New FinCEN FAQs Aim to Ease SAR Filing Burdens
The Treasury Department’s Financial Crimes Enforcement Network issued new FAQs last week that it said help clarify certain requirements related to the filing of suspicious activity reports with FinCEN. The FAQs touch on requirements relating to the circumstances under which financial institutions must file the reports, ongoing reviews of customer accounts, and more.
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The guidance will make sure financial institutions aren’t “needlessly expending resources on efforts that do not provide law enforcement and national security agencies with the critical information they need to detect, combat, and deter criminal activity,” FinCEN said. John Hurley, undersecretary for terrorism and financial intelligence, added that the agency is looking to “de-prioritize low-value activity” and instead direct compliance resources toward the most “significant threats” to the U.S.
“SARs should deliver better outcomes by providing law enforcement the most useful information -- not by overwhelming the system with noise,” Hurley said.
One FAQ clarifies that financial institutions aren’t required to file a SAR for transactions with a value at or near the current transaction reporting threshold of over $10,000 if there is no indication that the transactions are “designed to evade [Bank Secrecy Act] reporting requirements.” FinCEN said a bank or other institution is required to file those reports only if it “knows, suspects, or has reason to suspect that the transaction or series of transactions are designed to evade” reporting requirements.
The agency also said institutions aren’t required to conduct "continuing activity" reviews of a customer or account following the filing of a SAR to “determine whether suspicious activity has continued.” Institutions can instead “rely on risk-based internal policies, procedures, and controls to monitor and report suspicious activity as appropriate, provided those internal policies, procedures, and controls are reasonably designed to identify and report such activity.”
Other FAQs spell out the suggested timelines under which financial institutions can choose to file those “continuing activity” reports and clarify that institutions aren’t required to document their decision not to file an SAR. “FinCEN has previously encouraged, but not required, financial institutions to document the decision not to file a SAR.”
If an institution chooses to document its decision not to file a SAR, “the level of appropriate documentation may vary based on the specifics of the activity being reviewed and need not exceed that which is necessary for the institution’s internal policies, procedures, and controls, which should be risk-based and reasonably designed to identify and report suspicious activity,” the agency said. It added that a “short, concise statement” should be enough in most cases, “although a financial institution may consider more documentation to explain the factors that the institution considered in reaching a SAR filing determination in more complex investigation scenarios.”