Help! My bank reported suspicious activity. What happens now?

August 30, 2023

Money laundering and bank fraud are on the rise. In fact, globally, the amount of money laundered in a single year equals about 2-5% of the worldwide gross domestic product.

To that end, countries around the globe are initiating procedures to detect potential suspicious activity, including the United States, with what is called a suspicious activity report (SAR).

In this article, we’ll uncover what this report is, its purpose, and what happens after a suspicious activity report is filed.

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What Is a Suspicious Activity Report (SAR)?

You’ve likely never heard of a suspicious activity report, and that’s for good reason. This report, which can be filed by any company involved in financial activity when there is possible suspicious activity on an account, can’t be divulged to clients.

A suspicious activity report, or SAR, is meant to identify any financial activity that could potentially be involved in money laundering, fraud, or terrorist funding.

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What Types of Businesses Have to File a SAR?

Banks are the obvious candidates, but also real estate agents, brokerages, investment firms, or any other firm that handles money on behalf of clients are able to file suspicious activity reports.

Here’s a suspicious activity report example: let’s say a bank sees unusual activity on a couple of different types of bank accounts owned by a customer that, until recently, had no activity at all. Maybe now they’re transferring tens of thousands of dollars between accounts and to an external account. This might be enough to trigger an alert and create a SAR.

The SAR will include the name, address, and passport number (if available) of the person who owns the account. It will also detail the suspicious activity and when it occurred. If there have been any SARs filed for this client previously, that information will be noted, as well.

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Why Are SARs Important?

Fraud and money laundering are at an all-time high in the U.S. and globally, ranging from small-time debit card fraud all the way to terrorist funding.

To try to mitigate suspicious activity, there have been many anti-money laundering protocols and regulations set up in the U.S., including the Bank Secrecy Act, the Patriot Act, and the Anti-Money Laundering Act (AMLA) of 2020.

There are also many types of financial reporting and tracking systems in place. One is the early warning system provided by Early Warning Services, which tracks a bank client’s financial activity, such as opening a savings account or making large transactions. Banks also can freeze accounts with suspicious activity.

And finally, we have the SAR. Not only is the SAR designed to identify potential suspicious activity before it becomes a bigger problem, but it also can prevent a public scandal and any financial damage that can occur when a financial institution is recognized to have money launderers as clients.

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What Triggers a Suspicious Activity Report?

Let’s look at when a bank or other financial institution would file a suspicious activity report.

Insider trading. Whenever an investment company sees evidence of an individual with inside knowledge of a company’s financials or plans for the future, this can be considered eligible for an SAR.

Money laundering. If a bank account shows evidence of patterns that seem related to money laundering of an amount of $5,000 or more, and there is an identifiable suspect, a SAR must be filed.

Illegal activity. Also, funds gained through illegal activity are considered suspicious, as is any financial activity that doesn’t line up with the industry the business is in. For example, if a restaurant is receiving payments from a computer vendor, this might trigger an alert.

Confusion on who owns the account. If there are multiple layers of ownership to a bank account or online savings account, such as shells or trusts, that make it difficult to pinpoint an actual account owner, this may be seen as suspicious.

Multiple real estate transactions. When it comes to real estate, multiple and rapid transactions (buying and selling) may be suspicious.A SAR must be filed within 30 days of the suspicious activity, and can request an extension of up to 60 days to collect further evidence.

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What Can Happen If Your Bank Files a SAR?

Once the financial company has submitted a suspicious activity report with the Financial Crimes Enforcement Network (FinCEN, a division of the U.S. Treasury), the appropriate governing body will investigate the issue and cross-check other law enforcement databases to see if there are any connections with other illegal or suspicious activity.

At this point, if there is enough evidence of fraud, money laundering, or terrorist funding, the case will be handed over to the appropriate law enforcement agency.

At no point is the individual who owns the account under investigation notified of the proceeding, unless it gets to the point of legal action being taken. Obviously, this is to prevent the individual from being able to cover his tracks and make it more challenging to uncover illegal activity.

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The Takeaway

A suspicious activity report, or SAR, is filed when a company suspects suspicious activity on an account. Most likely, you don’t have to worry about a suspicious activity report being filed against you if you’re not doing anything illegal with your financial accounts.

Still, it can be useful to understand what situations could trigger one and avoid doing any of those with your bank accounts or other financial accounts.

This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.

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