Federal agencies provided banks clarity about their legal obligations for communicating suspicious activity report (SAR) information with their customers on Sept. 2 via a joint statement.

U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) issued the statement along with the Federal Reserve, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the National Credit Union Administration.

The statement explains that banks’ confidentiality requirements defined by the Bank Secrecy Act (BSA) do not preclude them from informing their customers about potentially fraudulent transactions and other suspicious activity or account closures.

The BSA prohibits the disclosure of SARs to customers or other individuals who are the subjects of a SAR, as well as the unauthorized disclosure of a SAR to such individuals and any information that would reveal the existence of a SAR to that person. The prevailing logic behind this prohibition is that revealing such information could undermine ongoing and future law enforcement investigations by alerting potential suspects, deterring financial institutions from reporting suspicious activity and filing SARs and even endangering SAR filers. However, the joint statement points out a key exception to this prohibition.