Banks can question customer activity without disclosing SARs

Federal regulators just gave lenders and financial institutions more breathing room when investigating suspicious activity. This new guidance clarifies that banks can ask you or your customers about unusual transactions without breaking the law. Specifically, they can seek information to verify if a transaction is legitimate without admitting that a Suspicious Activity Report (SAR) has been filed. For retailers and operators, this means you might see an increase in proactive inquiries from your financing partners regarding specific high-value or unusual transactions. Previously, the fear of 'tipping off' a customer about a federal investigation led to silence or immediate account freezes. Now, lenders are encouraged to communicate to clear up misunderstandings. This is good news for your business operations. It reduces the likelihood of a sale being killed by an automated fraud flag that could have been resolved with a simple conversation. However, it also means your staff should be prepared to provide documentation for unusual purchase patterns if requested by the lender. The focus is on transparency and due diligence rather than immediate rejection. Expect your financing partners to be more inquisitive, but also more flexible, as they work to satisfy anti-money laundering requirements without hurting the customer experience.

Source: Banking Dive

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