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What Is a Sar OR

What Is a Sar OR

What Is a Sar

The financial institution has the responsibility to file a report within 30 days regarding any account activity they deem to be suspicious or out of the ordinary. An extension of no more than 60 days may be obtained, if necessary to collect more evidence. The institution does not need proof that a crime has occurred. The client is not notified that a SAR has been filed regarding their account.

Star

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Disclosure to the customer, or failure to file a SAR, can result in very severe penalties for both individuals and institutions. SARs allow law enforcement to detect patterns and trends in organized and personal financial crimes. This way they can anticipate criminal and fraudulent behavior and counteract it before it escalates. The requirements under the anti-money laundering statutes were significantly expanded again, as of January 1, 2021, with the enactment of the Anti-Money Laundering Act of 2020. (Source:

Suspicious activity reports are a tool provided by the Bank Secrecy Act (BSA) of 1970. Originally called a "criminal referral form" the SAR became the standard form to report suspicious activity in 1996. Mainly used to help financial institutions detect and report known or suspected violations, the USA Patriot Act expanded SAR requirements to help combat domestic and global terrorism. Whether financial or otherwise, SARs enable law enforcement agencies to uncover and prosecute significant money laundering, criminal financial schemes, and other illegal endeavors. SARs give governments an opportunity to spot and analyze emerging trends and patterns across a broad spectrum of personal and organized crimes. With this knowledge, they can anticipate and counteract fraudulent and criminal behavior before it gains a foothold. (Source: legal.thomsonreuters.com)

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The criteria for providing a SAR differs from country to country and even from institution to institution, depending on the nature of the suspicious activity and the particulars of the bank or fund. In the United States, FinCEN requires a suspicious activity report in a few instances. First, if financial institutions believe an employee engaged in insider activity, they must file a report. However, it is not limited only to employees. Financial institutions monitor customer transactions, too. If potential money laundering or violations of the BSA are detected, a report is required. Computer hacking and customers operating an unlicensed money services business also trigger an action. Once potential criminal activity is detected, the SAR must be filed within 30 days. If more evidence is needed – such as identifying a subject involved – an extension not to exceed 60 days is available. Finally, SAR filings must be kept for five years from the date of the filing. Failure to comply with any of these regulations can result in civil and criminal penalties, including substantial fines, regulatory restrictions, loss of banking charter, and even imprisonment.

Many different types of financial industries require SAR reports, including banks and credit unions, stock and mutual fund brokers, and various money service businesses (check cashing companies, money order providers, etc.) However, casinos and card clubs, precious metals or gems dealers, insurance companies, and those involved in the mortgage business, all fall under the stipulations of the BSA. If there is an opportunity for money laundering, tax evasion, or criminal financing within the day-to-day business of the institution, the organization and its employees are required to be aware of the rules and regulations around suspicious activity reports. (Source: legal.thomsonreuters.com)

 

 

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