We have a customer that has been wiring money from an overseas bank to his account at our bank. The total amount of money involved is over $50,000, but all the individual transactions have been below $10,000. We do not believe this is a “mule” situation as the funds remain in the customer’s account after they have been wired. We know that we can reject wires and file a suspicious activity report (SAR), but is there any way for us to verify that the wires are legitimate without talking to the customer? We have attempted to call him, but his phone does not accept voicemail. Further, neither the customer nor the bank he is wiring funds from come up as a positive OFAC hit. For now, we have placed a temporary hold on his account.

We are not aware of any guidance outlining steps that a bank can take to verify the legitimacy of a customer’s wire transfers. If you cannot reach your customer by phone, you can try contacting them by mail or email if you have their address or email address on file. You also could try reaching out to the bank that sent the wire, although it may be able to provide only limited information.

Under Article 4A of the Illinois Uniform Commercial Code (UCC), once a bank has accepted funds on behalf of a customer by wire transfer, the bank is obligated to pay the amount of the transfer to the beneficiary (with limited exceptions). If you suspect that your customer is engaging in fraud, we recommend filing a SAR. OCC-supervised institutions are required to file SARs for transactions involving or aggregating $5,000 or more when the bank knows, suspects, or has reason to suspect that the transaction involves potential money laundering or violations of the Bank Secrecy Act. Also, you should file a SAR when there is reason to suspect that the transactions are designed to evade any regulations promulgated under the Bank Secrecy Act (which may be the case here, where there is a series of individual transactions that could indicate structuring because they are all below the $10,000 for currency reporting), among other reasons. Additionally, a bank may, but is not required to, file a SAR with respect to any suspicious transaction, regardless of the dollar amount involved, when the bank reasonably believes the transaction may be relevant to the possible violation of any law or regulation.

For resources related to our guidance, please see:

Illinois UCC, 810 ILCS 5/4A-404 (“Subject to Sections 4A-211(e), 4A-405(d), and 4A-405(e), if a beneficiary’s bank accepts a payment order, the bank is obliged to pay the amount of the order to the beneficiary of the order. Payment is due on the payment date of the order, but if acceptance occurs on the payment date after the close of the funds transfer business day of the bank, payment is due on the next funds transfer business day. If the bank refuses to pay after demand by the beneficiary and receipt of notice of particular circumstances that will give rise to consequential damages as a result of nonpayment, the beneficiary may recover damages resulting from the refusal to pay to the extent the bank had notice of the damages, unless the bank proves that it did not pay because of a reasonable doubt concerning the right of the beneficiary to payment.”)

OCC Suspicious Activity Report Rules, 12 CFR 21.11(c)(2) (“The bank shall send the completed SAR to FinCEN in the following circumstances: . . . (2) Violations aggregating $5,000 or more where a suspect can be identified. Whenever the national bank detects any known or suspected Federal criminal violation, or pattern of criminal violations, committed or attempted against the bank or involving a transaction or transactions conducted through the bank and involving or aggregating $5,000 or more in funds or other assets where the bank believes that it was either an actual or potential victim of a criminal violation, or series of criminal violations or that it was used to facilitate a criminal transaction, and the bank has a substantial basis for identifying a possible suspect or group of suspects. If it is determined prior to filing this report that the identified suspect or group of suspects has used an alias, then information regarding the true identity of the suspect or group of suspects, as well as alias identifiers, such as drivers’ license or social security numbers, addresses and telephone numbers, must be reported.”)

OCC Suspicious Activity Report Rules, 12 CFR 21.11(c)(4) (“The bank shall send the completed SAR to FinCEN in the following circumstances: . . . (4) Transactions aggregating $5,000 or more that involve potential money laundering or violate the Bank Secrecy Act. Any transaction (which for purposes of this paragraph (c)(4) means a deposit, withdrawal, transfer between accounts, exchange of currency, loan, extension of credit, or purchase or sale of any stock, bond, certificate of deposit, or other monetary instrument or investment security, or any other payment, transfer, or delivery by, through, or to a financial institution, by whatever means effected) conducted or attempted by, at or through the national bank and involving or aggregating $5,000 or more in funds or other assets, if the bank knows, suspects, or has reason to suspect that:

(i) The transaction involves funds derived from illegal activities or is intended or conducted in order to hide or disguise funds or assets derived from illegal activities (including, without limitation, the ownership, nature, source, location, or control of such funds or assets) as part of a plan to violate or evade any law or regulation or to avoid any transaction reporting requirement under Federal law;

(ii) The transaction is designed to evade any regulations promulgated under the Bank Secrecy Act; or

(iii) The transaction has no business or apparent lawful purpose or is not the sort in which the particular customer would normally be expected to engage, and the institution knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction.”)

FinCEN Regulations, 31 CFR 1010.311 (“Each financial institution other than a casino shall file a report of each deposit, withdrawal, exchange of currency or other payment or transfer, by, through, or to such financial institution which involves a transaction in currency of more than $10,000, except as otherwise provided in this section.”)

FinCEN Regulations, 31 CFR 1010.314 (“No person shall for the purpose of evading the transactions in currency reporting requirements of this chapter with respect to such transaction: . . . (c) Structure (as that term is defined in § 1010.100(xx)) or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more domestic financial institutions.”)

FinCEN Regulations, 31 CFR 1010.100(xx) (“For purposes of § 1010.314, a person structures a transaction if that person, acting alone, or in conjunction with, or on behalf of, other persons, conducts or attempts to conduct one or more transactions in currency, in any amount, at one or more financial institutions, on one or more days, in any manner, for the purpose of evading the reporting requirements under §§ 1010.311, 1010.313, 1020.315, 1021.311 and 1021.313 of this chapter. ‘In any manner’ includes, but is not limited to, the breaking down of a single sum of currency exceeding $10,000 into smaller sums, including sums at or below $10,000, or the conduct of a transaction, or series of currency transactions at or below $10,000. The transaction or transactions need not exceed the $10,000 reporting threshold at any single financial institution on any single day in order to constitute structuring within the meaning of this definition.”)

FinCEN Suspicious Activity Report Rules, 31 CFR 1020.320(a)(1) (“Every bank shall file with the Treasury Department, to the extent and in the manner required by this section, a report of any suspicious transaction relevant to a possible violation of law or regulation. A bank may also file with the Treasury Department by using the Suspicious Activity Report specified in paragraph (b)(1) of this section or otherwise, a report of any suspicious transaction that it believes is relevant to the possible violation of any law or regulation but whose reporting is not required by this section.”)