A Suspicious Activity Report (SAR) is a report that financial institutions — including broker-dealers, banks, and insurance companies — must file with FinCEN (Financial Crimes Enforcement Network) when they detect a transaction or pattern of transactions that may involve illegal activity, including money laundering.
SAR filing requirements: - Threshold: Transactions involving $5,000 or more in funds or assets. - Who files: All registered broker-dealers and other financial institutions. - Deadline: Must be filed within 30 calendar days of identifying the suspicious activity (60 days if no suspect is identified at the time of detection). - Form: FinCEN Form 114 (FBAR) for foreign accounts; Form BSA (SAR) for suspicious activity reports.
What constitutes suspicious activity: - Structuring (deliberately breaking up transactions to avoid CTR). - Unusual patterns inconsistent with the customer's known profile. - Unusual cash activity. - Transactions lacking business purpose. - Possible tax evasion, fraud, insider trading laundering.
Critical rule — no tipping off: - Financial institutions and their employees are prohibited from notifying the subject of a SAR that a report has been filed. - Violating this confidentiality requirement is a federal offense. - The existence and contents of SARs are confidential.
SAR vs. CTR: | | SAR | CTR | |---|---|---| | Threshold | ≥$5,000 | >$10,000 | | Trigger | Suspicion of illegal activity | Large cash transaction (automatic) | | Confidential | Yes (no tipping off) | No (the customer can know a CTR was filed) |
> Exam tip: SAR = $5,000 suspicion threshold; CTR = $10,000 cash threshold. SARs are confidential — no tipping off. CTRs do not carry the same confidentiality rule. Filing deadline: 30 days (60 if no suspect). Key topic on SIE, Series 7.