What is a Suspicious Activity Report?

System hacked warning alert on notebook (Laptop) - suspicious activity report

Suspicious Activity Reports (SARs) are part of the United States government’s ongoing efforts to target money laundering, fraud, and other financial crimes. Under the Bank Secrecy Act of 1970, financial institutions are required to report suspicious activity to the Financial Crimes Enforcement Network (FinCEN), which is part of the U.S. Financial Intelligence Unit. The SAR triggers a government assessment and investigation of the reported activity.

The requirements for filing an SAR were expanded under the Patriot Act of 2001 as part of the government’s efforts to combat terrorism after the terrorist attacks of 9/11. The requirements were expanded again under the Anti-Money Laundering Act of 2020.

A Suspicious Activity Report is intended to identify account holders who are involved in money laundering or fraud or who are funding terrorism. The SAR allows the federal government to identify and investigate financial crime patterns. Individuals, businesses, and others should understand what triggers an SAR and how to protect themselves during the investigation that will follow.

Understanding Suspicious Activity Reports

Under the Bank Secrecy Act, financial institutions are required to:

  • Keep records of cash purchases of negotiable instruments;
  • File reports of cash transactions that exceed a daily aggregate amount of $10,000;
  • Report suspicious activity that might signal criminal activity.

Financial institutions must file a Suspicious Activity Report if they detect suspicious activity or transactions that could be related to money laundering or other allegedly criminal activity or that they suspect could be used to fund terrorist activities.

Notably, the failure to file an SAR where appropriate is itself a federal crime.

When a financial institution files a Suspicious Activity Report, they must identify specific factors regarding the suspicious activity being reported, including:

  • Who is suspected of suspicious activity
  • When and where the suspicious activity occurred
  • The tools or devices being used
  • The method of operation
  • Why the activity looks suspicious

What Triggers a Suspicious Activity Report?

The criteria for triggering an SAR vary from institution to institution but often include large cash deposits, transfers inconsistent with customer activity, or transactions involving known criminals or terrorist groups. Common signs that trigger a Suspicious Activity Report include:

  • Significant transactions by people with little evidence of legitimate business activity;
  • Transactions between types of businesses that typically have no connection with one another;
  • Unusual or large transactions with no apparent financial purpose;
  • Wire transfers in repetitive patterns or in large numbers or amounts;
  • Particularly complex transactions among multiple accounts and parties;
  • Bulk cash transactions;
  • A dormant account suddenly becoming very active for a short time;
  • Transactions that seem to be structured to avoid reporting requirements;
  • Other potentially criminal activity, such as tax evasion or involvement by someone known to be involved in criminal behaviors.

Many financial institutions have implemented automated systems that flag certain transactions for further review before they are approved.

What Happens When a Suspicious Activity Report Is Filed?

When a financial institution files an SAR, it means they have identified suspicious behavior and have alerted the authorities. In most cases, you will not know that a financial institution has filed an SAR. FinCEN regulations prohibit financial institutions from informing customers or anyone else that an SAR has been filed against them.

Remember that the filing of an SAR does not mean that you will be facing criminal charges. In fact, many SARs are filed out of an abundance of caution without any real suspicion of wrongdoing on the part of the individual in question. However, if there is evidence linking you to a potential crime, it may result in a formal law enforcement investigation. In some cases, the filing of an SAR can result in your assets being frozen or seized by law enforcement agents.

What To Do If You Are Under Investigation

If you suspect you are under investigation for alleged criminal activity, you should hire a criminal defense attorney immediately. If you become involved in a federal criminal investigation, your lawyer can protect your rights and help you avoid mistakes that could hurt your chances of obtaining a favorable outcome. A criminal defense lawyer will ensure you are not interviewed by law enforcement agents without your attorney being present, review any documents you intend to turn over to the government as part of their criminal investigation, and negotiate favorable terms in exchange for your cooperation during their investigation.

If you are under investigation or were charged with a federal crime, contact the Law Offices of Hope Lefeber today. Ms. Lefeber has over three decades of experience defending people accused of crimes in federal court and has earned a reputation as an aggressive criminal defense lawyer who relentlessly represents her clients.

To schedule a free, confidential consultation to discuss your situation, call Ms. Lefeber at 610-668-7929 or complete the online form.

Categories: Fraud, Government Fraud