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FinCEN, the Federal Reserve Board, the FDIC, the National Credit Union Administration and the OCC (collectively, the "agencies") issued new guidance on suspicious activity report ("SAR") filings for covered financial institutions.
The agencies clarified that a financial institution:
- can maintain an account for which it has received a written "keep open" request from law enforcement, but it is not obliged to do so;
- is not required to file a SAR after the receipt of a grand jury subpoena, but should determine whether a SAR filing is necessary after reviewing relevant account activity;
- is not required to terminate a customer relationship after a SAR filing (the agencies stated that, while there is no specific number of SAR filings that must "trigger any particular escalation step," the financial institution should consider, among other things, the customer's risk profile and geographic location);
- is not required to file a SAR based on "negative news" about a customer (e.g., reviews from the media or news articles);
- in the case of multiple negative news alerts, is not required to independently investigate each alert;
- need not repeat information in multiple data fields in the same SAR report; and
- should limit the SAR narrative to remain within character limits, but if the filer must exceed the character limit, it should attach additional information instead of filing an additional report.
Commentary Christian Larson
The Anti-Money Laundering Act of 2020 requires FinCEN to review the current SAR-filing requirements under the Bank Secrecy Act. FinCEN also must propose any changes that will streamline the SAR reporting process for financial institutions while ensuring that SARs are "useful" to law enforcement agencies. These FAQs make clear that financial institutions need not automatically file a SAR each time a red flag of potentially suspicious activity arises. Doing so would flood FinCEN with SARs that are not "useful." Rather, financial institutions are expected to conduct an investigation in response to red flags of potentially suspicious activity and make a considered determination of whether a SAR filing is required.
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