A Suspicious Activity Report (or SAR) is a report regarding suspicious or potentially suspicious financial activity, filed with FinCEN (the FINancial Crimes Enforcement Network), an arm of the United States Department of the Treasury. (See the FinCEN website (http://www.fincen.gov) for detailed guidelines)

SARs are filed primarily by financial institutions such as banks, credit unions and check cashing establishments. Casinos are required to file a separate report called a SAR-C. FINCEN requires a SAR report to be filed by a financial institution when the financial institution experiences a potential loss (also known as risk or exposure) of $25,000 or more, a potential loss of $10,000 or more when a suspect can be identified, for any potential loss when an employee is involved (such as embezzlement or misuse of position) or any transaction or set of transactions that may be deemed suspicious. By far the most common reason for filing a SAR is when a financial institution suspects its customer is trying to structure his transactions in a way so as to avoid a Currency transaction report being filed upon him. A CTR is required under the Bank Secrecy Act for any cash transaction or transactions greater than $10,000.

SAR reports include detailed information about transactions that are or appear to be fraudulent, and the individuals conducting such transactions. While many institutions file thousands of SARs a year, very few people will have a SAR filed with their name included. The goal of SAR filings is to help the Federal government identify individuals, groups and organizations involved in fraud, terrorist financing and money laundering. At the same time, neither the financial institution, nor the Federal government is required to notify an individual or organization that a SAR has been filed that includes their name. Financial institutions usually undergo an investigations process prior to filing a SAR to assure that the information reported is appropriate and accurate. This process will often include review by financial investigators, management and attorneys prior to filing.

An institution can file these reports as a paper form, electronically on tape or floppy disk, or through a special secure internet connection.

Financial institutions face very heavy penalties for failing to properly file Suspicious Activity Reports, including large fines, regulatory restrictions, and even losing their charter. This regulatory compliance has become increasingly important for financial institutions in recent years, with entire departments and executive positions springing up to ensure regulatory compliance, in SARs as well as the Bank Secrecy Act and the Sarbanes-Oxley Act.