FinCEN rules require the filing of Suspicious Activity Reports (SARs) regarding suspicious activities that are conducted or attempted by, at, or through an institution and that involve in aggregate at least $5,000 in funds or other assets, including currency and all other forms of payment. In addition, the rule encourages institutions to file SARs on a voluntary basis regarding transactions that appear relevant to violations of law or regulation, even in cases where the $5,000 threshold is not met. According to FinCEN, “suspicious activity” is any conducted or attempted transaction or pattern of transactions that you know, suspect, or have reason to suspect meets any of the following conditions:
- Involves money from criminal activity;
- Is designed to evade BSA requirements, whether through structuring or other means;
- Appears to serve no business or other legal purpose and for which available facts provide no reasonable explanation; or
- Involves use of the money services business to facilitate criminal activity.
Examples of activities that could be considered suspicious and red flags include:
- Use of a false ID, or multiple IDs on different occasions;
- Two or more customers use the same or similar IDs (photo or name may be different);
- A customer breaks a large transaction into two or more smaller transactions;
- Customer changes a transaction after learning that he or she must show ID;
- Customer conducts transactions so that they fall just below amounts that require reporting or recordkeeping;
- Two or more customers seem to be working together to break one transaction into two or more transactions; and
- Customer uses two or more locations or cashiers on the same day to break one transaction into smaller transactions.
If customer does something obviously criminal – such as offering a bribe or even admitting to a crime – the law requires an SAR filing if it involves or aggregates funds or other assets of $2,000 or more.
As summarized by FinCEN, the law protects you from SAR report civil liability; you are not being asked to accuse customers of criminal activity. You are only required to file a SAR if you believe the activity is suspicious and involves $2,000 or more. It is illegal to tell any person involved in the transaction that a SAR has been filed.
For guidance see: http://www.fincen.gov/financial_institutions/msb/materials/en/report_reference.html. The rule permits institutions to delegate contractually the SAR reporting obligations to separate entities. However, as is the case with other delegated AML responsibilities, the institution remains ultimately responsible for assuring compliance with the rule, and therefore must actively monitor the performance of its delegates.