Suspicious activity reporting forms the cornerstone of the BSA reporting system. It is critical to the United States’ ability to utilize financial information to combat terrorism, terrorist financing, money laundering, and other financial crimes. Within this system, FinCEN and the federal banking agencies recognize that, as a practical matter, it is not possible for a bank to detect and report all potentially illicit transactions that flow through the bank. Examiners should focus on evaluating a bank’s policies, procedures, and processes to identify and research suspicious activity. However, as part of the examination process, examiners should review individual Suspicious Activity Report (SAR) filing decisions to determine the effectiveness of the suspicious activity monitoring and reporting process. Above all, examiners and banks should recognize that the quality of SAR data is paramount to the effective implementation of the suspicious activity reporting system.
Banks, bank holding companies, and their subsidiaries are required by federal regulations53 to file a SAR with respect to:
A transaction includes a deposit; a withdrawal; a transfer between accounts; an exchange of currency; an extension of credit; a purchase or sale of any stock, bond, certificate of deposit, or other monetary instrument or investment security; or any other payment, transfer, or delivery by, through, or to a bank.
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