Compliance Blog

Written by Shari R. Pogach, Regulatory Paralegal     

             Recently JiJi, Bernadette and I attended a one-day seminar on information sharing and best practices related to the Bank Secrecy Act and Anti-Money Laundering (BSA/AML).  Hosted by local law enforcement, the seminar offered a window into how the other side views the multitude of Suspicious Activity Reports (SARs) that financial institutions file.

            For example, did you know that SAR filings were originally transcribed into continuous lines of all capitalized type and no grammar?  Law enforcement readers used rulers in order to get through the material without going blind.  FinCEN’s upgrades and changes to the BSA forms and reporting process has apparently made reading transcribed SAR material a little easier on the eyes today though. 

             Law enforcement is aware that financial institutions over file.  There will likely continue to be some push pull when it comes to satisfying regulatory responsibilities versus the utility of SARs to law enforcement. 

             Here’s what law enforcement suggests about writing and submitting an effective SAR narrative:

• Don’t just give the facts, explain why you think the activity is suspicious;
• Remember you should be telling a story with your narrative;
• Opening your narrative with the background and history of your credit union is not necessary; and
• Be prepared to back-up the reason for the SAR with staff witnesses and supporting documentation, for example, if based on a conversation a teller had with a member, the teller should not later forget the conversation.

             Although it often seems as though all those SAR filings disappear into a black hole, this isn’t the case.  For instance, the Asset Forfeiture and Money Laundering Section of Maryland’s U.S. Attorney’s Office may receive several hundred SARs a month, equivalent to half a ream of copy paper, just on possible money laundering activity.  Out of those only six or ten cases may be selected for further investigation. Why are they selected?  Selection is based upon a compelling reason such as the size, volume or type of incident.  But just this year, 23 of their cases have resulted in seizure, 11 indictments, nine convictions, one pending, one fugitive and five civil resolutions.  And, sometimes cases may be pursued based on a lesser charge, such as structuring, simply because law enforcement couldn’t prove other than that.

             The goal for law enforcement is to successfully partner with financial institutions and exchange information in order to catch the “bad guys.”  You might try contacting your local law enforcement to see if they’re willing to come to your credit union and educate your staff on suspicious activity and trends in your area.  It might not lessen the burden of filing those SARs but it will help understand their value to law enforcement.