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FinCEN Final Rule Requiring Mutual Funds to Report Suspicious Activity

May 18, 2006

By The Investment Management Practice

Recently, the Financial Crimes Enforcement Network of the Department of the Treasury published final regulations requiring mutual funds to file Suspicious Activity Reports (SARs) on suspicious transactions. The final rule creates a suspicious reporting requirement that is uniform with reporting requirements already established for other financial institutions such as banks, broker-dealers, casinos, and financial services businesses. Since May 2003, mutual funds have been required to design and implement reasonable procedures designed to prevent them from being used to launder money or finance terrorist activities.