To help detect illegal financial transactions like money laundering and fraud, Congress enacted the Bank Secrecy Act (BSA) in 1970. The law was amended to include provisions of the Patriot Act intended to discover and report financial conduct consistent with funding terrorism or terrorist organizations.
Beginning in 2013, financial institutions must use the BSA E-Filing System to file “Suspicious Activity Reports” (SARs) about banking transactions that meet certain criteria indicative of illegal activity.
These Suspicious Activity Reports notify a special office within the Department of Treasury called the Financial Crimes Enforcement Network (FinCEN). As part of the United States Financial Intelligence Unit, the federal agency is tasked with monitoring and investigating the individuals and businesses whose activities are reported by a bank in a SAR.
Stechschulte Nell, Attorneys at Law in Tampa believes that every bank customer should understand what a SAR is and how it could affect them if they happen to be the subject of one of these Suspicious Activity Reports. Several types of financial transactions will trigger the filing of a SAR that you should know about to avoid engaging in one unknowingly.
What Transactions Cause a Bank to File a Suspicious Activity Report (SAR)?
The law requires banks to report any financial transactions that are out of the ordinary or contrary to standard business practices. Not only are these financial institutions encouraged to report suspicious transactions, but failing to do so can subject the bank to civil and criminal penalties, large fines, loss of banking charter, and even imprisonment.
Banks and other financial institutions have 30 days in which to file a Suspicious Activity Report once an unusual or suspicious account activity is detected.
Part of the bank’s responsibility is to ensure it can identify its account holders and the parties taking part in each transaction. If for some reason the bank is unable to immediately identify the names of the parties involved in the suspicious transaction, it may delay filing the SAR for up to 30 additional days.
However, in no case is a bank allowed to delay filing a SAR beyond 60 days.
The account activity and transactions that are required to be reported in a SAR include but are not limited to the following:
- Money laundering
- Cash transaction structuring,
- Check fraud and kiting,
- Computer intrusion,
- Wire transfer fraud,
- Mortgage and consumer loan fraud,
- Embezzlement,
- Misuse of position or self-dealing,
- Identity theft, and
- Terrorist financing.
Money laundering involves efforts to conceal or disguise the financial proceeds of criminal activity. Structuring cash transactions refers to conducting or attempting to conduct one or a series of transactions in any amount over the course of several days in an attempt to evade the federal law requirement to report cash deposits of $10,000 or more.
These and the other illegal activities listed above are much easier to accomplish if banks were not required by law to file Suspicious Activity Reports (SARs).
What Do Financial Institutions Consider Suspicious Activities?
How is a bank manager or other officer to know when an account is engaged in suspicious activity? With all the millions of bank transactions that occur throughout the country every day, why would one transaction trigger suspicion?
The key indication of suspicious activity is a sudden significant change in an account’s pattern of activity. For example, any of the following events could cause a bank or other financial institution to file a SAR:
- Unusual or large transactions with no apparent economic purpose;
- Transactions of substantial size made by individuals or entities with little or no history of legitimate business activity,
- Substantial transactions between business entity types with no usual business connections,
- Disproportionately large transactions considering the type of business conducting them;
- Repetitive patterns or frequent transactions involving large amounts of money;
- Particularly complex transactions between multiple accounts or parties;
- Transactions involving bulk cash, common among smugglers;
- A usually dormant account that becomes very active for a short period;
- Structured transactions that seem to be attempting to avoid reporting requirements;
- Significant financial transactions by someone known to be involved in criminal activities.
Financial institutions have implemented computerized systems to flag transactions that are outside of established patterns for a particular account. These protocols not only assist in identifying potential occurrences of money laundering and other illegal activity but also help to secure depositors and account holders from unauthorized or fraudulent account hacking.
What Happens If You Have a SAR Filed About Your Activities?
If your bank or financial institution files a SAR because of one or more of your transactions, nothing will usually happen immediately. In fact, in most cases, filing a SAR is a routine matter that banks perform in order to ensure that they are not cited for violating their own legal obligations.
As a result of banks’ tendency to file rather than not file a SAR out of an abundance of caution, most SARs do not lead to any adverse actions. However, some SARs do involve suspicious activities enough to stimulate the attention of federal law enforcement authorities.
Often, preexisting federal criminal investigations discover additional evidence of financial crimes when law enforcement reviews SARs filed by the suspects’ financial institutions.
If one of your account transactions does spark sufficient interest from federal investigators, it is possible that your account may be frozen to prevent the funds in question from being removed until the investigation is complete. This is likely to occur only after some initial investigation confirmed the government’s belief that some illegal activity occurred, causing the government to seek a court order temporarily freezing the account.
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Contact an Experienced Criminal Defense Lawyer Immediately
Any account holder who becomes aware that they are under investigation because a bank filed a SAR about one of their transactions should immediately contact an experienced criminal defense lawyer to represent them.
No account holder should attempt to interact with federal investigators if their bank reports them on a Suspicious Activity Report. Even if no illegal or wrongful conduct was involved in the suspicious transaction, a person under investigation should speak with authorities only through a skilled criminal defense lawyer who can protect them from making admissions that will be incriminating or may be misinterpreted.
Protect yourself and your family at all times. In the end, if no official prosecution or forfeiture action begins, your funds will be released. However, if a transaction results in a criminal prosecution, any statements they make can be the most damning evidence used against them.
Need experienced legal defense? Contact Stechschulte Nell Law for a case review today at 813-280-1244.
