In this 55th year of anti-money laundering (AML), countering the financing of terrorism (CFT), and Bank Secrecy Act (BSA) compliance, the current compliance focus is on customer/member due diligence (CDD/MDD). CDD/MDD consists of four elements: customer/member identification; beneficial ownership; risk profile; and the most important element of CDD/MDD, the identification and reporting of suspicious transactions—transactions that are either illegal or inconsistent with what was expected for that specific client with no reasonable explanation.
According to the Financial Crimes Enforcement Network (FinCEN), banks, savings associations, and credit unions (known as development finance institutions, or DFIs) have filed more than 24 million suspicious activity reports (SARs) since April 1, 1996, with all covered entities filing more than 42 million reports during the same time. In 2024, the Federal Trade Commission received 6.5 million consumer complaint reports; 2.6 million detailing fraud and reporting $12.5 billion in losses. The top five fraud types included imposter fraud, online shopping/negative review fraud, business and job opportunity scams, investment scams, and internet services scams. According to the 2024 National Strategy for Combating Terrorist and Other Illicit Financing (May 2024), fraud is the “largest revenue-generating crime” in the U.S., and the SAR filings support that statement as check fraud is now the most often reported crime on the SARs filed by DFIs (8.8% of all SARs filed for calendar year 2024). Credit/debit card fraud, identity theft, counterfeit instruments, ACH fraud, wire fraud, and elder financial exploitation are the other fraud “types” located within the “top twenty” categories of SAR filings.
FinCEN is the bureau at the U.S. Department of the Treasury that administers AML/CFT and is implementing the many requirements found within the Anti-Money Laundering Act of 2020 (AMLA). In addition to the fraud types referenced above, FinCEN is currently asking DFIs to look for and report possible instances of bulk-cash smuggling along the Southwest border, oil smuggling by both Iranian factions and Mexican drug cartels, deep-fake media/generative AI schemes, counterfeit passport card schemes, human trafficking/human smuggling, cyber fraud/crime, timeshare fraud, ransomware, and suspected public/private corruption, both foreign and domestic.
While identifying and reporting possible criminal activity is never “routine,” reporting “inconsistent transactions” is one of the more challenging aspects of SAR reporting. Through the CDD process, DFIs establish what is “normal/expected” activity for their clients, and when transactions are inconsistent, SAR filing is considered. Is it out of the normal pattern for that client, or clients of that same type within your organizational structure? Or does this transaction or pattern of transactions have no apparent economic, business, or lawful purpose? Is it inconsistent enough, or is it suspicious enough to report, or should it continue to be monitored and watched for trends and patterns? Many DFIs attending our AML/CFT seminars are utilizing a SAR committee, consisting of senior representatives from across the organization, e.g., commercial, retail, compliance, systems administrator, audit (ad hoc, non-voting), etc., who will look at each inconsistent “opportunity” and reach concurrence on how to proceed. (Minutes of those meetings, along with detailed explanations of how the “No SAR” conclusion was reached, are extremely instrumental in “surviving” the federal AML/CFT exam.)
Users of our ProBank Advisor® platform will often seek our opinion on a specific “possible” SAR situation and ask for guidance as to what to look at, which questions to ask, or what other factors could be pertinent to that situation. Our advisors can also answer questions related to proper form completion, filing time frames, examiner scrutiny, etc.
The AMLA requires Treasury to streamline, modernize, and update the AML/CFT regime in our country. In a speech on June 18, 2025, Deputy Secretary of the Treasury Michael Faulkender stated, “SARs and CTRs provide critical intelligence for our law enforcement partners to protect national security by combating drug cartels, human traffickers and smugglers, fraudsters, and terrorists. On the specific topic of SARs, Treasury is currently exploring ways to streamline SAR reporting, including by improving the form itself, which will be beneficial for law enforcement and national security agencies, as well as financial institution filers.” Watch for updates from Forvis Mazars as these changes occur.
Tackling the complex and evolving regulatory compliance landscape can be challenging for financial institutions. Digital solutions like ProBank Advisor can help your institution gain peace of mind and thrive in this complicated space. If you have any questions, please reach out to a professional at Forvis Mazars.