Barister's Brain
As a regular feature in Quarterly Interest, our advice columnist, Barry Barrister, will answer a legal question the OSBC has received that we think would be of interest to bankers. Even though he's a fictional lawyer (arguably the best kind), Barry has insisted we include the caveat that the advice he dispenses is general in nature, and is not intended as a substitute for obtaining specific legal advice from counsel when necessary.
Dear Barry,
Our bank filed a Suspicious Activity Report (SAR) on an individual back in December of 2005. We also filed one in January and May on this same individual because the suspicious activity continued. We have been in contact with our local Federal Bureau of Investigation office, and were told the FBI is declining to further investigate the matter. Do we have to keep filing supplemental SARs if the suspicious activity is still going on? Seems like a lost cause and a waste of time if it is not going to be investigated.
- Fastidious Filer Freda
Dear Freda:
I think you may know deep down what the likely answer to this question is, but you just don't want to hear it! You are obligated to continue filing SARs if the suspicious activity continues. Guidance has been previously given on this subject by the Financial Crimes Enforcement Network (FinCEN). The guidance indicates that if conduct continues for which a SAR has been filed, the financial institution should report the ongoing suspicious activity at least every 90 days, "even if a law enforcement agency has declined to investigate or there is knowledge that an investigation has begun". FinCEN notes, "Although a series of filings may not generate immediate contact from law enforcement, the filings could still prove vital during the investigative process at a later time", and they also state, "...the information contained in a SAR that one law enforcement agency has declined to investigate may be of interest to other law enforcement agencies, as well as supervisory agencies." (The SAR Activity Review, Trends Tips & Issues, Issue 10, May 2006 and "Answers to Frequently Asked Bank Secrecy Act Questions" #4 and #8, at www.fincen.gov.)
There are a few clarifications to this position worth noting:
-If the bank believes the activity surrounding a SAR warrants prompt attention, the bank should contact appropriate law enforcement directly.
-If the bank believes the suspicious activity may relate to terrorism, the bank should promptly contact FinCEN's Financial Institutions Hotline, at 1-866-556-3974. It is operational seven days a week, 24 hours a day.
-And finally, an exception to the continued filing rule has been made for those types of suspicious activities referred to as "4-1-9" schemes, "advance fee fraud" schemes or "Nigerian scams". These are the ones where a person receives an unsolicited communication from someone in a foreign country, often an African nation, who purports to be a current or former official of the foreign government, and is soliciting help in transferring a large sum of money (with the promise that the recipient of the communication, of course, will benefit financially from providing assistance in the transaction). Detailed information about these schemes is available from the United State Secret Service website, at www.secretservice.gov/alert419.shtml. FinCEN has indicated they no longer want to receive SARs on these scams if there is no monetary loss involved. If a monetary loss has occurred, or there are indicators of other illegal activity in connection with the scam, FinCEN indicates the financial institution "should consider filing a Suspicious Activity Report based on the requirements of 31 C.F.R. Part 103 and the Suspicious Activity Report filing instructions. In addition, the financial institution should contact the local United States Secret Service field office, local police department or other appropriate law enforcement agency." (The SAR Activity Review, Trends Tips & Issues, Issue 7, August 2004.)
Lawfully yours,
Barry
