Suspicious activity report

Suspicious activity report

A Suspicious Activity Report (or SAR) is a report regarding suspicious or potentially suspicious activity, filed with the Financial Crimes Enforcement Network (FinCEN), an agency of the United States Department of the Treasury.

Introduction

The purpose of the Suspicious Activity Report is to report known or suspected violationsof 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.Fact|date=June 2008 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.Fact|date=June 2008

Who reports suspicious activity

Many different financial industries are now required to file SARs. Each SAR form wasspecifically designed to accommodate respective institution types such as depository institutions, money services businesses (MSBs) or the securities and futures industry.

For example, MSBs such as check cashing establishments and money remitters use the SAR-MSB form, while casinos use the SARC form.

When is a SAR filed?

FinCEN requires a SAR report to be filed by a financial institution when the financial institution suspects: insider abuse by an employee; violations of law aggregating over $5,000 or more where a subject can be identified; violations of law aggregating over $25,000 or more 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.

Structure of SAR reports

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.

SAR confidentiality

Unauthorized disclosure of a SAR filing is a federal criminal offense. [ [http://www.ots.treas.gov/docs/4/480024.pdf Unauthorized Disclosure of Suspicious Activity Reports, US Treasury] ] 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 forum on either a cartridge or 3.5" floppy disk.

Penalties for non-compliance

Financial institutions and their employees face civil and criminal penalties for failing to properly file Suspicious Activity Reports, including large fines, regulatory restrictions, loss of banking charter, and/or imprisonment.

Parts of a SAR

A SAR contains five different sections with each section containing information about the filing institution or the activity in question.

Part IContains the filing institutions name, address, tax ID number, location of the suspicious activity and any account numbers involved with the suspicious activity.

Part IIContains any name, address, social security or tax ID's, birthdate, drivers license numbers, passport numbers, occupation and phone numbers of all parties involved with the suspicious activity.

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

Part IVUsually contains the contact information for the financial instituitons Compliance Officer or equivalent.

Part VA written description of the nature of the suspicious activity.

See also

* Structuring

References

External links

* [http://www.fincen.gov FinCEN main site]
* [http://www.msb.gov FinCEN's website for MSBs]


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