Compliance Blog

Written by Shari R. Pogach, Regulatory Paralegal

I was listening to the news on NPR last week when a story came on about suspicious activity reports. Hearing that term, well, that naturally peaked my interest so I started listening more closely.  Imagine my perplexity when the story went on to discuss a freelance photographer in Los Angeles who likes to take pictures of industrial scenes, bridges, ports and refineries.  Huh?

Yes, apparently this photographer raises the suspicions of security guards and local law enforcement so his picture taking activities often get reported to the feds.  As a result, the photographer has had several visits from FBI agents with questions about why he’s taking such pictures.

The Nationwide Suspicious Activity Reporting Initiative is led by the Justice Department and 53 federal agencies now participate.  Under this program, suspicious activity reports include information sometimes received from community members, private security guards and via anonymous tips – everyone is encouraged to help. As a  result, many of the reports filed are problematic or useless.

A former FBI agent, Mike German, now senior policy counsel at the ACLU in Washington, DC, considers all of this to be not helpful and a waste of time.  His organization filed public records requests and was able to get 1,800 such suspicious activity reports originating from central California.  Many, if not most, examples of the suspicious activity in the copies of these reports are of people taking pictures of dams and other public structures.

Unlike financial institution suspicious activity reporting, the suspicious activity reports filed under the Nationwide Suspicious Activity Reporting Initiative appear to be publically available upon request.  So, this odd NPR story gives me the perfect opportunity to leave you with a reminder of the confidentiality of Suspicious Activity Report (SAR) filings by credit unions.  31 C.F.R. § 1020.320(e) states:  

        â€œ(e) Confidentiality of SARs. A SAR, and any information that would reveal the existence of a SAR, are confidential and shall not be disclosed except as authorized in this paragraph (e). For purposes of this paragraph (e) only, a SAR shall include any suspicious activity report filed with FinCEN pursuant to any regulation in this
chapter.

            (1) Prohibition on disclosures by banks —(i) General rule. No bank, and no director, officer, employee, or agent of any bank, shall disclose a SAR or any information that would reveal the existence of a SAR. Any bank, and any director, officer, employee, or agent of any bank that is subpoenaed or otherwise requested to disclose a SAR or any information that would reveal the existence of a SAR, shall decline to produce the SAR or such information, citing this section and 31 U.S.C. 5318(g)(2)(A)(i), and shall notify FinCEN of any such request and the response thereto.

           (ii) Rules of Construction.Provided that no person involved in any reported suspicious transaction is notified that the transaction has been reported, this paragraph (e)(1) shall not be construed as prohibiting:

            (A) The disclosure by a bank, or any director, officer, employee, or agent of a bank, of:

            ( 1 ) A SAR, or any information that would reveal the existence of a SAR, to FinCEN or any Federal, State, or local law enforcement agency, or any Federal regulatory authority that examines the bank for compliance with the Bank Secrecy Act, or any State regulatory authority administering a State law that requires the bank to comply with the Bank Secrecy Act or otherwise authorizes the State authority to ensure that the bank complies with the Bank Secrecy Act; or

            ( 2 ) The underlying facts, transactions, and documents upon which a SAR is based, including but not limited to, disclosures:

            ( i ) To another financial institution, or any director, officer, employee, or agent of a financial institution, for the preparation of a joint SAR; or

            ( ii ) In connection with certain employment references or termination notices, to the full extent authorized in 31 U.S.C. 5318(g)(2)(B); or

            (B) The sharing by a bank, or any director, officer, employee, or agent of the bank, of a SAR, or any information that would reveal the existence of a SAR, within the bank's corporate organizational structure for purposes consistent with Title II of the Bank Secrecy Act as determined by regulation or in guidance.

            (2) Prohibition on disclosures by government authorities. A Federal, State, local, territorial, or Tribal government authority, or any director, officer, employee, or agent of any of the foregoing, shall not disclose a SAR, or any information that would reveal the existence of a SAR, except as necessary to fulfill official duties consistent with Title II of the Bank Secrecy Act. For purposes of this section, “official duties” shall not include the disclosure of a SAR, or any information that would reveal the existence of a SAR, in response to a request for disclosure of non-public information or a request for use in a private legal proceeding, including a request pursuant to 31 CFR 1.11.”