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Supervision News Flash

May 2019

Are SARs Really Used?

writing report

A frequent comment we hear from bankers is, “What happens with suspicious activity reports (SARs) once they are filed with FinCEN.” Bankers want to know if these reports are really being used. Many times banks that dutifully file SARs when warranted never hear anything back. However, we want to assure you that SARs you complete are useful and provide invaluable information for both regulators and law enforcement.

Our Enforcement and Legal Risk Unit within the Supervision, Regulation and Credit department at the Richmond Fed use SAR data regularly. This unit completes a risk-based review of all SARs filed by our supervised financial institutions as a way to identify new trends and risks. Our reviews look at multiple data sets in order to find trends.  Cybersecurity, human trafficking, and elder abuse are examples of suspicious activities that are reviewed to understand new or emerging risks for our institutions. With a better understanding of the risks, examiners and analysts can provide more focused information when answering your questions, both during and between examinations, and for offering periodic webinars or other outreach on BSA AML hot topics.    

In addition to being used by regulators, local and federal law enforcement rely on SAR information for both undertaking and building legal cases involving a range of criminal activity.  To highlight the benefit of SAR data, since 2015 FinCEN has publicly recognized law enforcement agencies that have successfully used SARs filed by financial institutions to “pursue and prosecute cases and to demonstrate to the financial industry the value of its reporting under the BSA.”

Next we highlight one of these cases from the 2018 news release that demonstrates how SARs are used by law enforcement and provide a link where this and additional cases can be found.  The case involved local law enforcement in St. Paul, Minnesota, and involved fraudulent misrepresentation by the perpetrator. The case began based on information received from a bank regarding a “large-scale fraud scheme targeting individuals with specific cultural beliefs.” The financial information provided by the financial institution showed more than $1.3 million being sent to the perpetrator’s account from multiple domestic and international locations, usually with an initial $3,000 to $5,000 payment followed by numerous small payments from the victims.  FinCEN indicates that this initial information combined with information from other banks allowed law enforcement to freeze funds, recover more than $1.5 million from three banks to repay victims and convict the perpetrator.   

Additional information is located on the FinCEN website within the links provided above or under news releases. FinCEN also provides SAR statistical data that banks can use to see what types of SARs are being filed. Check out these resources and SAR-Stats. In addition to highlighting how SARs are used, regulators are reaching out to FinCEN in an effort to find ways to reduce BSA/AML reporting burdens, as noted in a May 1, 2018, American Banker article.

For additional information, please feel free to email Suzanne Reynolds, Senior Manager, or call her at (804) 697-2725. You may also view our BSA AML webinar from December 2017.

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