With fraudulent activity on the rise and exploding during the pandemic, some banks are taking an even harder look at their customers’ transactions — and closing their accounts when they feel that it’s necessary, the New York Times reported. Because financial institutions have a front-row seat for watching the country’s cash flow, financial institutions are obligated to alert regulators and law enforcement through a Suspicious Activity Report if there’s irregular behavior that they cannot easily explain. Not all reports lead to account closures, and not all closures lead to reports. But if banks fail to report suspicious activity and regulators discover problematic transactions later, banks and their compliance employees are potentially on the hook for all manner of penalties. “So all their incentives are toward closing accounts,” according to an explanation of SARs on the website of the Bank Policy Institute, a research and advocacy organization that represents mid- and large-size banks. Financial institutions filed 1.4 million of these SARs in 2021, according to a bureau of the Treasury Department. That was nearly 70 percent higher than the 839,314 filed in 2014.