- within Government, Public Sector, Intellectual Property and Cannabis & Hemp topic(s)
- in United States
On October 9, 2025, the Financial Crimes Enforcement Network ("FinCEN") jointly issued updated Frequently Asked Questions ("FAQs") with the Federal Reserve Board of Governors, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency, clarifying the circumstances under which financial institutions must file suspicious activity reports ("SARs").
Background
For decades, SARs have been a useful tool for law enforcement agencies to detect money laundering and counter the financing of terrorism. However, regulatory guidance regarding when and how financial institutions must file these reports has at times been unclear. Financial institutions often expended significant organizational resources meeting supervisory expectations or best practices from examination manuals, even where not strictly required by law. The FAQs seek to clarify and simplify what is required of financial institutions under the Bank Secrecy Act ("BSA").
Recent regulatory updates indicate a shift in philosophy regarding SARs, emphasizing efficiency and effectiveness in suspicious activity reporting. FinCEN has signaled an intent to pivot away from blanket expectations that can lead to duplicative work and information overload for both financial institutions and law enforcement. This marks a notable departure from previous practices where compliance obligations often resulted in substantial resource expenditures with limited incremental value for investigators.
What Do These FAQs Say?
FinCEN and its partners identify four key areas: structuring SARs; continuing activity reviews; timelines for continuing activity SARs; and documentation requirements, clarifying both legal standards and practical expectations within the SAR regulatory scheme.
- SAR Filings for Potential Structuring-related Activity
FinCEN writes that financial institutions are not required to file SARs for a transaction or series thereof with a value at or near the $10,000 Currency Transaction Report ("CTR") threshold solely because it meets that amount, unless there is knowledge or suspicion that such transactions are designed specifically "to evade BSA reporting requirements." In absence of any knowledge, suspicion, or reason to suspect, a financial institution is not required to file SARs simply because a transaction is at or above the CTR threshold.
Similarly, financial institutions must file a SAR only when they know, suspect, or have reason to suspect transactions aggregating $5,000 or more are designed specifically "to evade BSA reporting requirements" such as CTRs.
The FAQ also addresses structuring – an unlawful attempt to evade CTR reporting requirements under 31 C.F.R. § 103.18. FinCEN regulations define structuring as "a person, acting alone, or in conjunction with, or on behalf of, other persons, conducting or attempting to conduct one or more transactions in currency, in any amount, at one or more financial institutions, on one or more days, in any manner, for the purpose of evading CTR reporting requirements." This definition is inclusive of attempts to evade requirements by breaking sums of currency above the CTR threshold into smaller sums below the threshold. The FAQs make clear that financial institutions should operate and maintain anti-money laundering and CFT protocols to detect and report structuring. The FAQs reflect FinCEN's intention that institutions focus their efforts on high-value information rather than routine filings based solely on transaction amounts.
2. Continuing Activity Reviews
The FAQs also address ongoing or continuing suspicious activity by a single customer or account. Prior FinCEN guidance suggested that financial institutions are expected or required to monitor whether suspicious activity is ongoing after a SAR has been filed. This guidance expressly states that financial institutions are not required to independently review a customer or account to evaluate whether suspicious activity continues after the filing of a SAR. Financial institutions can fulfill their SAR compliance obligations by relying on their standard policies and protocols for monitoring suspicious activity, and reporting it as appropriate, provided that those internal policies are reasonably designed to identify and report suspicious activity.
FinCEN stated in a prior guidance that financial institutions should file SARs for continuing suspicious activity after a 90-day period, with a filing deadline of 120 calendar days following the filing of a previous, related SAR. This FAQ now clarifies that financial institutions are not required to do so.
The revised FAQs address longstanding industry concerns about ongoing reviews of customer activity after initial SAR filings. Historically, examiners have interpreted prior advisories as requiring frequent re-evaluations of previously flagged accounts on a set timetable. The new FAQs clarify that separate, post-SAR investigations need not be conducted unless dictated by risk-based internal processes or relevant facts emerge during routine monitoring. This move encourages institutions to leverage their own protocols rather than defaulting to rigid mandates, potentially allowing compliance teams greater flexibility while still meeting regulatory expectations.
3. Timing of Reports
If a financial institution elects to file a continuing activity SAR in accordance with FinCEN's continuing suspicious activity guidance, they should do so within 120 calendar days of the filing of an initial SAR. This provides financial institutions a 90-day period after the filing of an initial SAR to evaluate continuing suspicious activity, and a 30-day period to file the subsequent SAR if the institution detects ongoing suspicious activity. In such a case, the institution should mark the date range of suspicious activity to include the entire 90-day period immediately following the filing of an initial or most recent SAR, on Item 30 of the SAR form. If a financial institution elects further reporting due to continued suspicion, the revised timeline allows up to 150 calendar days following detection, providing additional flexibility compared with prior practice.
4. SAR Documentation
FinCEN clarifies that neither the BSA nor its implementing regulations require a financial institution to document a decision not to file a SAR. Prior FinCEN guidance had encouraged financial institutions to document such a decision, but there is no requirement for them to do so. If a financial institution chooses to document the decision not to file a SAR, a short, concise statement documenting the decision, consistent with internal policies and procedures, is likely sufficient, though institutions may consider additional documentation in complex investigations.
Documentation standards surrounding decisions not-to-file have shifted from "best practice" recommendations toward an explicitly optional stance. For many years, documenting "no-file" determinations was encouraged, and became ingrained as best practice, but this has now been reframed as optional rather than required by law. Financial institutions are advised that concise recordkeeping aligned with their risk-based policies will generally suffice; extensive narrative explanations should be reserved for especially complex matters or when warranted by specific circumstances.
Conclusions and Practical Steps
The recently issued FAQs clarify supervisory expectations without changing existing legal or regulatory requirements for suspicious activity reporting. They respond to feedback from financial institutions while streamlining prior guidance. By clarifying ambiguous areas and prioritizing efficiency, regulators aim to align compliance efforts with national security priorities while minimizing unnecessary operational burdens for filers. Financial institutions should monitor how this new guidance is implemented during examinations, including any changes to supervisory manuals, and proactively adjust their reporting policies as needed to leverage efficiencies without compromising vigilance against illicit finance.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
