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Suspicious Activity Report (SAR)

03 December, 2023

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People usually prefer dealing with businesses with a legitimate presence in the industry and possessing the legal documents required to be considered legit. It is absolutely crucial for businesses to maintain a good reputation in the market. Stakeholders, investors, and customers rely on the reputation and reviews of a business. This also determines the success of a business. 

There needs to be a standard that can be globally used to determine whether a business is legit or not. This task is mainly assigned to local and global regulatory bodies. There are multiple regulatory bodies for a single industry, each functioning specifically to regulate those industries. This is where Suspicious Activity Reporting (SAR) comes in. This allows regulatory bodies and organizations to establish a mutual standard that dictates all of their activities while ensuring they comply with the regulatory standards.

Regulatory Bodies In Our Modern Business Ecosystems

Our current business dealings are mainly carried out on the internet. Before digitization, regulatory bodies primarily dealt with physical paperwork, which is certainly very resource-intensive and time-consuming but relatively easy compared to our current complex mechanisms. It is now challenging to determine whether an entity is legitimate or not. Illicit entities utilize modern technologies to dodge security mechanisms that directly impact the global financial ecosystem. Some of the modern regulatory bodies include: 

  • Financial Industry Regulatory Authorities (FINRA)
  • Securities and Exchange Commission (SEC)
  • Federal Reserve Board (FRB)
  • Office of the Comptroller of the Currency (OCC)
  • Financial Crimes Enforcement Network (FinCEN)

These regulatory bodies work to ensure that all the organizations functioning on their premises comply with the standards they set. These regulatory bodies control every aspect, from setting rules and regulations to taking legal action against perpetrators. It is to be noted that their main function is to ensure the implementation of the laws; it is a business’s own job to secure itself against offenders. 

Regulatory Bodies and Reporting Processes 

To ensure proper functioning, regulatory bodies require organizations to file reports in each quarter. While these regulatory bodies do possess the power to conduct sudden audits, they usually make the companies aware before conducting one so that they can prepare the required documents and reports. These reports can include financial statements, risk reports, compliance reports, and regulatory filings. Each audit has its own requirements and purpose. 

The reporting process requires the companies to prepare the needed documents and present them to the regulatory authority. It is to be noted that if a company fails to present a bank suspicious activity report or if a report has errors, that company is subjected to legal action. This can raise speculations about money laundering, terrorist financing, and corruption. It is essential for companies to create a fool-proof reporting process that saves them from facing inconveniences. 

What Is A Suspicious Activity Report (SAR)?

SAR suspicious activity report is a reporting process that requires financial institutions to present a detailed account of their activities and engagements to make sure they are not involved in any illegal matters. This reporting process varies from institution to institution and is performed under particular circumstances. This reporting process is regulated by the Financial Crimes Enforcement Network (FinCEN) regulatory authority. This reporting process is based on the regulations enforced by the Bank Secretary Act (BSA). 

A suspicious activity report (SAR) can be filed against both individuals and organizations. If a company suspects any of its employees to be involved in illegal activities, they can file a report against them. Apart from that, if a company encounters a suspicious client or customer, it can file a report against them as well. The most major application of this reporting process lies in preventing money laundering and other illegal financial activities. If a company suspects potential money laundering or illegal financial activity in another company’s processes, it can file a SAR against it. The regulatory authority FinCEN also conducts audits to make sure all the required standards are being met. 

The SAR report must be filed within the first 30 days once illegal activities are spotted. The regulatory authority also provides a 60-day extension for transparency. After proper legal action, if an entity is found guilty, it is subjected to fines accordingly. If an entity is found not to be guilty, it is still kept under observation for 5 years. 

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Significance of SAR: How To Submit A SAR Report?

The SAR reporting process has existed since 1970, and it has played a crucial role in preventing financial crimes and illegal activities. The main reasons for this are how simple it is and its accessibility. This reporting process alerts the regulatory bodies in advance about potential illegal activities, and proper action can be taken against them. It has made the fight against financial crimes really easy. It has helped safeguard public interests and created a more secure financial ecosystem by eliminating illegal activities. Users now have a sense of control over illegal financial activities as they have access to a system that allows them to report any suspicious activities that occur on their radar personally.

The SAR reporting process is available to everyone. The standard SAR form is on the BSA e-file system. Users can either fill out the form online or download it to submit it manually. This reporting process is valid for all suspicious activities in the financial ecosystem. Even if a user encounters a suspicious or altered transaction, a report can be filed and proper action taken against it. 

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