Activity Report (SAR)
The Suspicious Activity Report (SAR) is filed by the financial institution that observes the suspicious activity in the account. The report is filed with the Financial Crimes Enforcement Network who will then investigate the incident. The Financial Crimes Enforcement Network is a division of the U.S. Treasury. The financial institution has the ability to file a report within 30 days regarding any account activity they deem to be suspicious or out of the ordinary. The institution does not need proof that a crime has occurred. The client is not notified that the Suspicious Activity Report has been filed regarding their account.
Suspicious Activity Reports are part of the anti-money laundering statutes and regulations which have become much stricter since 2001. The goal of the Suspicious Activity Report and the resulting investigation is to identify customers who are involved in money laundering, fraud or terrorist funding. The customer is not told that a report is being filed. Disclosure to the customer, or failure to file a Suspicious Activity Report, can result in very severe penalties for both individuals and institutions.
Example of a Suspicious Activity Report Situation
For example, Albert is an account holder at XYZ Financial Institution. Albert has been a client for nearly five years and has an established account history and very predictable transactions. Every month, he deposits $15,000 into the account and buys an index fund. One day, he starts to receive weekly transfers of $9,000 into the account. Almost as quickly as the money hits the account, it leaves again. This is out of the ordinary for Albert's account and usual activity. The financial institution may consider this to be suspicious activity and might file a Suspicious Activity Report.