What is a Suspicious Activity Report (SAR)?

A Suspicious Activity Report (SAR) is a critical tool used in the fight against financial crime, particularly in detecting and preventing money laundering and other illicit activities. It is specifically designed to alert appropriate authorities, such as law enforcement and regulatory agencies, about transactions or patterns of behavior that appear suspicious or may indicate wrongdoing.

Filing a SAR is a legal obligation for financial institutions when they identify unusual activity that raises red flags based on specific criteria established by the Bank Secrecy Act (BSA) and other regulations. These reports help authorities investigate potential criminal activities, such as fraud, human trafficking, or terrorist financing.

Understanding the purpose of a SAR emphasizes its importance in the broader context of compliance and risk management in the financial sector, reinforcing why it is distinct from other types of reports and documentation related to normal transactions, customer identification, or loan applications.