Suspicious Activity Reports (SARs) Refresher
Happy Thursday, compliance friends! Today’s blog is going to serve as a quick refresher on Suspicious Activity Reports (SARs). To begin, section 1020.320(a)(1) of FinCEN’s regulations states that:
“Every [credit union] shall file with the Treasury Department, to the extent and in the manner required by this section, a report of any suspicious transaction relevant to a possible violation of law or regulation. A [credit union] may also file with the Treasury Department by using the Suspicious Activity Report specified in paragraph (b)(1) of this section or otherwise, a report of any suspicious transaction that it believes is relevant to the possible violation of any law or regulation but whose reporting is not required by this section."
Section 748.1(d) of NCUA’s regulations further clarify the SAR filing requirements for credit unions:
“Suspicious Activity Report. A credit union must file a report if it knows, suspects, or has reason to suspect that any crime or any suspicious transaction related to money laundering activity or a violation of the Bank Secrecy Act has occurred. For the purposes of this paragraph (c) credit union means a federally insured credit union and official means any member of the board of directors or a volunteer committee.”
So, what actually needs to be reported? Section 748.1(d)(1) describes reportable activity. It provides, in part, that:
“A credit union must report any known or suspected crime or any suspicious transaction related to money laundering or other illegal activity, for example, terrorism financing, loan fraud, or embezzlement, or a violation of the Bank Secrecy Act by sending a completed suspicious activity report (SAR) to the Financial Crimes Enforcement Network (FinCEN) in the following circumstances:
(i) Insider abuse involving any amount;
(ii) Transactions aggregating $5,000 or more where a suspect can be identified;
(iii) Transactions aggregating $25,000 or more regardless of potential suspects; and
(iv) Transactions aggregating $5,000 or more that involve potential money laundering or violations of the Bank Secrecy Act.”
Furthermore, for suspicious transactions that do not fall within the thresholds listed above, a credit union is not required to file a SAR but may voluntarily choose to do so. Whether a particular transaction or transactions should be reported is a decision the credit union must make, based on the particular circumstances.
The FFIEC’s BSA/AML Manual also provides information regarding SAR filing and may provide credit unions with additional information regarding the determination of when to file. Notably, it details that a SAR should be filed for:
• “Transactions conducted or attempted by, at, or through the [credit union] (or an affiliate) and aggregating $5,000 or more, if the [credit union] or affiliate knows, suspects, or has reason to suspect that the transaction:
o May involve potential money laundering or other illegal activity (e.g., terrorism financing).
o Is designed to evade the BSA or its implementing regulations.
o Has no business or apparent lawful purpose or is not the type of transaction that the particular customer would normally be expected to engage in, and the bank knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction.”
One other quick tidbit I wanted to mention is that section 748.1(d)(4)(i) requires credit unions to “promptly notify” the board of directors of “any SAR filed.” It also notes that, instead of reporting to the board of directors, credit unions may notify “a committee designated by the board of directors to receive such notification.”
Lastly, credit unions can view trends in SAR filings by visiting FinCEN's website regarding SAR stats here.
As always, compliance questions can be sent to our Compliance Team at compliance@americascreditunions.org.
In other news, please see the two links below that may provide some helpful insight into the potential changes to the CFPB under the new Trump administration:
• What Lies Ahead for the CFPB as Trump 2.0 Takes Shape?
• Trump 2.0: Potential CFPB Changes in 2025 | McGlinchey Stafford PLLC
