Agencies Confirm Banks Can Discuss Fraud With Customers

Five U.S. federal financial regulators, including FinCEN and the Federal Reserve, have issued a joint statement clarifying the scope of confidentiality for suspicious activity reports (SARs) under the Bank Secrecy Act. The guidance confirms that financial institutions are not prohibited from communicating with customers about potentially fraudulent transactions, account restrictions, or closures, so long as the communication does not reveal the existence of a SAR.

This clarification is significant for counsel advising banks and credit unions, as it addresses a persistent tension between the duty of confidentiality and the need for transparent customer communication in fraud prevention. The agencies affirmed that discussing the underlying facts, transactions, and documents a SAR is based on is permissible. The statement provides a non-exhaustive list of approved communications, such as requesting customer due diligence, asking about the purpose of a transaction, or explaining an account closure. Financial institutions should review their customer communication policies and training materials to align with this guidance, which may allow for more direct engagement with customers on high-risk activity without violating federal law.