Loan Officer Practice Exam 2026 – Comprehensive All-in-One Guide for Exam Success!

A Suspicious Activity Report (SAR) is required under the Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) regulations when a financial institution encounters suspicious activity that might indicate money laundering or fraud. Among the options listed, electronic funds transfers generally involve transactions that can be high-risk for illegal activities due to the speed, anonymity, and the ability to move large sums of money across borders quickly.

Electronic funds transfers can also facilitate illicit transactions, making it essential for financial institutions to monitor these activities closely. If any red flags are identified during the processing of these transfers, such as unusual patterns, large amounts, or transactions to or from high-risk jurisdictions, a SAR must be filed.

In contrast, although consumer loans, mortgage applications, and auto financing can also involve suspicious activities, they do not inherently require SARs in the same context as electronic funds transfers. These types of transactions may warrant scrutiny but are not as routinely associated with the immediate movement of funds that raise suspicious flags as electronic funds transfers do.