The filing of Suspicious Activity Reports (SARs) is required by the Bank Secrecy Act. To ensure the proper and timely filing of reports, SAR regulations have been published by Financial Crimes Enforcement Network (FinCEN), the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board (FRB), and the Federal Deposit Insurance Corporation (FDIC). Although these regulations are similar, the ones published by the regulators (OCC, FRB and FDIC) are slightly broader in scope.
Under the regulations there are both required SARs and discretionary SARs. Required SARs include a) insider abuse involving any amount, b) transactions aggregating $5,000 or more where a suspect can be identified, c) transactions aggregating $5,000 or more that involve potential money laundering of violations of the Bank Secrecy Act, and d) transactions aggregating $25,000 or more regardless of potential suspects. Discretionary SARs are those which a financial institution may voluntarily choose to file when circumstances indicate suspicious activity, but the regulations do not require the filing of a SAR.
Regardless of who an institution’s federal regulator is, every institution is subject to both their regulator’s SAR regulations, as well as FinCEN’s SAR regulations. As previously mentioned, all four versions of the SAR regulations are similar and contain the same filing exemptions for robberies and burglaries, as long as the crimes are reported to law enforcement. There are also exemptions for lost, missing, counterfeit or stolen securities, provided that the financial institution files a report with the Securities and Exchange Commission. Where the regulations differ, with respect to SAR exemptions, is that the FinCEN regulations give the Treasury Department the authority to grant exemptions to the SAR regulations, and the OCC, FRB, and FDIC regulations do not grant this authority to the federal regulators. Nonetheless, since financial institutions are subject to both FinCEN and their regulator’s versions of the SAR regulations, the exemption from FinCEN would only apply to FinCEN SAR filing requirements and not the regulator’s SAR filing requirements.
However, due to the publication of Notices of Proposed Rulemaking (NPRM) by the OCC, FRB, and FDIC, the regulators have proposed to add the power of case-by-case exemption from SAR filings to each regulator’s SAR regulations. Although the regulators have proposed to procedurally handle SAR filing exemptions differently, the basic process will be to request an exemption from SAR filing from the institution’s regulator after which the regulator will confer with FinCEN to see if each agency is interested in dually granting an exemption from SAR filings in that specific instance.
Included in the NPRMs are communication and documentation requirements that require the regulators to respond timely to the institution making the request and after conferring with FinCEN to provide a response granting or denying the request. Exemptions may be granted for an indefinite or fixed period and may be extended or revoked by the regulators. In the case of a revocation, the institution will have an opportunity to challenge the revocation and the ultimate decision by the regulator must be communicated in writing to the requesting financial institution.