FinCEN SAR Activity Review, Trends, Tips & Issues, Issue 10

2. Questioning Individuals about Potentially
Suspicious Activity
When determining whether suspicious activity has occurred, institutions
are responsible for “examining all the facts, including the background
and possible purpose of the transaction.” 21 As part of an institution’s due
diligence to determine whether suspicious activity has occurred, reasonable
investigation into the nature and purpose of the activity may be necessary.
Institutions have expressed concern over the perceived tension between
questioning a customer about potentially suspicious activity and the
institution’s responsibility to maintain the confidentiality of SARs. 22
FinCEN recognizes that under certain circumstances, institutions may
discreetly question a customer about the nature and purpose of a transaction
without revealing their intention to file a SAR. For example, to determine
whether a customer’s transactions are “designed to evade any [reporting]
requirements,” 23 an institution may wish to ask a customer why he or
she is making frequent cash deposits slightly below a certain reporting
or recordkeeping threshold. If the customer provides an answer that
reasonably satisfies the institution that the transaction is not designed to
evade reporting requirements (e.g. her business has a verifiable insurance
policy that covers up to $10,000 in currency in the event of a burglary), no
SAR would be required. Financial institutions are encouraged to document
SAR decisions, including final decisions not to file a SAR. (See Item 5 for
additional guidance on documentation of SAR decisions).
Institutions are reminded that any questioning should not risk “tipping off”
the customer or otherwise disclose that a SAR is being filed. Ultimately,
institutions will need to exercise discretion and judgment when determining
how and when to inquire of customers about unusual activity.
3. Continued Suspicious Activity Report Filings When No
Law Enforcement Action Has Been Taken
A number of institutions, particularly after filing multiple SARs on the same
individual, have contacted FinCEN to verify whether law enforcement had
received the SARs or if law enforcement intended to act upon the information
supplied in the reports. Institutions have questioned whether or not filing of
the supplemental SARs is necessary if no law enforcement action has been
taken. Law enforcement uses information in SARs to conduct investigations,
21 See 31 C.F.R § 103.18(a)(2)(iii) and the other SAR rules.
22 Financial institutions may not disclose to the person involved in a transaction that the transaction has
been, or will be, reported. See 31 C.F.R § 103.18(e).
23 See 31 C.F.R § 103.18(a)(2)(ii) and other SAR rules.
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