SAR Filing Scenarios: Identifying and Reporting Suspicious Activity
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Key Insights
- Master the art of Suspicious Activity Report writing through real-world scenarios — structuring, layering, trade-based ML, and crypto red flags.
When to File a SAR
Under the Bank Secrecy Act (BSA), financial institutions must file a SAR when they know, suspect, or have reason to suspect that a transaction:
- Involves funds derived from illegal activity
- Is designed to evade BSA reporting requirements (structuring)
- Lacks a lawful purpose or is unusual for the customer
- Involves use of the institution to facilitate criminal activity
Filing thresholds:
- Transactions ≥ $5,000 involving suspected criminal activity
- Any amount for certain offenses (money laundering, terrorism)
- $25,000+ if suspect is unknown
Scenario 1: Structuring
Pattern: Multiple cash deposits just below the $10,000 CTR threshold.
Red flags:
- Multiple deposits of $9,000-$9,999 within a short period
- Deposits at different branches or ATMs
- Customer appears to receive cash from multiple sources
- Customer is evasive about the source of funds
SAR narrative example: "Account holder made 7 cash deposits between [dates] totaling $67,400, with individual deposits ranging from $8,500 to $9,800. Deposits were made at 3 different branch locations. When asked about the source, customer stated 'tips from work' but employment records show monthly salary of $3,200."
Scenario 2: Layering through Shell Companies
Pattern: Rapid movement of funds through multiple corporate accounts with no apparent business purpose.
Red flags:
- Wire transfers between related entities with no clear commercial reason
- Companies registered in secrecy jurisdictions
- Nominee directors or shareholders
- Funds flowing in circles (A → B → C → A)
Article Metadata
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Feynman Concept Cards
Master each building block: read the ELI5, explore the analogy, work the example, find your gaps, teach it back, build it.
Bank Secrecy Act is a regulations concept in the Compliance pillar.
Analogy
Example
Find Gaps
Explain Bank Secrecy Act as if teaching a colleague who is new to regulations. Cover: what it is, how it works, and why it matters.
Create
Create a diagram that demonstrates Bank Secrecy Act in a real-world regulations scenario. Walk through your design decisions.
Show solution
A diagram for Bank Secrecy Act should include: 1. The core components of bsa 2. How they interact 3. Expected outcomes or outputs
Suspicious Activity Report is a sar str concept in the Compliance pillar.
Analogy
Example
Find Gaps
Explain Suspicious Activity Report as if teaching a colleague who is new to sar str. Cover: what it is, how it works, and why it matters.
Create
Create a flowchart that demonstrates Suspicious Activity Report in a real-world sar str scenario. Walk through your design decisions.
Show solution
A flowchart for Suspicious Activity Report should include: 1. The core components of sar 2. How they interact 3. Expected outcomes or outputs
Feynman Synthesis — Prove You Understand
1. The One-Pager
Explain this lesson's core idea to a smart 15-year-old. No jargon allowed.
2. The Gap Map
List 3 things you are still unsure about. Be specific.
Knowledge Check
Test your understanding of this lesson.
Hands-On Lab
Run code and work through compliance scenarios directly in your browser.
SAR Filing Simulator
AdvancedYou observe the following over 10 days on one business account: eight cash deposits of $9,000–$9,950 from different branches, immediately followed by wires to a shell-company account in a high-risk jurisdiction. Draft a Suspicious Activity Report (SAR).
Flashcards
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