Suspicious Activity Reports and Civil Litigation

Under the Annunzio-Wylie Anti-Money Laundering Act, financial institutions are required to report potentially suspicious activity to the Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury Department. Financial institutions fulfill their reporting obligations under the act by filing suspicious activity reports—commonly referred to as SARs—with FinCEN. Although a financial institution’s obligations under the act are to the government, plaintiffs have increasingly sought to rely on these provisions in civil litigation.

This development presents challenges for banks because although the act requires them to monitor and report potentially suspicious conduct to FinCEN, it also prohibits financial institutions from disclosing SARs, or revealing that they have been filed, to third parties. In fact, FinCEN recently issued an advisory, titled “SAR Confidentiality Reminder for Internal and External Counsel of Financial Institutions,” reminding financial institutions of their confidentiality obligations and the risks of non-compliance.¹ This article discusses how litigants have sought to rely on the SAR reporting process and analyzes the issues raised by these efforts.

SAR Requirements