What should a credit union do in response to identifying suspicious activity?

When a credit union identifies suspicious activity, the appropriate course of action is to file a Suspicious Activity Report (SAR). This is a critical component of compliance with the Bank Secrecy Act (BSA) and serves several important purposes.

Filing a SAR is essential because it allows the credit union to report suspicious transactions to the Financial Crimes Enforcement Network (FinCEN) and relevant regulatory authorities. This process helps in identifying potential money laundering, fraud, or other financial crimes that could affect the integrity of the financial institution and the broader financial system. Reporting suspicious activity not only fulfills regulatory obligations but also contributes to the overall safety and security of the financial industry by enabling further investigation by law enforcement agencies.

Moreover, the timely filing of a SAR can help protect the credit union from potential liability issues and assist in maintaining a sound compliance posture. Banks and credit unions are encouraged to have robust internal processes for monitoring and reporting suspicious activities, and their staff must be trained to recognize the signs of such activities.

In summary, filing a SAR is the correct response to suspicious activity as it is a legally mandated action that supports crime prevention, regulatory compliance, and customer and institutional protection.