The Financial Crimes Enforcement Network (“FinCEN”) requires certain financial institutions to file Suspicious Activities Reports (“SARs”) in order to enable law enforcement to initiate or supplement major money laundering or terrorist financing investigations and other criminal cases. Financial institutions use the SAR to document and report suspicious or potentially suspicious activity among their clients. The report has a narrative format, requiring financial institutions to document all suspicious activity concisely and in chronological order.
In general, a SAR narrative should identify the five essential elements of information – who? what? when? where? and why?
Who is conducting the suspicious activity?
To start the SAR narrative, financial institutions should used to further describe the suspect or suspects, including occupation, position or title within the business, and the nature of the suspect’s business or businesses. In the event financial institutions do not have complete or detailed information on a suspect, they should fill out the report as accurate and complete as possible with the information available to them.
What Instruments Or Mechanisms Are Being Used To Facilitate The Suspect Transaction(s)?
The “what” part of the narrative is where financial institutions track the flow of funds and the methods suspects used to transfer the funds. When documenting the movement of funds, identify all account numbers at the financial institution affected by the suspicious activity and when possible, provide any account numbers held at other institutions and the names/locations of the other financial institutions, including MSBs and foreign institutions involved in the reported activity.
When Did The Suspicious Activity Take Place?
Next, financial institutions need to indicate the date when the suspicious activity was first noticed and the duration of the activity. in order to better track the flow of funds, individual dates and amounts of transactions should be included in the narrative rather than just the aggregated amount. FinCEN also notes that financial institutions should not insert objects, tables, or pre-formatted spreadsheets when filing a SAR. These items may not convert properly when keyed in or merged into the SAR System.
Where Did The Suspicious Activity Take Place?
Financial institutions then follow up with where the suspicious activity took place, documenting all offices involved in the suspicious activity and provide their physical addresses. If the suspicious activity involves a foreign jurisdiction, provide the name of the foreign jurisdiction, financial institution, address and any account numbers involved in, or affiliated with the suspected activity or transaction(s).
Why Does The Filer Think The Activity Is Suspicious?
This section should start with financial institutions briefly describing their industry or business. After that, financial institutions should describe, as fully as possible, why the activity or transaction is unusual for the customer; consider the types of products and services offered by your industry, and the nature and normally expected activities of similar customers.
For more information on the Suspicious Activity Report, check our Filing A Suspicious Activity Report (“SAR”)
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