The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) is seeking to clarify certain requirements related to suspicious activity reports (SARs), in accordance with Banks Secrecy Act/anti-money laundering (BSA/AML) standards, by answering four frequently asked questions (FAQs) in an Oct. 9 joint release with other federal agencies.
FinCEN said the goal of the new guidance is to ensure financial institutions are not needlessly expending resources on efforts that are unhelpful to law enforcement and national security agencies, in an agency press release. The FAQs address four common inquiries regarding critical information these entities find useful to detect, combat and deter criminal activity.
“SARs should deliver better outcomes by providing law enforcement the most useful information — not by overwhelming the system with noise,” Under Secretary for Terrorism and Financial Intelligence John Hurley said in the release. “Compliance requires real resources, and that’s why prioritization is crucial. At Treasury, we will continue to reform our AML and Countering the Financing of Terrorism framework to de-prioritize low-value activity and direct compliance resources towards the most significant threats to our country.”
Based on feedback collected from financial institutions, the agency developed the answers to the FAQs to clarify regulatory requirements relating to structuring SARs, continuing activity reviews and decisions on when an institution should not file a SAR.
The following is a list of the four FAQs with a portion of the corresponding answers:
Question 1: “Is a financial institution required to file a SAR for a transaction or a series of transactions with a value at or near the currency transaction reporting (CTR) threshold (i.e., over $10,000) absent information that the transaction or series of transactions is designed to evade BSA reporting requirements?”
Answer 1: “No. The mere presence of a transaction or series of transactions by or on behalf of the same person at or near the $10,000 CTR threshold is not information sufficient to require the filing of a SAR. Financial institutions are only required to file a SAR if the institution knows, suspects or has reason to suspect that the transaction or series of transactions are designed to evade CTR reporting requirements. Absent this knowledge, suspicion, or reason to suspect, financial institutions are not required to file a SAR.”
Question 2: “Is a financial institution required to conduct a review of a customer or account following the filing of a SAR to determine whether suspicious activity has continued?
Answer 2: “No. Recognizing the burden that continued SAR filings on the same customer or account place on institutions, FinCEN suggested in October 2000 that institutions file a SAR for repeated and ongoing suspicious activity at least every 90 days. Over time, this suggestion has become interpreted as a requirement or expectation that financial institutions conduct a separate review of a customer or account following the filing of a SAR to determine whether suspicious activity has continued.”
Question 3: “What is the timeline for a financial institution that elects to file SARs in accordance with FinCEN’s continuing suspicious activity guidance?”
Answer 3: “As noted in the prior FAQ, FinCEN previously suggested that financial institutions report continuing suspicious activity via a SAR filing at least every 90 days. Subsequent FinCEN guidance advised financial institutions to file SARs for continuing activity after a 90-day period with the filing deadline being 120 calendar days after the date of the previously related SAR filing. However, financial institutions are not required to do so and may instead file SARs as appropriate in line with applicable timelines.”
Question 4: “Is a financial institution required to document the decision not to file a SAR?
Answer 4: “No. There is no requirement or expectation under the BSA or its implementing regulations for a financial institution to document its decision not to file a SAR. FinCEN has previously encouraged, but not required, financial institutions to document the decision not to file a SAR.”
FinCEN issued the FAQs jointly with the Federal Reserve, the Federal Deposit Insurance Corporation, the National Credit Union Administration and the Office of the Comptroller of the Currency.