On October 8, the Office of the Comptroller of the Currency (OCC), in collaboration with the Financial Crimes Enforcement Network (FinCEN), the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the National Credit Union Administration, released a set of frequently asked questions (FAQs) concerning Suspicious Activity Reports (SARs). These FAQs aim to clarify regulatory requirements related to SARs, assisting financial institutions in fulfilling their compliance obligations while optimizing resources for activities that provide the greatest value to law enforcement and other government users of Bank Secrecy Act (BSA) reporting.
Key Areas Addressed in the FAQs
- SAR Filings for Potential Structuring-related Activity
Financial institutions often grapple with the decision of whether to file a SAR for transactions near the currency transaction reporting (CTR) threshold of $10,000. The FAQs clarify that a SAR is not required solely based on the transaction amount. Instead, a SAR must be filed if the institution knows, suspects, or has reason to suspect that the transaction is designed to evade CTR reporting requirements. Structuring, or the deliberate attempt to evade CTR reporting, is unlawful under the BSA and may indicate underlying illegal activity.
- Continuing Activity Reviews
The FAQs address the misconception that financial institutions must conduct separate reviews of customers or accounts following a SAR filing to determine if suspicious activity persists. Institutions are not required to perform such reviews. Instead, they may rely on risk-based internal policies, procedures, and controls to monitor and report suspicious activity as appropriate.
The financial institution remains required to file regarding continuing SAR activity. However, the FAQ clarifies that there is no affirmative duty to review previously filed SARs and the related accounts for suspicious activity.
- Timeline for Continuing Activity Reviews
While FinCEN previously suggested reporting continuing suspicious activity every 90 days, the FAQs clarify that institutions are not bound by this timeline. A SAR is required to be filed no later than 30 calendar days after the date of the institution’s initial detection of facts that may constitute a basis for filing a SAR.
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.
- Documentation of Decisions Not to File a SAR
The FAQs confirm that there is no requirement under the BSA for financial institutions to document decisions not to file a SAR. While documentation is encouraged, it should be concise and tailored to the institution’s internal policies, procedures, and controls. In complex scenarios, more detailed documentation may be warranted to explain the factors considered in the SAR filing determination. However, best practices suggest that financial institutions continue to document the reasons why a SAR was not filed.