Topic: Suspicious Activity Reports (SARs)
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One of our customers is writing checks to himself, which he deposits elsewhere. The customer is repeatedly overdrawing his account with these checks. Is this considered check kiting, and/or is this considered check fraud?
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We believe that the activities you described would be considered check kiting, and they also may be considered to constitute “bank fraud” in violation of federal and Illinois law. We cannot comment on a specific customer, but the definitions below will be helpful in determining whether to report these activities. In an October 2007 SAR…
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Can we legally reveal to our bank’s legal counsel that we have filed a SAR, even if the attorney is not on our staff?
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Yes, we believe that the disclosure of a suspicious activity report (SAR) to your bank’s counsel would be an authorized disclosure. As an agent of the bank, the attorney may review the SAR without violating the SAR confidentiality rule. (We previously have confirmed this interpretation with a FinCEN attorney.) In fact, a FinCEN publication suggests consulting…
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Aside from filing a SAR, is there any other reporting we are obliged to do if we receive a mortgage loan application with what we believe to be fraudulent information — falsified tax returns, bank statements, etc.?
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We believe your bank should file the SAR, and management should report the filing to your Board of Directors. The FDIC's rules state the following about additional reporting at 12 CFR 353.3(b)(2) and 353.3(c), as follows: (b)(2) In situations involving violations requiring immediate attention, such as when a reportable violation is ongoing, the bank shall…
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One of our employees embezzled money from the bank. We fired the employee and filed a SAR, but we did not contact local law enforcement or prosecute the crime. Do we have any duty to make any other reports about the crime?
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We recommend contacting your primary regulators so that they are aware of what happened. You also should check any insurance or bonding agreements, which may require your institution to report the crime to your insurance company. We found this BankNews article about employee embezzlement helpful, as it recommends the same steps after discovering bank employee…
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We get several different kinds of subpoenas. Some are grand jury subpoenas, some are for divorces. For which types of subpoenas must we contact the person first? Do we have to respond to out-of-state subpoenas?
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When responding to a subpoena in Illinois, both federal and Illinois laws could apply. Below is a summary of the major provisions that might apply to a subpoena. However, please note that we cannot provide legal advice, and any questions about a specific subpoena will likely have to be answered by bank counsel. Illinois law:…
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If a bank officer discloses to the bank attorney that the bank officer plans to file a SAR, is that is considered an “unauthorized disclosure”?
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After discussing with FinCEN’s legal department, we do not believe that the disclosure of a suspicious activity report (SAR) to the bank’s legal counsel would be an unauthorized disclosure. As an agent of the bank, the attorney can review the SAR without violating the SAR confidentiality rule. See 31 CFR 1020.320. In fact, FinCEN has…