When Must an SEC-Registered Investment Adviser File a SAR or CTR?

When Must an SEC-Registered Investment Adviser File a SAR or CTR?

Overview

With the FinCEN Final Rule issued on August 28, 2024, the Bank Secrecy Act (BSA) framework now clearly applies to many SEC-registered investment advisers (RIAs) and Exempt Reporting Advisers (ERAs). As a result, these firms are now subject to anti-money laundering (AML) obligations—including the duty to file Suspicious Activity Reports (SARs) and potentially Currency Transaction Reports (CTRs).

What Is a SAR?

A Suspicious Activity Report (SAR) is a confidential report that must be filed with the Financial Crimes Enforcement Network (FinCEN) when a covered entity detects suspicious behavior that may involve:- Money laundering- Terrorist financing- Fraud (wire fraud, securities fraud, etc.)- Structuring or evasion of BSA reporting requirements- Unusual or unexplained transactions

Key Triggers for SAR Filing by RIAs:

• A client deposits or withdraws large sums without a clear investment rationale.

• An investor attempts to obscure identity or source of funds.

• Suspicion of dealings with a sanctioned entity.

• Use of firm as pass-through without advisory services.

• Refusal to provide required due diligence documentation.

Timing Requirement: A SAR must be filed within 30 calendar days of detecting suspicious activity (or 60 days if no subject is identified).

What Is a CTR?

A Currency Transaction Report (CTR) is a report that must be filed for any single or aggregated cash transactions over $10,000 conducted by, or on behalf of, one person in one business day.

• CTR Applicability to Investment Advisers:

• Most RIAs do not handle cash directly, but the final rule does not exempt them.

• If the firm conducts or facilitates cash transactions over $10,000, a CTR is required.

• Aggregated same-day transactions across accounts must be considered.

Key Differences Between SAR and CTR

📝 Key Differences Between SAR and CTR

Requirement	SAR (Suspicious Activity Report)	CTR (Currency Transaction Report)
Purpose	Reports suspicious or potentially criminal activity	Reports large currency transactions
Trigger	Behavioral or transactional red flags	Cash transactions ≥ $10,000 in one day
Deadline	Within 30 days (or 60 if no suspect)	Within 15 calendar days
Applies to	Almost all investment advisers under final rule	Only if firm handles physical cash
Filing Tool	BSA E-Filing System (FinCEN)	BSA E-Filing System (FinCEN)

Confidentiality & Legal Considerations

Advisers must not disclose to clients or third parties that a SAR was filed (this is “tipping off” and is prohibited).- CTRs can be disclosed in some cases, but always consult legal counsel.- Maintain all filing records for a minimum of 5 years.

Practical Takeaways for RIAs

1. Integrate SAR/CTR protocols into your AML program.

2. Train staff on red flags and responsibilities.

3. Review custodial arrangements for exposure to cash.

4. Document all decisions, including why a SAR wasn't filed.

5. Use the BSA E-Filing System for all SAR and CTR filings.

Final Thoughts

Filing SARs and CTRs is a key responsibility under AML regulations. With the January 1, 2026 deadline approaching, RIAs should prepare early to meet these obligations and protect the integrity of the U.S. financial system.

📥 Need help updating your AML program or training staff on SAR/CTR obligations? Contact us today for templates, workshops, or a custom compliance review.