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Samantha: Hello, this is Samantha Shares.

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This episode covers
Frequently Asked Questions.

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The following is an audio
version of that document.

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This podcast is educational
and is not legal advice.

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We are sponsored by Credit Union
Exam Solutions Incorporated, whose

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team has over two hundred and
forty years of National Credit

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Union Administration experience.

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We assist our clients with N C
U A so they save time and money.

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If you are worried about a recent,
upcoming or in process N C U A

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examination, reach out to learn how they
can assist at Mark Treichel dot com.

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Also check out our other podcast called
With Flying Colors where we provide tips

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on how to achieve success with N C U A.

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And now the Frequently Asked
Questions Regarding Suspicious

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Activity Reporting Requirements.

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October 3, 2005.

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The Financial Crimes Enforcement Network,
jointly with the Board of Governors of

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the Federal Reserve System, the Federal
Deposit Insurance Corporation, the

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National Credit Union Administration, the
Office of the Comptroller of the Currency,

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and the Office of Thrift Supervision, is
issuing interpretive guidance in response

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to questions received regarding the
filing of Suspicious Activity Reports.

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The purpose of this guidance is to
clarify the regulatory expectations

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and requirements for financial
institutions with respect to the

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reporting of suspicious activity.

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Financial institutions are reminded
that Suspicious Activity Reports are

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one of the most important sources
of information available to law

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enforcement and regulatory agencies
for detecting financial crime,

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and are used in a wide range of
investigations and enforcement actions.

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Below are answers to frequently
asked questions regarding suspicious

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activity reporting requirements.

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Question 1: S A R Filings for
Potential Structuring related Activity.

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Is a financial institution required to
file a S A R for transactions or a series

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of transactions in which a person or
persons are structuring transactions to

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avoid the C T R threshold, even though
the total amount of currency involved

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does not exceed ten thousand dollars?

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Yes.

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The mere purpose of structuring
is evidence of suspicious

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activity regardless of the amount.

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If one person or two or more persons
act together to break up currency

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transactions to avoid the ten thousand
dollar C T R threshold, then information

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sufficient to identify the activity
should be reported on a S A R.

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For example, if an individual
conducts multiple cash deposits of

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nine thousand five hundred dollars
or less into different accounts

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to evade a C T R, the financial
institution is required to file a S A R.

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A financial institution is required
to file a S A R for a transaction

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conducted or attempted by, at, or
through the institution if it involves

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or aggregates at least five thousand
dollars in funds or other assets, and

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the institution knows, suspects, or has
reason to suspect that the transaction:

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One, involves funds derived from illegal
activities or is intended to hide or

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disguise funds from illegal activities.

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Two, is designed to evade Bank
Secrecy Act requirements, such

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as structuring to avoid a C T R.

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Three, has no business or
apparent lawful purpose.

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FinCEN has consistently advised
that financial institutions must

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file S A R s for structuring even
when the total amount of currency

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is less than ten thousand dollars.

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Under FinCEN guidance, structuring
transactions to evade reporting

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requirements is suspicious in and
of itself and must be reported.

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Financial institutions should not ignore
structuring simply because the total

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amount falls below the C T R threshold.

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The fact that the amount is below ten
thousand dollars does not eliminate

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the obligation to file a S A R.

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Question 2: Continuing Activity Reviews.

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Is a financial institution required
to conduct a review of a customer

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or account following the filing
of a S A R to determine whether

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suspicious activity has continued?

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Yes.

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Recognizing that suspicious conduct
does not end once an initial S A R

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is filed, FinCEN guidance issued in
October two thousand advised that

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institutions must review their S
A R filings to determine whether

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additional S A R s should be filed.

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The continuing review should determine
whether suspicious activity has persisted

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and whether further S A R s are warranted.

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Institutions are required to file
continuing activity S A R s no later

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than ninety days after the date of
the previously related S A R filing,

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if suspicious activity continues.

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Financial institutions must establish
policies and procedures to identify

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and report ongoing suspicious activity.

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Institutions are expected to
document reviews conducted and

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provide the rationale for whether
a subsequent S A R is necessary.

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Question 3: Continuing
Activity Reviews – Timeline.

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What is the timeline for a financial
institution that elects to file S

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A R s in accordance with FinCEN’s
continuing suspicious activity guidance?

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As noted in prior F A Qs, FinCEN
previously recommended that financial

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institutions report continuing
suspicious activity with a new S A

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R filing at least every ninety days.

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Subsequent S A R s must be filed no later
than one hundred and twenty calendar

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days after the date of the initial S A R.

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The standard timeline is: Day
one: Date of suspicious activity

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detection, begin review.

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Day thirty: File initial S A R.

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Day ninety: Review whether
suspicious activity continues.

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Day one hundred and twenty: File
continuing S A R if necessary.

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This timeline ensures that law
enforcement is kept informed of

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continued suspicious activity.

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Institutions must maintain procedures that
identify and escalate potential continuing

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suspicious conduct to compliance officers
responsible for S A R decision-making.

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Question 4: No S A R Documentation.

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Is a financial institution required to
document the decision not to file a S A R?

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Yes.

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There is no requirement or regulation
that requires an institution to document

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its reasons for not filing a S A R.

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However, FinCEN has stated that
financial institutions should maintain

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sufficient documentation to support the
rationale for their decision not to file.

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This documentation should be
retained in accordance with the

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institution’s internal policies
and record retention requirements,

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and must be available to examiners
and law enforcement upon request.

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This concludes the questions.

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If your Credit Union could use assistance
with your exam, reach out to Mark Treichel

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on LinkedIn, or at Mark Treichel dot com.

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This is Samantha Shares and
we thank you for listening.