# Presentation: 089020

## Slide 1

## Suspicious Activity Report

- This presentation is provided to educate financial institutions about the filing requirements and use of the  Suspicious Activity Report.

## Objectives:

- Importance of filing a SAR
- Which institutions must file?
- What forms to file?
- When to file?
- Who uses the SAR?

## The Importance of Filing a SAR

- Identifies potential & actual illegal             activity:

-   Money laundering

-   Terrorist financing

-   Other financial fraud & abuse

- 2.  Detects & prevents flow of illicit funds

- 3.  Establishes emerging threats through 	                        analysis of patterns & trends

- 4.  It’s required by law!

## Financial  Institutions Required To File SARs  

- _Depository Institutions_**    ** (since April ‘96)
- _Money Services Businesses (MSBs)_  (Money trans-mitters & issuers, sellers & redeemers of money orders or travelers checks since January ‘02)
-      (Currency dealers & exchangers since March ’03 – effective Aug. ‘03)
- _Casinos & Card Clubs_** **** **(since March ’03)

- _Securities & Futures Industries_**  **
- 	(Broker-Dealers since     January ‘03)
- 	(Futures Commission Merchants & Introducing Brokers in Commodities – effective May 18, 2004)
- _Insurance Companies_** **(proposed)
- _Mutual Fund Operators_** **(proposed)

## SAR Reporting Deadlines

- A financial institution is required                         to file a SAR:

- No later than ***30 calendar days*** after the date of initial detection of facts that may constitute a basis for the filing

- No later than ***60 calendar days*** if no
-    suspect was identified on the date   of detection of the incident  requiring the filing

## Slide 7

## Depository Institutions                        Required To File A SAR

- Banks
- Savings Association
- Savings Association Service Corporations
- Credit Unions
- Bank Holding                  Companies

- Non-bank subsidiaries of bank holding companies
- Edge & Agreement Corporations
- U.S. branches & agencies of foreign banks

## Form to use:

- Treasury Form TD F 90-22.47 SAR

## When Must A SAR Be Filed?

- For any known or suspected violations of federal criminal laws or  regulations committed/attempted against or through the institution if it involves or aggregates at least _$5,000_ in funds or other assets & the bank knows, suspects, or has reason to suspect the funds are:

- Obtained from illegal activity
- Intended or conducted to hide or disguise funds or assets derived from illegal activity
- Designed to evade any reporting requirements of the Bank Secrecy Act (BSA)
-  						31 CFR 103.18

## When Must A SAR Be Filed? 

- For any known or suspected federal criminal violations committed/attempted against or through the institution involving funds (cont.):

- Transacted with no business or lawful purpose
- Not the sort the customer normally engages
- The institution knows of no reasonable explanation for the transaction after examining available facts including the background and possible purpose of the transaction
- 						31 CFR 103.18

## When Must a SAR Be Filed?

- Note:  Financial institutions _may_ also report  suspicious transactions that they believe are relevant to a violation of law or regulation but whose reporting is not required by 31 CFR Part 103.18.

## MSBs Required to File a SAR

- Money Transmitters
- Currency dealers or exchangers
- Issuers, sellers, or redeemers of  money orders
- Issuers, sellers, or redeemers of traveler’s checks

## Form to use:

- Treasury Form TD F 90-22.56 SAR-MSB

## When Must a SAR-MSB Be Filed?

- Any transaction or pattern of transactions conducted or attempted that is suspicious &  involves or aggregates funds or assets of at least _$2,000_ if the MSB knows, suspects, or has reason to suspect the transactions are:

- Derived from illegal activity or is intended to hide or disguise funds or assets derived from illegal activity
- Designed to evade the requirements of the BSA, whether through structuring of other means
- 					31 CFR 103.20

## When Must a SAR-MSB Be Filed? 

- Any transaction or pattern of transactions (cont.)

- Serves no business or apparent lawful purpose & the MSB knows of no reasonable explanation for the transaction after examining all available facts
- 						31 CFR 103.20

## When Must a SAR-MSB Be Filed?

- * Special note for _issuers_ of money orders & travelers checks:

- Issuers are required to report transactions or pattern of transactions that are suspicious & involve or aggregate funds or other assets of at least _**$5,000**_ if ***identification of transactions is derived from review of clearance records or other similar records of items sold or processed. ***

## Required to File a SAR 

-  Brokers or dealers in securities (“BD”)
- Futures commission merchants (“FCM”) (effective May 18, 2004)
- Introducing brokers in commodities (“IB”) (effective May 18, 2004)

## Form to use:

- FinCEN 101  SAR-SF

## When Must a SAR-SF Be Filed?

- Any transaction or pattern of transactions conducted or attempted involving funds or other assets of at least _$5,000_ if the BD, FCM, or IB knows, suspects, or has reason to suspect the funds are:

- Derived from illegal activity
- Intended to hide or disguise funds or assets derived from illegal activity
- Designed to evade reporting requirements of the BSA or other laws  or regulations
- 						31CFR 103.19

## When Must a SAR-SF Be Filed?

- Any transaction or pattern of transactions (cont.)

- No business or apparent lawful purpose
- Not typical for customer
- BD, FCM, or IB knows of no reasonable explanation for transaction after examining all available facts
- 						31 CFR 103.19

## Form to use:

- FinCEN 102  SAR-C

## When Must a SAR-C Be Filed?

- Any transaction or pattern of transactions conducted or attempted involving or aggregating funds or assets of at least _$5,000_ if the casino knows, suspects or has reason to suspect the funds are:

- Derived from illegal activity
- Intended to hide or disguise funds or assets derived from illegal activity
- Designed to evade reporting requirements of the BSA or other laws or regulations
- 						 31 CFR 103.21

## When Must a SAR-C Be Filed?

- Any transaction or pattern of transactions (cont.)

- Not typical for client
- Has no business or apparent lawful purpose
- Casino or Card Club knows of no reasonable explanation for transaction after examining all available facts
- 						31 CFR 103.21

## Slide 28

## Law Enforcement  - To initiate and support money laundering, terrorist financing, and other criminal investigations

- Federal law enforcement – DOJ, FBI, DEA, DHS, ICE, USSS, IRS, USPS

- _Law Enforcement _ - To initiate and support money laundering, terrorist financing, and other criminal investigations

-  State law enforcement

-  Local law enforcement

## Analysts –to identify trends & patterns

- _Analysts_ –to identify trends & patterns

- 		- FinCEN
- 		- Joint agency financial task forces
- 		- Law enforcement agencies
- 		- Office of Foreign Assets Control 		  	  (OFAC)

## Federal Regulatory Authorities 
		- BSA/AML compliance exams

- _Federal Regulatory Authorities _
- 		- BSA/AML compliance exams

- An Important Note: Referral to FinCEN by regulatory authorities upon discovery of insufficient systems & programs to identify, investigate, document & report suspicious activity may result in:

-   Civil monetary penalties

-   Enforcement actions

##    Financial institution shall retain for               5 years from the date of the filing:

- A copy of any SAR filed; ***and***
- The original or business record of ***any ***supporting documentation; ***and***
- Make all supporting documentation available to FinCEN & any appropriate                 law enforcement agencies or regulatory authorities

## Another Important Reminder

- 	Federal law requires that a financial institution, & its directors, officers, employees, and agents who, voluntarily or by means of a suspicious activity report, report suspected or known criminal violations or suspicious activity _may not_ notify any person involved in the transaction that the transaction has been reported.

## Questions?Call the FinCENRegulatory Help Line at 1-800-949-2732