On January 19, 2021, the Federal Reserve Board, FDIC, OCC, FinCEN, and NCUA (collectively, the “federal agencies”) issued answers to frequently asked questions (“FAQs”) regarding suspicious activity reports (“SARs”) and other anti-money laundering (“AML”) considerations for financial institutions subject to SAR requirements in response to recent recommendations from the Bank Secrecy Act Advisory Group. The FAQs state that they are intended to assist financial institutions with their AML compliance obligations, and do not have the force of law or create any new supervisory expectations.

In the FAQs, the federal agencies address several key issues related to law enforcement concerns and inquiries. In particular, the FAQs clarify that a financial institution may maintain an account or relationship with a customer for which the institution has received written “keep open” requests from law enforcement, even if the institution has identified suspicious or potentially illegal activity. However, while the financial institution may maintain the account, the FAQs state that the institution is not required to do so and a decision to maintain or close an account should be based on the institution’s own policies and procedures. The FAQs further note that if the financial institution does keep these accounts open, it is still obligated to comply with all applicable BSA requirements, including filing SARs if appropriate.

The FAQs also advise financial institutions that the receipt of a law enforcement inquiry, such as a grand jury subpoena, with respect to an account does not, on its own, trigger the requirement to file a SAR. However, such an inquiry should be considered in an institution’s overall risk assessment of the customer and his or her account.

The FAQs address five other issues, including advising that financial institutions are not required to:

  • terminate customer relationships following the filing of one or more SARs;
  • file SARs based only on the existence of negative news associated with a customer;
  • initiate independent investigations based solely on multiple negative news alerts based on the same underlying events;
  • duplicate information in SAR narratives that are already included in other sections of the SAR; or
  • submit multiple SARs on the same suspicious activity to accommodate narratives that surpass the SAR narrative character limits.

The Bank Secrecy Act Advisory Group’s recommendations, to which the FAQs respond, are described in more detail in FinCEN’s September 17, 2020 Advance Notice of Proposed Rulemaking on AML Program Effectiveness.