If there is a system error that has caused certain transactions/activity to not come under review for SAR filing, once the system error is corrected, would the initial detection date for filing be the date you SHOULD have detected the transation/activity or the date that you DID detect the activity? If this is past the 30 day window that you would have detected had the system error not occured then the filing would be considered as a late filing, right?

The FFIEC manual states "The SAR rules require that a SAR be electronically filed through the BSA E-Filing System no later than 30 days from the date of the initial detection of facts that may constitute a basis for filing a SAR." Due to your system error, you didn't detect the facts that may constitute a basis for filing until the day it was corrected. To me, the clock starts the date you detect the activity, so you'd have 30 days from the date the system error is corrected.

It is 30 days from detected as far as FinCen is concerned but that may not be good enough for your regulators as the detection may not have been timely enough for them.

http://www.fincen.gov/news_room/nr/pdf/20130923.pdf

Look at pages 70 & 71 (document, not pdf) of the BSA/AML Examination Manual. The summary statement you will find there is:

The phrase “initial detection” should not be interpreted as meaning the moment a transaction is highlighted for review.

In your scenario, your position would have to be that your investigation began on the date you DID identify the transactions. To paraphrase and condense what you will read in the Manual, you begin the countdown to the required filing date when it becomes apparent to your bank that a SAR filing is necessary.

The Manual, supported by prior interpretations, reflects more common sense than the regulation; they do not want "hip-shot" filing decisions.