Suspicious Activity Report (SAR)

What Is a Suspicious Activity Report (SAR)?

A suspicious activity report (SAR) is a device given under the Bank Secrecy Act (BSA) of 1970 for monitoring suspicious activities that wouldn't usually be hailed under different reports, (for example, the currency transaction report). The SAR turned into the standard form to report suspicious activity in 1996.

SARs can cover practically any activity that is strange. An activity might be remembered for the SAR assuming that the activity leads to a doubt that the account holder is endeavoring to conceal something or make an unlawful transaction.

Understanding a Suspicious Activity Report (SAR)

The SAR is filed by the financial institution that notices suspicious activity in an account. The report is filed with the Financial Crimes Enforcement Network, or FinCEN, who will then investigate the occurrence. FinCEN is a division of the U.S. Treasury.

The financial institution has the responsibility to file a report in the span of 30 days in regards to any account activity they consider to be suspicious or strange. An extension of something like 60 days might be acquired, if necessary to collect more evidence. The institution doesn't require proof that a crime has happened. The client isn't informed that a SAR has been filed in regards to their account.

FinCen requires the SAR forms filed by financial institutions to recognize the five essential components of the suspicious activity being reported:

Who is leading the suspicious activity?
What instruments or systems are being utilized?
When did the suspicious activity occur?
Where did it happen?
For what reason does the filer think the activity is suspicious?

What's more, the method of operation (or, how is the activity being carried out?) is likewise required to be remembered for the report.

Significance of SARs

SARs are part of the United State's anti-money laundering statutes and regulations, which have become a lot stricter starting around 2001. The Patriot Act altogether expanded SAR requirements as part of a work to combat global and domestic terrorism. The goal of the SAR and the subsequent investigation is to distinguish customers who are engaged with money laundering, fraud, or fear based oppressor funding.

Disclosure to the customer, or inability to file a SAR, can bring about exceptionally serious punishments for the two people and institutions. SARs permit law enforcement to identify examples and trends in organized and personal financial crimes. This way they can anticipate criminal and fraudulent behavior and counteract it before it heightens. The requirements under the anti-money laundering statutes were fundamentally expanded once more, as of January 1, 2021, with the enactment of the Anti-Money Laundering Act of 2020.

In the United States, financial institutions must file a SAR assuming that they suspect that an employee or customer has taken part in insider trading activity. A SAR is likewise required in the event that a financial institution recognizes evidence of computer hacking or of a consumer operating an unlicensed money services business. SAR filings must be saved for a long time from the date of the filing.

In various examples, SARs have empowered law enforcement specialists to start or seek after major investigations in money laundering or psychological oppressor financing, and other crook cases.

Common Patterns of Suspicious Activity

A portion of the common examples of suspicious activity distinguished by the Financial Crimes Enforcement Network are as per the following:

A lack of evidence of genuine business activity (or any business operations whatsoever) embraced by quite a few people of the parties to the transactions(s)
Unusual financial nexuses and transactions happening among certain business types (for instance, a food importer dealing with a car parts exporter)
Transactions not equivalent with the stated business type or that are unusual compared with volumes of comparative businesses operating locally
Unusually large numbers or potentially volumes of wire transfers, monotonous wire transfer designs
Unusually complex series of transactions including numerous accounts, banks, and parties
Bulk cash and monetary instrument transactions
Unusual mixed deposits into a business account
Explosions of transactions inside short periods, particularly in dormant accounts
Transactions or volumes of activity conflicting with the expected purpose of the account or activity level as referenced by the account holder while opening the account
Transactions endeavoring to abstain from reporting and recordkeeping requirements.

Illustration of a SAR

For instance, Albert is an account holder at XYZ Financial Institution. Albert has been a client for almost five years and has a laid out account history and truly unsurprising transactions. Consistently, he deposits $5,000 into the account and purchases a index fund. At some point, he begins to receive week after week transfers of $9,000 into the account. Nearly as fast as the money raises a ruckus around town, it leaves once more. This is strange for Albert's account and normal activity. The financial institution might believe this to be suspicious activity and could file a Suspicious Activity Report.

Features

The SAR turned into the standard form to report suspicious activity in 1996.
A suspicious activity report (SAR) is an instrument given under the Bank Secrecy Act (BSA) of 1970 for monitoring suspicious activities that wouldn't usually be hailed under different reports, (for example, the currency transaction report).
Activity might be remembered for the SAR assuming the activity leads to a doubt that the account holder is endeavoring to conceal something or make an unlawful transaction.