Step 1: Spotting red flags that initiate the SAR process
The SAR journey begins with a red flag—anomalous behavior or transaction patterns that suggest suspicious activity. Common examples include:
- Structuring deposits to avoid currency transaction reports (CTRs)
- Wire transfers inconsistent with the customer’s business profile
- Rapid activity in dormant or low-volume accounts
- Reluctance to provide required identification
- Sudden shifts in geography or transaction type
Automated monitoring systems, particularly those enhanced by artificial intelligence, help institutions detect these red flags efficiently. Still, even the most advanced system can’t replace skilled staff. Institutions must train employees to recognize and escalate concerns without prematurely dismissing key indicators.
Step 2: Conducting a defensible investigation
Once a red flag is identified, compliance teams begin the next SAR process step: investigation. This involves gathering evidence, reviewing customer history, evaluating transaction context, and determining whether a SAR filing is warranted.
With real-time payment platforms like FedNow increasing alert volume and urgency, investigators are under pressure to work quickly without sacrificing quality. Institutions can optimize this step by:
- Regularly tuning monitoring rules to reflect emerging typologies
- Using robust case management systems to centralize documentation
- Cross-training teams to ensure redundancy
- Conducting AML staffing assessments to keep workloads manageable
The key is ensuring each investigation is both thorough and defensible—able to withstand examiner scrutiny at any time.
Step 3: Writing and filing a strong SAR
If the investigation results in reasonable suspicion, the institution has 30 calendar days to file a SAR—or 60 days if no suspect is identified. But meeting the deadline is only part of the requirement. The narrative must be useful to law enforcement.
Best practices for this step of the SAR process include:
- Clearly answering the who, what, when, where, why, and how
- Including specific transaction details (amounts, accounts, dates)
- Avoiding acronyms or codes that aren’t widely understood
- Using plain, professional language to improve clarity
Templates may help standardize formatting, but no two SARs are alike. Each narrative should be tailored to the facts of the case and reviewed for accuracy and completeness.
Step 4: Monitoring SARs after filing
Filing a SAR doesn’t close the case. Examiners often look closely at how institutions manage SARs after submission. Effective post-filing SAR process steps include:
- Documenting the full investigative timeline and decision-making process
- Showing evidence of supervisory reviews or escalations to the BSA Officer
- Reassessing the customer relationship, including risk rating updates or account closure
SAR trends—whether based on volume, type, or customer geography—should feed back into your institution’s AML/CFT risk assessments. For example, multiple SARs tied to the same customer may point to a systemic vulnerability that needs to be addressed across lines of business.
Step 5: Using SARs to strengthen compliance and national security
The final SAR process step is often overlooked: leveraging SARs as a tool to enhance overall risk management and support law enforcement. A single well-filed SAR could play a pivotal role in investigations into human trafficking, elder exploitation, or terrorism financing.
Financial institutions can take steps to ensure SARs serve their broader compliance goals by:
- Training investigators on emerging fraud and AML typologies
- Incorporating SAR trends into enterprise risk frameworks
- Leveraging advisory services during periods of high alert volume
- Reassessing the effectiveness of current AML software and processes
