Answers › Red flags and typologies
Does one red flag mean we must file a SAR? How do red flags relate to the SAR decision?
No. One red flag does not by itself mean a SAR must be filed. A red flag is a reason to look closer; whether the activity is reportable is decided after that review.
What the guidance says:
- The FFIEC's red flags are examples of potentially suspicious activity that may warrant additional scrutiny. The list is not all-inclusive, and the mere presence of a red flag is not by itself evidence of criminal activity (FFIEC BSA/AML Examination Manual, Appendix F).
- Closer scrutiny should help determine whether the activity is suspicious or one for which there does not appear to be a reasonable business or legal purpose (FFIEC BSA/AML Examination Manual, Appendix F).
- Management's primary focus should be on reporting suspicious activity, rather than on determining whether the transactions are in fact linked to money laundering, terrorist financing or a particular crime (FFIEC BSA/AML Examination Manual, Appendix F).
- FinCEN makes a parallel point about transactions at or near the $10,000 CTR threshold: on that fact alone, they do not require a SAR (FinCEN SAR FAQs, Oct. 9, 2025, Question 1).
What we would do:
- Treat the flag as the start of a review, not a conclusion. Compare the activity with what you know of the customer's business and history, look at where the money came from and where it went, and check for other red flags.
- Do not treat a single flag as a reason to stop reviewing. The guidance puts the focus on reporting suspicious activity, not on proving a crime.
- Handle records of the review under your own procedures. FinCEN's October 2025 FAQs say there is no requirement or expectation under the BSA to document a decision not to file a SAR; FinCEN had previously encouraged it, but not required it. If you do document it, the level of detail need not exceed what your own risk-based internal policies, procedures and controls call for (FinCEN SAR FAQs, Oct. 9, 2025, Question 4).
Whether the activity is reportable is a decision for your BSA/AML officer, applying your SAR procedures to the full facts.
Sources
- FFIEC BSA/AML Examination Manual, Appendix F (red flags): https://bsaaml.ffiec.gov/manual/Appendices/07
- FinCEN SAR FAQs (Oct. 9, 2025), Question 1: https://www.fincen.gov/system/files/2025-10/SAR-FAQs-October-2025.pdf
This answer is general information, not legal advice. Forteris is not a law firm.
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