U.S. banking agencies clarify SAR confidentiality rules for customer communications

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Banking SAR confidentiality guidance

Highlights

The Federal Reserve, FDIC, OCC, FinCEN, and NCUA clarified that Bank Secrecy Act rules allow banks and credit unions to discuss suspicious transactions with customers without revealing SAR filings.
The June 20, 2025 statement emphasizes that the clarification does not alter current legal or regulatory obligations or create new supervisory expectations for financial institutions.
Banks can now inform customers about account closures and discuss potentially fraudulent activity, provided they avoid disclosing the existence of a SAR, thereby supporting transparency and customer engagement.

SAR guidance addresses fraud inquiries

As stated by National Credit Union Administration, the Federal Reserve, FDIC, OCC and FinCEN are clarifying that existing Bank Secrecy Act rules do not bar banks and credit unions from discussing underlying suspicious transactions with customers, provided those communications do not reveal that a SAR may have been filed. The agencies say the statement does not change current legal or regulatory requirements and does not create new supervisory expectations.

The clarification follows a June 20, 2025 request for information from the Federal Reserve, FDIC and OCC on ways to help consumers, businesses, and financial institutions reduce payments fraud risk, with particular attention to check fraud. Commenters raised concerns about how bank staff can communicate promptly and transparently with customers during fraud investigations that may lead to SAR filings or account closures.

SAR confidentiality remains a statutory and regulatory requirement intended to limit disclosure to appropriate purposes. The agencies say unauthorized disclosure could compromise current or future law enforcement investigations, discourage suspicious activity reporting, and expose SAR filers to risk.

Operational impact for banks and customers

Under FinCEN's implementing regulation, a SAR or information revealing its existence does not include the underlying facts, transactions, and documents on which the report is based. That means banks and credit unions may discuss potentially fraudulent or suspicious transactions involving an account, and may notify a customer that an account is being closed for such activity, as long as the communication does not disclose the existence of a SAR.

The agencies say institutions should handle customer communications case by case and use precautions when discussing information that could indirectly signal a SAR filing. They indicate lenders can generally explain the transactions at issue, describe remediation efforts, and outline potential mitigation steps available to the customer, in an effort to improve transparency while preserving anti-money laundering reporting safeguards.

The statement also references Executive Order 14331, Guaranteeing Fair Banking for All Americans. Regulators say clearer communication around account actions is intended to strengthen customer engagement and support fair access to financial services.

Our earlier report on a Detroit tax refund fraud case detailed how Rodney Underwood pleaded guilty to filing more than 200 false returns that sought over $7 million in IRS refunds, with an estimated government loss of about $6.2 million. We noted that authorities say the scheme relied on repeat, nearly identical filings and concealment of the preparer’s role, underscoring the legal and financial consequences of fraud investigations and enforcement actions.

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