The first two articles in this series , published in the December 2024-February edition of ACAMS Today 1 and on ACAMSToday . org 2 respectively , focused on suspicious activity report ( SAR ) optimization for law enforcement ( LE )― how to determine the most valuable SARs from an LE standpoint from a seemingly endless stream of reports submitted by the banking industry . Let us pivot our focus now to the primary source of SARs ― financial institutions ( FIs )― and how they can optimize reported information to maximize report usefulness for LE .
Background
From the early days of the “ criminal referral form ” to today ’ s electronically filed SAR , FIs have served as an integral component in the U . S . fight against money laundering and terrorist financing . While FIs and their products and services have changed in size and complexity over the years , the SAR filing requirements and related guidance have stagnated . Financial Crimes Enforcement Network ( FinCEN ) statistics 3 show that SAR filings have grown exponentially in recent years , leading to questions about their value and usefulness from the exhausted banking compliance teams struggling to meet anti-money laundering / Bank Secrecy Act ( AML / BSA ) regulatory and auditor expectations .
FinCEN NPRM ―‘ highly useful ’
One source of hope that has yet to be finalized as of this writing is the FinCEN Notice of Proposed Rulemaking ( NPRM ) titled “ Proposed Rule to Strengthen and Modernize Financial Institution AML / CFT [ Countering the Financing of Terrorism ] Programs ,” 4 published in July 2024 . This document outlined intent to establish examiner training that would “ focus on the overall effectiveness of AML / CFT programs and consider the highly useful quality of their outputs .” A key provision of this rulemaking is the direction for FIs to review and evaluate their FinCEN filings based on known or detected threat patterns or trends that “ may also help [ FIs ] minimize a type of SAR filing characterized by some industry sources as a ‘ defensive filing ’ and focus on generating highly useful reports to relevant government authorities .”
Assuming that examiner training is established through publication of a Final Rule , FinCEN can utilize the new examiner training protocol to develop and publish updated guidance for FIs to use when filing SARs . This guidance should also be incorporated into the Federal Financial Institutions Examination Council ’ s ( FFIEC ) AML / BSA examination manual 5 so that FIs are reviewed on current standards and best practices going forward .
As a by-product of reviewing their SAR filings for threat patterns and trends , FIs should be encouraged by their federal regulators to reevaluate current transaction monitoring rules and models to align with reporting on FinCEN ’ s National Priorities 6 and other recently released FinCEN advisory typologies 7 ( such as check fraud , elder financial exploitation and fentanyl trafficking ) in order to “ identify suspicious financial activities , better focusing bank
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