Intriguing. Next time, I suggest you hide two or three bundles of money to see if Fido alerts on the "right" one or all of them. He may just like
the smell of money. You may not choose to file a continuing or amending SAR just because of the arrest or seizure, but it would be relevant to any LEA reading the narrative of any SAR you do choose to file. My suggestion would be that you mention the arrest and seizure in the narrative of any SAR you file and provide guidance on how to find any public reporting of the issue; e.g. a link to the newspaper's site and the date of the story. Any law enforcement agency interested in your SAR will want to know about the arrest and which other LEA it should contact for additional information.
This person has cost your bank a significant amount of time and trouble. It should be very difficult to establish a reason for keeping the account open and I'm pretty certain the paychecks will stop coming...