Final answer:
Financial institutions must file a Suspicious Activity Report for transactions over $5,000 that may indicate money laundering or other illegal activities. Regulatory agencies like the FDIC, OCC, and NCUA supervise banks to ensure financial stability and the safety of deposits.
Step-by-step explanation:
Deposits, withdrawals, transfers, or any other business deals involving $5,000 or more are subject to monitoring by financial institutions.
If a financial company or insurer knows, suspects, or has reason to suspect that a transaction may be related to illegal activity, is not the usual type of transaction for the customer, or has no apparent lawful purpose, they are required to file a Suspicious Activity Report (SAR). SARs are a tool used by financial institutions to report potentially suspicious behavior that may indicate money laundering or terrorist financing.
In the United States, financial institutions are regulated and supervised to ensure they maintain positive net worth and that their asset risk levels are appropriate.
The Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the National Credit Union Administration (NCUA) are among the agencies that oversee these institutions. During the 2008-2009 recession, questions arose about why financial instability was not detected sooner, leading to substantial losses.