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New SAR form and what it means for your credit union

By: Naomi Glass, BSA/AML Compliance Manager

The suspicious activity report (SAR) form has finally gotten a face lift! As of February 1, 2019, all financial institutions in the country are required to electronically file an updated SAR form developed by the Financial Crimes Enforcement Network (FinCEN).

SARs by the numbers

In 2018, FinCEN received 814,271 SARs from depository institutions. Nearly 99,000 of those SARs were filed by credit unions regulated by the NCUA.

Updating the SAR, which will ultimately help law enforcement do their jobs better, has been in the works for some time. About a year ago, FinCEN announced that it was updating the form to adhere to changes defined in a Federal Register notice posted in February 2017. The updated version was released by FinCEN last summer, and financial institutions were given until January 1, 2019, to officially switch. (FinCEN later extended the deadline until February 1, 2019.)

What’s new and different about the SAR? Although the changes to the original version of the SAR are not substantial to most financial institutions, and there are no new regulatory requirements, there are several noteworthy differences worth mentioning.

First, the file itself is different. As was the case previously, SARs may be submitted individually (discretely) through the FinCEN e-filing website or submitted in batch. What’s changed is that there is an updated version of the SAR discrete form available on the FinCEN e-filing website (v1.2), and batch submissions must be made in an XML-based file rather than the prior ASCII fixed-length delimited file format.

It should also be noted that as of February 1, FinCEN’s e-filing system will reject the previous version of the discrete form and ASCII-based batch format filings. Rejected files may put a financial institution at risk of a BSA violation for failure to file in a timely manner , so check with your credit union’s BSA Officer to ensure your institution has made the conversion.

There are also several new and updated data fields that have been added to the SAR for the purposes of enhancing its overall content. A more detailed SAR inevitably benefits law enforcement as it will enable them to conduct more thorough money laundering and terrorist financing investigations. A few of the new/updated fields include the following:

  • Cyber event category. As we all know, cybersecurity is a huge issue these days. Cyber-attacks can be committed against both financial institutions and their customers/members. The good news is that the updated SAR form contains a new "Cyber Event" suspicious activity type category that can be used to record up to 99 cyber events associated with the suspicious activity. Also, along the technology front, the updated form has new text fields within the current “IP Address” section to record the date and/or timestamp of a suspect’s electronic internet-based contact with the financial institution.
  • New and/or modified subtype selections for indicating the nature of the suspicious activity. This is a much-needed change since the prior form lacked check boxes for some serious suspected crimes, including human trafficking, human smuggling, ponzi schemes, foreclosure/short sale fraud, and many others.
  • New text field to notify FinCEN of SARs filed in response to a specific order or advisory. The updated SAR form contains a new text field which enables the filer to alert FinCEN in the event the SAR is being filed in response to a current specific geographic targeting order (GTO), advisory, or other activity.

Resources available
Because change is never easy, there are resources available to financial institutions to assist in the transition to the new SAR form. FinCEN’s e-filing website is a useful source for information, as well as the updated XML User Guide.

It’s important to remember that despite the arduous and time-consuming process of filing SARs, they are a critical component in law enforcement’s effort to combat money laundering and terrorist financing investigations. I encourage all of you to just keep calm and file on.