Question 16
Domain 3: Ethics, Fraud Prevention, and Consumer ProtectionWhen a SAR is filed, what must the financial institution do regarding customer notification?
Correct answer: C
Explanation
A Suspicious Activity Report is confidential, so the institution must not tell the customer it was filed. Federal SAR rules prohibit disclosure of the filing, which is why the customer is not notified.
Why each option is right or wrong
A. Notify the customer within 30 days
B. Notify the customer only if criminal charges are filed
C. Not notify the customer — SAR filings are confidential
31 U.S.C. § 5318(g)(2) and the implementing SAR confidentiality rules in 31 C.F.R. § 1020.320(e) prohibit a financial institution from disclosing that a Suspicious Activity Report has been filed. The institution must therefore keep the filing confidential and give no notice to the customer; unauthorized disclosure can trigger civil and criminal penalties under the Bank Secrecy Act framework.
D. Notify the customer before filing the SAR