What action should a credit union take if it identifies suspicious account activity?

When a credit union identifies suspicious account activity, the appropriate action is to file a Suspicious Activity Report (SAR) if warranted. The primary purpose of a SAR is to alert law enforcement and regulatory authorities about potentially unlawful or suspicious financial activity. Filing a SAR allows the institution to comply with the Bank Secrecy Act (BSA) requirements while also contributing to the overall efforts to combat money laundering and other financial crimes.

In this context, choosing to file a SAR serves several important functions. It ensures that detailed information regarding the suspicious activity is documented and shared with relevant authorities, enabling them to conduct further investigations. Additionally, filing a SAR aids the credit union in demonstrating that it has fulfilled its compliance obligations under the BSA, thereby protecting itself from potential penalties.

The other actions — ignoring the activity, closing the account immediately without investigation, or notifying all members — would not align with the regulatory expectations for compliance and could compromise the integrity of the investigation. Each of those options may hinder the credit union's ability to respond appropriately to the suspicious activities and could even expose the institution to increased risks, including potential legal liability.