Topic: Suspicious Activity Reports (SARs)
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Our business customer had multiple checks drawn on their account that were forgeries. The customer noticed the forged checks and notified us within four days, and we returned the checks four days after paying them. We received a claim of late return from the depository bank for one of the checks. Is there anything we can do? Are we liable or can we debit our customer?
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We believe your bank likely is liable for the check since you returned it after the midnight deadline. Your bank would have a defense to liability for the check only if the depository bank breached a presentment warranty to your bank or your customer’s negligence substantially contributed to the making of the forged check. Under…
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We believe a new customer may be involved in a fraud due to suspicious wire transactions, so we froze their account and placed an incoming wire on hold. We are working with an out-of-state bank that has requested a subpoena or 314(b) notice before it shares information with us, and our BSA officer is out tending to a family emergency. No one else at our bank has a login for FinCEN’s online 314(b) notice, and it will take five business days to obtain a new login. Is there any other way to access FinCEN’s 314(b) notice?
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Yes, a fillable PDF copy of FinCEN’s 314(b) notice is linked in the resources below. FinCEN’s regulations provide that financial institutions sharing information pursuant to Section 314(b) of the USA PATRIOT Act may submit the necessary notice to FinCEN through its website or “if a financial institution does not have Internet access, by mail to:…
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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.
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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…
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Our customer due diligence form asks for a customer’s job title, place of employment, and length of employment. Are we required to collect this information, and is it necessary for both consumer and business accounts?
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No, we do not believe you must ask for a customer’s job title, place of employment, and length of employment before opening a consumer or business account, but we believe it is common to collect this information for certain customer risk profiles and for purposes of filing suspicious activity reports (SARs) and currency transaction reports…
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We filed a suspicious activity report (SAR) for suspected structuring by an employee who banks with us after our compliance software flagged the activity. The FDIC has requested additional information related to this SAR, including the employee’s employment file (excluding any HIPAA-protected information). We did not identify the employment file as supporting documentation in our SAR or use any information from it to make our SAR determination. Are there any problems related to providing this kind of employment information to the FDIC?
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We do not recommend providing any information to the FDIC that is not “supporting documentation” for the original SAR, as the Bank Secrecy Act’s safe harbor from liability for disclosures of possible violations of law applies only to the SAR itself and the SAR’s supporting documentation. The Bank Secrecy Act provides banks with a safe…
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We learned that one of our customers had three fraudulent checks drawn on his account after we alerted him that he had overdrawn his account. We believe that the checks are counterfeits and the fraudster forged our customer’s signature on them. The checks all were deposited at different banks. We returned the checks to the Federal Reserve four days after we paid them and received a claim of late return for one of them shortly after. The Federal Reserve says we have twenty days to respond to the claim. What is our best option for responding to the claim of late return?
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We believe your bank likely is liable for the check since you returned it after the midnight deadline. Your bank would have a defense to liability for the check only if the depository bank breached a presentment warranty to your bank or your customer’s negligence substantially contributed to the making of the forged check. Under…
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For Customer Identification Program (CIP) purposes, how should we describe a person’s occupation if they are a stay-at-home mom? We believe FinCEN prefers the term “homemaker,” but we typically use “stay-at-home mom.” “Occupation” also appears as a field on items such as FinCEN’s Currency Transaction Report (CTR), and we want to make sure we are using the correct terminology.
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We recommend setting a policy or procedure to ensure that you are using the terms “homemaker” and “stay-at-home parent” consistently for all customers who fit those labels and are not otherwise employed. Additionally, you should monitor such customers’ activities and “pay particular attention” if they “continually make large cash deposits,” as suggested in FinCEN’s guidance…
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For how long are banks required to file Suspicious Activity Reports (SARs) for continuing activity after the first 90-day review and the subsequent filing of SARs over a 12-month period? Are banks required to continue filing follow up SARs after the first 12-month period if the activity continues?
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Yes, we believe that institutions must file SARs for continuing suspicious activity after the first 12-month period of suspicious activity and for as long as the suspicious activity continues. When your bank identifies suspicious activity, it must file a SAR for “any suspicious transaction relevant to a possible violation of law or regulation,” but FinCEN…