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SAR Reporting

Last Updated: 2025-02-17 Status: Complete

Suspicious Activity Reports (SARs) are the primary mechanism for reporting potential money laundering and financial crimes to FinCEN. Understanding when and how to file SARs is a critical compliance obligation.

Quick Reference

Report TypeThresholdDeadlineFiled With
SAR (known suspect)$5,00030 daysFinCEN
SAR (no suspect)$25,00030-60 daysFinCEN
SAR (insider)Any amount30 daysFinCEN
CTR> $10,000Same dayFinCEN

Suspicious Activity Reports (SARs)

What Triggers a SAR?

A SAR must be filed when the institution knows, suspects, or has reason to suspect:

SAR Thresholds

SituationThresholdNotes
Known suspect identified$5,000Subject can be identified
No suspect identified$25,000Unknown perpetrator
Insider abuseAny amountEmployee, director, agent
Money laundering$5,000Know, suspect, or reason to suspect
BSA violation$5,000Structuring, evasion
MSB point of sale$2,000Money services business transactions

SAR Filing Deadlines

SituationInitial DeadlineMaximum
Suspect identified30 calendar days from detection30 days
No suspect, investigation ongoing30 days, may extend60 days
Ongoing activityContinuing SARs every 90 daysN/A

SAR Filing Process

SAR Narrative Requirements

The narrative is the most critical part of the SAR:

ElementDescription
WhoSubject name, address, identification
WhatType of suspicious activity
WhenDates and times of activity
WhereLocations, accounts involved
WhyWhy activity is suspicious
HowMethod used, transaction details

Narrative Best Practices:

DoDon't
Be specific and factualUse vague language
Include dollar amountsOmit key details
Describe the patternMake conclusions of guilt
Reference supporting docsInclude privileged info
Use clear chronologyRamble without structure

SAR Confidentiality

Tipping Off Prohibited

It is illegal to notify the subject that a SAR has been or will be filed. Violation carries criminal penalties.

  • Do not tell the customer
  • Do not include SAR reference in customer communications
  • Limit internal knowledge to need-to-know

Currency Transaction Reports (CTRs)

CTR Requirements

RequirementDetails
Threshold> $10,000 in currency (cash)
AggregationMultiple transactions by same person in one business day
Filing deadline15 days after transaction
FormFinCEN Form 112

What Counts as Currency

CurrencyNot Currency
US paper moneyChecks
US coinsWire transfers
Foreign paper moneyCard transactions
Foreign coinsMoney orders

CTR Exemptions

Certain customers may be exempt from CTR filing:

Exempt CategoryExamples
BanksDomestic banks
GovernmentFederal, state, local agencies
Listed companiesNYSE, NASDAQ listed
SubsidiariesOf listed companies
Established customersAfter proper documentation
Exemption Requirements

Exemptions require:

  • Annual review
  • Proper documentation
  • No suspicious activity

Filing Procedures

Electronic Filing

All SARs and CTRs must be filed electronically through FinCEN's BSA E-Filing System:

StepAction
1Register for BSA E-Filing account
2Complete appropriate form
3Submit electronically
4Receive acknowledgment
5Retain confirmation

Record Retention

RecordRetention Period
SAR filing5 years
CTR filing5 years
Supporting documentation5 years
Investigation notes5 years
Decision not to file5 years

Common SAR Scenarios

Scenario 1: Structuring

Pattern: Customer makes multiple cash deposits of $9,500 over several days

Analysis:

  • Appears designed to avoid CTR threshold
  • Meets $5,000 SAR threshold
  • File SAR citing structuring

Scenario 2: Unusual Merchant Activity

Pattern: New merchant has sudden spike in volume, all transactions just under $1,000, high refund rate

Analysis:

  • Pattern suggests potential laundering
  • Evaluate total dollar amount
  • If > $5,000 suspicious, file SAR

Pattern: Multiple merchants owned by same individual transacting with each other

Analysis:

  • May be layering activity
  • Document the relationships
  • If suspicious and > $5,000, file SAR

SAR Quality Metrics

Common Deficiencies

DeficiencyImpact
Incomplete narrativeCan't understand activity
Missing subject infoCan't identify suspect
Late filingRegulatory violation
No supporting docsCan't verify
Vague descriptionsNot actionable

Quality Checklist

ItemVerified
All fields completed
Narrative addresses 5 W's
Dollar amounts accurate
Dates correct
Subject info complete
Supporting docs referenced
Filed within deadline
Retained confirmation

PayFac SAR Considerations

Who Files?

EntityResponsibility
PayFacFile SAR if you detect suspicious activity
Sponsor bankMay also file based on their monitoring
BothPossible for same activity

PayFac-Specific Red Flags

Red FlagSAR Consideration
Transaction launderingSub-merchant processing for others
Bust-outRapid processing then abandonment
Unusual refundsRefunds without corresponding sales
Geographic anomaliesTransactions inconsistent with business
Velocity spikesSudden unexplained volume

References

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