Financial institutions across the United States are reexamining their anti-money laundering programs after the release of FinCEN’s October 2025 Suspicious Activity Report (SAR) FAQs. The update, jointly issued by the Federal Reserve, FDIC, NCUA, and OCC, brought long-awaited clarifications to key reporting obligations under the Bank Secrecy Act. Although the FAQs explicitly stated that they do not alter existing regulations, their practical implications reach deep into how banks and non-bank financial institutions assess, document, and escalate suspicious activity.

The FinCEN SAR Guidelines and Their AML Impact

The document emphasizes a more risk-based, intelligence-driven approach to suspicious activity monitoring rather than rigid, rule-bound filing behavior. FinCEN’s message is subtle but clear: compliance resources should focus on meaningful risks, not mechanical triggers. For many institutions, this recalibration represents a chance to revisit outdated monitoring logic and reduce unnecessary filings, while for others it exposes deficiencies in how risk assessments are applied to SAR programs.

The new guidance touches on four operationally sensitive areas: structuring-related activity, continuing activity reviews, the 90-day rule for repeated reporting, and documentation standards for decisions not to file. Each of these domains reflects recurring pain points in AML oversight, particularly where examiners have found institutions either overreporting to mitigate regulatory risk or underreporting due to flawed escalation processes.

Structuring and the Fine Line of Suspicion

Structuring remains one of the most commonly cited offenses in U.S. money laundering enforcement actions. The FAQs reaffirm that institutions are not required to file a SAR simply because a customer’s transactions hover around the $10,000 Currency Transaction Report (CTR) threshold. What matters is whether the institution “knows, suspects, or has reason to suspect” that the pattern is designed to evade reporting requirements. This wording is critical. It places the emphasis on intent and pattern recognition rather than pure transaction value.

For AML officers, the distinction reinforces the need for analytical context. A legitimate business with frequent cash deposits of $9,500 should not automatically be labeled suspicious if there is a consistent, transparent business rationale. Yet, a pattern of fragmented deposits from multiple branches, inconsistent with declared business activity, could reasonably raise suspicion of structuring.

The FAQs remind compliance professionals that structuring is unlawful under the Bank Secrecy Act and that the definition extends to “any manner” of conduct intended to evade CTR requirements. This includes multiple deposits under $10,000 on the same or different days, across branches or affiliates, by or on behalf of the same individual or entity. The nuance lies in how financial institutions design monitoring rules to detect this conduct without overwhelming analysts with false positives.

Institutions are expected to calibrate their transaction monitoring systems according to the money laundering and terrorist financing risk inherent to their business model. A universal threshold approach is discouraged. Instead, FinCEN expects contextual parameters aligned with each institution’s customer base, geography, and service offerings. This reinforces a broader regulatory trend: regulators are less interested in seeing uniformity and more in seeing rationale.

A bank that files hundreds of SARs for borderline transactions without substantive suspicion is no longer seen as conservative but inefficient. Regulators want to see evidence of judgment, not quantity. Conversely, institutions that fail to connect obvious structuring patterns across business lines risk significant enforcement action for willful blindness. The new FAQs implicitly challenge institutions to upgrade their analytical capabilities, adopt machine learning techniques to identify structuring typologies, and document the rationale for every decision—whether to file or not.

Rethinking Continuing Activity and the 90-Day Cycle

The long-debated “90-day rule” for continuing suspicious activity has been a source of confusion and operational burden for years. The October 2025 FAQs finally settle the matter: financial institutions are not required to conduct a separate review following each SAR filing solely to determine whether suspicious activity has continued.

This clarification is more consequential than it appears. Many compliance programs had institutionalized manual reviews every 90 days after a SAR filing, driven by an assumption that regulators required such follow-up. FinCEN’s update acknowledges that this practice, while well-intentioned, drained resources from genuine risk areas. Instead, institutions may rely on ongoing, risk-based monitoring mechanisms to capture continued suspicious activity automatically.

The guidance does not prohibit continued SAR filings, but rather gives flexibility in timing and necessity. The previous informal expectation that continuing SARs be filed at least every 90 days has been reframed as an option, not a mandate. Institutions that elect to maintain the 90-day cadence can do so, but others may adjust based on risk profiles and internal monitoring results.

For example, if a customer’s suspicious behavior persists, and the institution’s system continuously detects and escalates the same typology, filing every 120 days instead of 90 might still meet FinCEN’s expectations if well justified. The new standard emphasizes that monitoring should be dynamic, not calendar-driven.

This change signals a gradual regulatory pivot toward efficiency. FinCEN and the prudential regulators recognize that the volume of redundant SAR filings often overwhelms law enforcement analysts. By removing unnecessary repetition, the agencies aim to improve the quality of intelligence reaching investigators.

For compliance departments, however, the operational implications are complex. Policies, procedures, and workflow systems must be reconfigured. SAR escalation matrices, alert generation intervals, and quality control metrics will all need adjustment. Training programs must ensure investigators understand that “less frequent” does not mean “less vigilant.” The decision not to file a follow-up SAR must still be grounded in continuous monitoring evidence and well-documented rationale.

Documentation and the Culture of Judgment

Perhaps the most interesting clarification in the FAQs concerns the absence of any requirement to document a decision not to file a SAR. This statement directly challenges an entrenched compliance culture of overdocumentation. For years, many institutions adopted a “document everything” philosophy to preempt examiner criticism, resulting in extensive case notes and unnecessary paperwork. FinCEN’s clarification underscores proportionality: the level of documentation should match the complexity of the review and the institution’s risk profile.

This does not mean decisions should be casual or undocumented, but rather that a concise, reasoned statement can suffice. For simple alerts where no indicators of suspicious activity are found, one or two sentences explaining the decision may be adequate. In complex cases involving multiple jurisdictions, counterparties, or intermediaries, a more detailed rationale remains appropriate.

The deeper regulatory philosophy here is trust in institutional judgment. Regulators increasingly recognize that excessive administrative demands can hinder effective AML operations. When analysts spend more time documenting why they are not filing than investigating genuine threats, the system fails its purpose.

Nonetheless, the FAQs reaffirm that internal policies and controls must remain risk-based and reasonably designed to detect and report suspicious activity. Institutions cannot use this flexibility as a pretext to weaken governance or oversight. Audit functions will likely adjust their methodologies to ensure decision-making remains consistent and defensible.

A balanced approach is now required: strong analytical rigor paired with lean documentation. The compliance profession may interpret this as an opportunity to shift culture—from fear-based overcompliance to intelligent, proportional risk management. FinCEN’s subtle message is to reward quality over quantity, a principle that mirrors its earlier calls for “effective and reasonable AML programs” rather than prescriptive checklists.

The Road Ahead for AML Compliance

The October 2025 FAQs represent more than a technical update. They reflect an evolving philosophy in the U.S. approach to financial crime prevention. Rather than imposing new rules, FinCEN and its fellow regulators are steering the industry toward autonomy, accountability, and better judgment.

Banks, money services businesses, insurance firms, and other covered entities now face a pivotal moment. They must modernize their monitoring infrastructures, integrate behavioral analytics, and train investigators to recognize nuanced patterns of money laundering beyond numeric triggers. The move away from rigid thresholds also aligns with global trends. FATF’s revised guidance emphasizes effectiveness and proportionality, and the European AML Authority (AMLA) is advancing similar principles across the EU framework.

However, challenges remain. Institutions accustomed to defensive compliance must learn to defend “why not” as much as “why.” The absence of mandatory documentation or fixed SAR review intervals does not eliminate accountability. It simply raises the bar for decision-making quality. Auditors and regulators will expect to see evidence that risk-based logic guided each choice, even without extensive paperwork.

Smaller institutions may find the transition harder. Community banks and credit unions with limited compliance resources will need practical templates and training to implement the new expectations effectively. Meanwhile, larger institutions must align global monitoring systems and ensure consistent application across business lines.

For law enforcement and intelligence agencies, the expected outcome is higher-quality data. If institutions follow FinCEN’s intent, fewer but more substantive SARs will reach analysts, allowing faster targeting of genuine threats. Over time, this could improve interagency collaboration and accelerate asset recovery linked to criminal networks.

Ultimately, the FAQs represent a cultural inflection point. AML programs are no longer judged by how much they report but by how well they reason. The future of SAR compliance lies not in checkboxes but in critical thinking—a shift that may redefine what regulatory success looks like in the next decade.

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Related Links

• FinCEN Official Site
• Federal Reserve Board AML Resources
• FDIC Bank Supervision and BSA Guidance
• Office of the Comptroller of the Currency (OCC)
• National Credit Union Administration (NCUA)

Other FinCrime Central Articles About FinCEN Guidelines

• FinCEN’s Compliance Cost Survey and the Hidden Agenda of Deregulation
• FinCEN modernization of BSA and SARs drives Hurley’s ACAMS keynote
• FinCEN’s 2025 Agenda Blends BSA Modernization, Beneficial Ownership and Digital Assets

Source: FinCEN

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