To File (a Suspicious Activity Report) or Not to File, That is the Question
The decision to file (or not to file a Suspicious Activity Report) is an important and onerous one. Because filing a report is, in most cases, not a one-day event. In 90 days, the institution should revisit the account or event to determine if a continuing report should be filed.
What are the events that require a report to be filed?
- Insider abuse involving any amount
- Transactions aggregating $5,000 or more when a suspect can be identified.
- Transactions aggregating $25,000 or more regardless of possible suspects.
- Transactions of $5,000 or more that involve potential money laundering or violations of the BSA.
- Any activity that is not legal under Federal standards (in more and more states, this would be Marijuana related activity.)
In addition, Financial Institutions are “encouraged” to file reports in cases of possible terrorism, identity theft, and computer intrusions, even when the amount of the activity is below the required amounts.
The listing above is the easy part of the decision process. The fact is that your institution may file a report for any amount and any reason and still be protected by the Safe Harbor afforded by the regulation. Filing any SAR should be only entered into with deliberation and forethought.
The form itself has a myriad of reasons that can be checked when your institution decides to file a SAR. You do want to check all reasons that apply, as well as all types of instruments, avenues used in the activity under Part II lines 45 and 46.
So, the bottom line is, why would you want to file a report? The simple answer is that you have determined that suspicious activity has occurred, and you want to share that suspicion with not only FinCEN but with law enforcement authorities who are reviewing reports constantly.
In order to grab the authorities’ attention, you want the first paragraph of the Narrative portion of the report to state plainly the: why, who, what, and when of the circumstance of your suspicion.
No doubt, the amount of the activity is a major factor in whether law enforcement would elevate their scrutiny of any report.
One of the classic cases where an amount was small on a completed report is in the case of a fast-food restaurant that was only depositing minimum amounts of cash into their account on a weekly basis; however, other restaurants in the same locale were depositing funds with amounts over the CTR threshold on a consistent basis. So, the SAR was filed based upon a suspicion of not reporting all income. The report ultimately was used in helping law enforcement with their case.
When the decision is to not file a report.
When the decision is not to file a SAR, the institution must outline first the reason for the potential filing, then the mitigating factors and documentation of why ultimately a report should not be completed.
The decision to file or not to file a SAR when dealing with Suspicious Activity that, by regulation, does not require a report, is totally up to the person or persons that meet and make that decision. However, once the decision to file a report is made, then ongoing monitoring should be completed to determine if a continuing report(s) should be filed.