Samantha: Hello, this is Samantha Shares.
This episode covers Frequently Asked Questions.
The following is an audio version of that document.
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And now the Frequently Asked Questions Regarding Suspicious
Activity Reporting Requirements.
October 3, 2005.
The Financial Crimes Enforcement Network, jointly with the Board of Governors of
the Federal Reserve System, the Federal Deposit Insurance Corporation, the
National Credit Union Administration, the Office of the Comptroller of the Currency,
and the Office of Thrift Supervision, is issuing interpretive guidance in response
to questions received regarding the filing of Suspicious Activity Reports.
The purpose of this guidance is to clarify the regulatory expectations
and requirements for financial institutions with respect to the
reporting of suspicious activity.
Financial institutions are reminded that Suspicious Activity Reports are
one of the most important sources of information available to law
enforcement and regulatory agencies for detecting financial crime,
and are used in a wide range of investigations and enforcement actions.
Below are answers to frequently asked questions regarding suspicious
activity reporting requirements.
Question 1: S A R Filings for Potential Structuring related Activity.
Is a financial institution required to file a S A R for transactions or a series
of transactions in which a person or persons are structuring transactions to
avoid the C T R threshold, even though the total amount of currency involved
does not exceed ten thousand dollars?
Yes.
The mere purpose of structuring is evidence of suspicious
activity regardless of the amount.
If one person or two or more persons act together to break up currency
transactions to avoid the ten thousand dollar C T R threshold, then information
sufficient to identify the activity should be reported on a S A R.
For example, if an individual conducts multiple cash deposits of
nine thousand five hundred dollars or less into different accounts
to evade a C T R, the financial institution is required to file a S A R.
A financial institution is required to file a S A R for a transaction
conducted or attempted by, at, or through the institution if it involves
or aggregates at least five thousand dollars in funds or other assets, and
the institution knows, suspects, or has reason to suspect that the transaction:
One, involves funds derived from illegal activities or is intended to hide or
disguise funds from illegal activities.
Two, is designed to evade Bank Secrecy Act requirements, such
as structuring to avoid a C T R.
Three, has no business or apparent lawful purpose.
FinCEN has consistently advised that financial institutions must
file S A R s for structuring even when the total amount of currency
is less than ten thousand dollars.
Under FinCEN guidance, structuring transactions to evade reporting
requirements is suspicious in and of itself and must be reported.
Financial institutions should not ignore structuring simply because the total
amount falls below the C T R threshold.
The fact that the amount is below ten thousand dollars does not eliminate
the obligation to file a S A R.
Question 2: Continuing Activity Reviews.
Is a financial institution required to conduct a review of a customer
or account following the filing of a S A R to determine whether
suspicious activity has continued?
Yes.
Recognizing that suspicious conduct does not end once an initial S A R
is filed, FinCEN guidance issued in October two thousand advised that
institutions must review their S A R filings to determine whether
additional S A R s should be filed.
The continuing review should determine whether suspicious activity has persisted
and whether further S A R s are warranted.
Institutions are required to file continuing activity S A R s no later
than ninety days after the date of the previously related S A R filing,
if suspicious activity continues.
Financial institutions must establish policies and procedures to identify
and report ongoing suspicious activity.
Institutions are expected to document reviews conducted and
provide the rationale for whether a subsequent S A R is necessary.
Question 3: Continuing Activity Reviews â Timeline.
What is the timeline for a financial institution that elects to file S
A R s in accordance with FinCENâs continuing suspicious activity guidance?
As noted in prior F A Qs, FinCEN previously recommended that financial
institutions report continuing suspicious activity with a new S A
R filing at least every ninety days.
Subsequent S A R s must be filed no later than one hundred and twenty calendar
days after the date of the initial S A R.
The standard timeline is: Day one: Date of suspicious activity
detection, begin review.
Day thirty: File initial S A R.
Day ninety: Review whether suspicious activity continues.
Day one hundred and twenty: File continuing S A R if necessary.
This timeline ensures that law enforcement is kept informed of
continued suspicious activity.
Institutions must maintain procedures that identify and escalate potential continuing
suspicious conduct to compliance officers responsible for S A R decision-making.
Question 4: No S A R Documentation.
Is a financial institution required to document the decision not to file a S A R?
Yes.
There is no requirement or regulation that requires an institution to document
its reasons for not filing a S A R.
However, FinCEN has stated that financial institutions should maintain
sufficient documentation to support the rationale for their decision not to file.
This documentation should be retained in accordance with the
institutionâs internal policies and record retention requirements,
and must be available to examiners and law enforcement upon request.
This concludes the questions.
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This is Samantha Shares and we thank you for listening.