Suspicious Activity Report

What is Suspicious Activity Report?

A SAR is a mandatory disclosure that regulated financial institutions file with government authorities when they detect transactions indicating illegal activity. The report documents the suspicious behavior, parties involved, and reasoning without notifying the customer.

How does Suspicious Activity Report work?

1. Compliance systems flag a transaction based on risk triggers or unusual patterns.
2. A compliance team investigates and confirms the activity is suspicious.
3. A SAR is filed within 30 days in the US without alerting the customer.
4. Authorities aggregate SARs across institutions to identify coordinated criminal activity.

Why does Suspicious Activity Report matter?

SARs are the primary mechanism for identifying money laundering and terrorism financing patterns that span multiple platforms. Filing them correctly provides legal safe harbor protection for the reporting entity.

Key features of Suspicious Activity Report

• Mandatory for regulated financial institutions
• Customer is never informed a report was filed
• Must be filed within 30 days of detecting suspicious activity
• Provides safe harbor protection for the filing institution

Examples of Suspicious Activity Report

A crypto exchange files a SAR when a user repeatedly deposits just under the $10,000 reporting threshold a structuring pattern. A custody provider files when it detects transfers linked to a sanctioned ransomware address.