Last month, the U.S. Supreme Court denied the Petition for a Writ of Certiorari in Cummings v. Doughty, thereby leaving open a split among circuit courts regarding the scope of the immunity financial institutions that file suspicious activity reports (“SARs”) are entitled to under federal law. As a result, financial institutions that file SARs will continue to run the risk that they will be exposed to litigation for simply complying with federal law.
The SAR Safe Harbor Clause -
To assist the government in uncovering and preventing crime and terrorism, the Annunzio-Wylie Anti-Money Laundering Act (the “Act”) authorizes the Secretary of the Treasury to “require any financial institution … to report any suspicious transaction relevant to a possible violation of law or regulation.” 31 U.S.C. § 5318 (g)(1). The Secretary has directed federal agencies and departments that regulate financial institutions to implement this provision, and the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Federal Reserve System, the National Credit Union Administration, the Federal Trade Commission, and the Financial Crimes Enforcement Network all have promulgated regulations requiring the financial institutions they oversee to report certain questionable transactions by submitting SARs.
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