Suspicious Activity Reports: Understanding the Basics
As explained by the Federal Deposit Insurance Corporation (FDIC), various types of transactions may trigger the need for a Suspicious Activity Report (SAR). These include:
Types of Suspicious Activities
- Money Laundering: Involves taking money generated by an illicit activity and presenting it as if it were earned through a legitimate business.
- Cash Transaction Structuring: Involves splitting or altering financial transactions to avoid automatic reporting to tax authorities.
- Check Fraud: Includes writing fraudulent checks, altering checks, creating bad checks (checks you know will bounce), and more.
- Check Kiting: Involves writing a check from an account with insufficient funds and depositing that check into another bank account.
- Wire Transfer Fraud: Refers to any malicious activity occurring during the course of a wire transfer.
- Mortgage and Consumer Loan Fraud: Involves consumers deliberately misrepresenting their financial position to secure a loan.
- Misuse of Position (Self-Dealing): When a fiduciary takes action or makes a suggestion that is in their own best interest, rather than the client’s.
- Identity Theft or Fraud: Refers to any misrepresentation of a person’s identity.
- Terrorist Financing: Involves financial transactions connected to illegal activity, especially those linked to terrorism.
Levels of Suspicion
There are three levels of suspicion:
Level 1: Simple Suspicion
A hunch or belief that suspicious activity might be occurring without any evidence.
Level 2: Reasonable Grounds to Suspect
A legitimate reason to believe illicit activity is occurring, supported by some evidence.
Level 3: Grounds to Believe Illicit Activity Has Occurred
When there is a strong indication of financial crimes and the accused party has no reasonable justification for their behavior.
Filing a Suspicious Activity Report (SAR)
Once the threshold is reached, a SAR must be submitted to FinCEN within 30 calendar days of the suspicious activity occurring. To avoid fines and penalties, it’s essential to follow guidelines and understand how to file a Suspicious Activity Report (SAR). Staying vigilant and reporting suspicious activities is crucial in combating financial crimes.
By utilizing tools and methods for searching and learning within the community, individuals and organizations can better identify and address suspicious behavior. Collaboration and knowledge sharing within the community enhance our collective ability to safeguard against financial crimes.