Joint Trades to FinCEN: SARs Demand Significant Bank Time, Resources 

Washington, D.C., July 2, 2024 –Suspicious activity reports take up major time and resources at financial institutions far exceeding the government’s estimates, the Bank Policy Institute, the Financial Technology Association, the Independent Community Bankers of America, the American Gaming Association and the Securities Industry and Financial Markets Association wrote in a letter filed today. The trades represent a broad range of institutions that file SARs and experience the significant pressure on resources and time that such efforts require. The SAR filing process goes far beyond rote box-checking – it involves extensive due diligence, investigation and documentation, the trades noted.

“We believe that FinCEN’s burden estimate of 1.98 hours per SAR substantially underestimates the amount of time required to thoroughly undergo the reviews and processes required under applicable requirements to file a SAR,” the trades said in the letter. “An institution’s process is not just the mechanical process of generating, submitting, and storing the SAR. This process includes the time dedicated to investigating the underlying reason for filing a SAR, obtaining and reviewing supporting documentation, conducting a second review, obtaining necessary approvals, documenting the investigation and decision process, and overseeing the process of filing a SAR. These steps are integral to the filing of a SAR and cannot be completed if any step in the process is excluded.”

The background: The trades submitted the letter in response to FinCEN’s notice under the Paperwork Reduction Act seeking comment on its proposal to renew, without changes, the form used by financial institutions to report suspicious transactions to the Treasury financial-crimes bureau. SARs are a cornerstone of the federal anti-money laundering framework, and banks are required to file them to flag transactions that appear potentially suspicious.

Key concern: According to recent BPI survey data, FinCEN significantly underestimates the time required for a bank to file a SAR. The survey found that banks spend 21.41 hours for every SAR filed, more than 10x FinCEN’s estimate of 1.98 hours. Section 6204 of the Anti-Money Laundering Act of 2020 requires the U.S. Treasury Secretary to review changes to financial institution reporting requirements related to SARs (and Currency Transaction Reports) to reduce those that are unnecessarily burdensome and determine the appropriate dollar amount threshold for such requirements. Treasury has yet to issue its report and any proposed adjustments in this area.

Bottom line: FinCEN should undertake an accurate measure of the demands of SARs in order to help both the government and financial institutions make efficient use of their limited resources.

Read the full letter here.

About SIFMA.

SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s one million employees, we advocate on legislation, regulation and business policy affecting retail and institutional investors, equity and fixed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA).

About Bank Policy Institute.

The Bank Policy Institute is a nonpartisan public policy, research and advocacy group that represents universal banks, regional banks and the major foreign banks doing business in the United States. The Institute produces academic research and analysis on regulatory and monetary policy topics, analyzes and comments on proposed regulations, and represents the financial services industry with respect to cybersecurity, fraud, and other information security issues.

About the Financial Technology Association.

The Financial Technology Association represents industry leaders shaping the future of finance. We champion the power of technology-centered financial services and advocate for the modernization of financial regulation to support inclusion and responsible innovation.

About ICBA.

The Independent Community Bankers of America® has one mission: to create and promote an environment where community banks flourish. We power the potential of the nation’s community banks through effective advocacy, education, and innovation.

About the American Gaming Association.

As the national trade group representing the U.S. casino industry, the American Gaming Association (AGA) fosters a policy and business environment where legal, regulated gaming thrives. The AGA’s diverse membership of commercial and tribal casino operators, sports betting and iGaming companies, gaming suppliers, and more lead the $329 billion industry and support 1.8 million jobs across the country.