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On October 9, 2025, the US Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) and the prudential regulators1 issued joint guidance clarifying regulatory expectations for suspicious activity reports (SARs).2 The guidance, in the form of a Frequently Asked Questions (FAQ) document, is intended to help financial institutions reduce unnecessary filings and concentrate resources on high-value law enforcement activities. In announcing the FAQ, Treasury Secretary Scott Bessent stated that by addressing "pain points" for financial institutions, the Administration was making "commonsense yet consequential reforms that will ease regulatory burdens without undermining law enforcement efforts."3 In our view, this FAQ offers welcome and much-needed relief from Bank Secrecy Act (BSA) obligations that have grown ever more burdensome on financial institutions, without commensurate benefits to law enforcement.
The guidance follows recent statements by Administration officials and regulators about modernizing anti-money laundering (AML)/countering the financing of terrorism (CFT) regulation. Last month, for example, FinCEN Director Andrea M. Gacki testified before the House Committee on Financial Services that "there is an urgent need to modernize the AML/CFT regime in the United States so that it is effective, risk-based and focused on the greatest threats to financial institutions and national security."4 And Undersecretary for Terrorism and Financial Intelligence John K. Hurley gave remarks at the Association of Certified Anti-Money Laundering Specialists Assembly Conference where he summarized the Administration's "North Star" for AML reform: "Limited resources should be allocated to the most pressing threats."5 These remarks follow a number of other statements by senior Treasury Department officials about the need—and the Administration's desire—to reform the AML/CFT compliance system.
I. FAQ Overview
The FAQ clarifies expectations of regulators based on existing rules relating to: A) structuring SARs; B) continuing activity reviews; and C) documentation expectations around a financial institution's decision not to file a SAR.
A. Structuring
FinCEN's FAQ clarifies that financial institutions are not required to file structuring SARs absent information that the transaction, or series of transactions, is designed to evade reporting requirements under the BSA.
"Structuring" refers to the practice of a customer breaking a large transaction into smaller ones to avoid triggering a financial institution's obligation to file a Currency Transaction Report (CTR), which is a form required to be filed when a customer transacts in US currency aggregating more than $10,000 in one day. Structuring transactions can be suspicious, and warrant filing a SAR, if done for the purpose of evading the CTR requirement and hiding currency from the government, for example.
This FAQ was drafted to clarify that financial institutions will not be expected to file structuring SARs in instances where multiple cash transactions aggregated to $10,000 in one day but the financial institution has no reason to suspect that the transactions were structured that way for the purpose of evading CTR requirements.6 Previously, the belief that regulators expected a financial institution to file a structuring SAR whenever a customer engaged in multiple smaller transactions that together totaled more than $10,000 often led financial institutions to file structuring SARs on actors, like small businesses or restaurants, that made multiple cash deposits or withdrawals that aggregated to $10,000 in a single day for legitimate business purposes. And the expectation that a customer who is reported in numerous SARs will be off-boarded may have led, over time, to such entities' loss of access to banking services.
Going forward, FinCEN and the prudential regulators7 clarified that, in line with the text of the BSA's implementing regulations, financial institutions are only required to file a SAR if the institution knows, suspects or has reason to suspect that the transaction or series of transactions are designed to evade reporting requirements. Upon release of this guidance, Undersecretary Hurley stated that "SARs should deliver better outcomes by providing law enforcement the most useful information—not by overwhelming the system with noise."8
B. Continuing Activity Reviews
FinCEN has clarified that financial institutions are not required to manually review a customer or account after filing a SAR to determine whether suspicious activity has continued. Prior FinCEN guidance had addressed the issue of how often a financial institution must file a SAR on continuing suspicious activity, providing that the financial institution need not file a SAR each time such activity took place but could file a continuing report after a 90-day review, but no later than 120 days after the date of the related prior SAR.9 This was meant to offer relief to financial institutions from burdensome repetitious SAR filing. However, over time this led to a perceived regulatory expectation that financial institutions must manually review whether suspicious activity has continued for 90 days after every SAR filing.
Going forward, financial institutions are not required to conduct a separate review, manual or otherwise, following the filing of a SAR to determine whether suspicious activity has continued. According to FinCEN, "Financial institutions instead may rely on risk-based internal policies, procedures, and controls to monitor and report suspicious activity as appropriate, provided those internal policies, procedures, and controls are reasonably designed to identify and report such activity." This approach also preserves the exemptive relief that allows financial institutions to file SARs as appropriate in line with applicable timelines for continuing activity if they detect it, and not every 30 days, as would be the requirement for newly detected suspicious activity.
C. No-SAR Documentation
FinCEN has clarified that financial institutions are not required to document a decision not to file a SAR. Previous guidance suggested that financial institutions should maintain documentation about decisions to both file and not file a SAR. Often, regulators have required significant documentation about no-SAR decisions in order to ensure that the financial institution had investigated the activity appropriately. Indeed, regulatory enforcement attorneys have been known to second-guess decisions not to file SARs if the decisions were not exhaustively justified through such documentation. This led financial institutions to defensively spend significant resources on documenting why activity was not suspicious, with little appreciable benefit to law enforcement. According to Undersecretary Hurley, "Every hour spent documenting a non-SAR is an hour not spent protecting Americans, and that trade-off is unacceptable."11
Going forward, financial institutions are not required to document a decision not to file a SAR. Should a financial institution choose to document its decision not to file a SAR, FinCEN advises that the level of documentation "may vary based on the specifics of the activity being reviewed and need not exceed that which is necessary to comply with the institution's internal policies, procedures, and controls, which should be risk-based and reasonably designed to identify and report suspicious activity." FinCEN suggests that in most cases, "a short, concise statement documenting a financial institution's SAR decision will likely suffice." Many financial institutions may decide to continue to document no-SAR decisions for a range of reasons, including for quality assurance purposes with respect to their SAR filing functions. But this new guidance should provide a measure of regulatory relief, allowing financial institutions to memorialize decisions in a much more reasonable and measured way, if they elect to do so.
II. Compliance Considerations
Financial institutions may wish to update their compliance programs in line with the guidance in the FAQ. The guidance aligns with the Administration's focus on national security priorities and areas of greater risk, and we anticipate that there will be additional efforts to reform the AML regime.
These reforms will likely explicitly permit financial institutions to utilize innovative tools and de-prioritize lower-risk areas.12 In the coming months, FinCEN and the other prudential regulators will propose a new AML Program Rule that will "re-center supervision where it should be: on the effectiveness of a bank's AML/CFT program" rather than put a "zero-tolerance focus on process and documentation and wide latitude for supervisory expectations and judgments that are not always consistent with the law or our national security priorities."13 Treasury has signaled that additional reforms may also "support broader innovation including artificial intelligence, blockchain analysis, digital identity, and [application programming interfaces] as part of a smarter AML framework."14 We applaud these efforts and look forward to additional efforts to modernize illicit finance compliance requirements.
Footnotes
1. The guidance was issued jointly by FinCEN, the Board of Governors of the Federal Reserve System (Federal Reserve), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), and the Office of the Comptroller of the Currency (OCC).
2. Frequently Asked Questions Regarding Suspicious Activity Reporting Requirements, FinCEN (Oct. 9, 2025), available at: https://www.fincen.gov/system/files/2025-10/SAR-FAQs-October-2025.pdf.
3. Remarks by Secretary of the Treasury Scott Bessent Before the Fed Community Bank Conference, US Department of the Treasury (Oct. 9, 2025), available at: https://home.treasury.gov/news/press-releases/sb0276.
4. Statement by FinCEN Director Andrea M. Gacki before the House Committee on Financial Services, Subcommittee on National Security, Illicit Finance, and International Financial Institutions, US Department of the Treasury (Sept. 9, 2025), available at: https://www.fincen.gov/news/testimony/statement-fincen-director-andrea-m-gacki-house-committee-financial-services.
5. Remarks by Under Secretary for Terrorism and Financial Intelligence John K. Hurley at the Association of Certified Anti-Money Laundering Specialists Assembly Conference, US Department of the Treasury (Sept. 17, 2025), available at: https://home.treasury.gov/news/press-releases/sb0251.
6. 31 C.F.R. § 1010.100(xx).
7. 31 C.F.R. § 1020.320(a)(2)(ii).
8. Press Release: FinCEN Issues Frequently Asked Questions to Clarify Suspicious Activity Reporting Requirements (Oct. 9, 2025), available at: https://www.fincen.gov/news/news-releases/fincen-issues-frequently-asked-questions-clarify-suspicious-activity-reporting.
9. FinCEN, The SAR Activity Review – Trends, Tips & Issues, Volume 1, at p. 27 (Oct. 2000); FinCEN, The SAR Activity Review – Trends, Tips & Issues, Issue 21, at p. 53 (May 2012).
10. FinCEN, The SAR Activity Review – Trends, Tips & Issues, Issue 10, at p. 35 (May 2006).
11. Remarks by Under Secretary for Terrorism and Financial Intelligence John K. Hurley at the Association of Certified Anti-Money Laundering Specialists Assembly Conference, US Department of the Treasury (Sept. 17, 2025), available at: https://home.treasury.gov/news/press-releases/sb0251.
12. Deputy Secretary Faulkender Lays Out Guiding Principles for Bank Secrecy Act Modernization, US Department of the Treasury (June 18, 2025), available at: https://home.treasury.gov/news/press-releases/sb0173.
13. Remarks by Secretary of the Treasury Scott Bessent Before the Fed Community Bank Conference, US Department of the Treasury (Oct. 9, 2025), available at: https://home.treasury.gov/news/press-releases/sb0276.
14. Remarks by Under Secretary for Terrorism and Financial Intelligence John K. Hurley at the Association of Certified Anti-Money Laundering Specialists Assembly Conference, US Department of the Treasury (Sept. 17, 2025), available at: https://home.treasury.gov/news/press-releases/sb0251.
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