SAR Filing Deadlines
This Compliance Clip explains the SAR filing timeframes - based on FinCEN SAR guidance - which you would think would be easy. Unfortunately, like all good compliance topics, they can be a bit confusing. Adam uses layman's terms to explain when the clock starts and when the SAR filing is due.
The following is a transcript of this video:
"This Compliance Clip is going to talk about SAR filing deadlines.
The question for today is: What is the SAR filing deadline?
The FFIEC BSA Exam Manual - which stands for the Federal Financial Institutions Examination Council, where all the Regulatory Agencies have come together - is a universal examination manual that all regulatory agencies use to examine the Bank Secrecy Act (BSA). So, regardless of whether your regulator is the FDIC, the Federal Reserve, the OCC, the NCUA, or the CFPB; your examiners are going to be utilizing the BSA Exam Manual.
The BSA Exam Manual answers with the SAR filing deadline is, which is our question for the day.
The Exam Manual says that the SAR filing deadline is 30 calendar days from the date of the initial detection of facts that may constitute a basis for filing a SAR. It goes on to say that the filing deadline is extended for 60 days if no suspect can be identified.
You would think this is pretty straightforward, but it really isn't. It’s a little complex due to one phrase. The phrase “initial detection.”
So the filing time frame is 30 or 60 calendar days from the initial detection of facts that may constitute the basis for filing a star.
The question now becomes when does the clock actually start? What is the “initial detection”? What does that mean?
The Exam Manual goes on to say that organizations may need to review transaction or account activity for a customer to determine whether to file a sar. The need for a review of a customer activity or transactions does not necessarily indicate a need to file a sar. So just because each transaction is flagged for review, it doesn't necessarily mean that you have to start the timing to file a SAR.
The Exam Manual goes on and says that the timing for filing a SAR starts when the organization - during its review or because of other factors - knows or has reason to suspect that the activity or transactions under review meet one or more of the definitions of suspicious activity.
What this is saying is that once you determine that you're going to have to file a SAR, that starts your clock.
Don't believe me? Let's take a further look.
FinCEN give us guidance on this. They give us a few different pieces of guidance regarding SAR filing timing.
The first guidance they gave us was in the SAR activity review issue #1, which was issued back in the early 2000’s. This guidance was fairly clear but they expanded on this since then in the SAR Activity Review issue 10. You can look this up. Just do a Google search on “SAR Activity Review” issue 1 or issue 10 and you will have to scroll down to the section that talks about SAR filing deadlines and you will see it there. In issue 10, it states that the phrase “initial detection” should not be interpreted as meaning the moment a transaction is highlighted for review.
This means your clock technically does not start the second you determine a transaction is up for review. I have seen a lot of auditors and examiners over the years to think that the clock starts when the transaction is highlighted for review, when you get that initial referral for suspicious activity, which is not the case.
The guidance goes on and gives us more clarification. Issue 10 says that the 30 or 60-day deadline does not begin until an appropriate review is conducted and a determination is made that the transaction under review is considered suspicious within the meeting of the SAR regulations.
This means that once the review has occurred and you have determined that a SAR is going to be filed, this begins your clock.
If your examiner tries to tell you it starts before that, pull this reference out, show it to them, and explain the rules to them.
Now, because there are a lot a of auditors and examiners that like to cite banks for not filing SARS soon enough, what is the best practice? Well, it is to file the SAR sooner than later. If you can file it within 30 days of the referral, or uncovering of that alert, then just do it. This approach leaves no questions or arguments for an examiner, and when you don’t have to argue with an examiner, it is always a good day. You have to save your arguments and save your battles for when you really need them."