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Understanding the Suspicious Activity Categories

The SAR form lists 21 categories of suspicious activity. Understanding what is encompassed within each of them can help you in two ways: it will aid you in properly completing the form, and it will help you become more attuned to the type of conduct that constitutes suspicious activity. We've excerpted from the October 2007 SAR Activity Review a chart that gives an explanation/description of each violation category and the federal criminal statutes which the conduct might violate.

Violation Category Characterization of Suspicious Activity: The Reportable Conditions Possible Federal Criminal Statue(s) Explanation/Description
a Bank Secrecy Act/Structuring/Money Laundering 31 U.S.C. Section 5311 and 31 C.F.R. Part 103 Bank Secrecy Act

31 U.S.C. Section 5324 - Structuring Transactions to Evade Reporting

18 U.S.C. Section 1956 - Laundering of Monetary Instruments
18 U.S.C. Section 1957 - Engaging in Monetary Transactions in Property Derived from Specified Unlawful Activity
  1. 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 recordkeeping and reporting requirement under federal law
  2. The transaction is designed to evade any regulations promulgated under the Bank Secrecy Act; or
  3. 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 financial institution knows of no reasonable explanation for the transaction after examining the available facts including the background and possible purpose of the transaction.
There are four types of structuring activities that are reportable:
  1. To avoid generating any Currency Transaction Report, Form 8300 and supporting records, and to avoid any recordkeeping connected to monetary instruments.
  2. To avoid the identification requirements, e.g. connected with non-bank money transmissions and purchase of monetary instruments.
  3. To avoid suspicious detection and conventional monitoring thresholds and filters.
  4. To avoid enhanced scrutiny or additional review frequently triggered by higher transaction amounts and thresholds.
Note: 18 USC 1956 creates 3 basic categories of Money Laundering:
  1. Conducting/attempting to conduct one or more financial transactions with proceeds from specified unlawful activity;
  2. Transporting/transmitting/transferring one or more monetary instruments or funds into or out of the United States with intent to promote carrying out of unlawful activity, to conceal or disguise the proceeds of specified unlawful activity, or to avoid a state or federal transaction reporting requirement;
  3. Where property has been represented to be from specified unlawful activity (to cover law enforcement-related sting operations where the property is really clean.)

    See an expanded explanation of money laundering in Section 6 of this Issue.
b Bribery/Gratuity 18 U.S.C. Section 215 - Bank Bribery Anyone who, in connection with bank business, corruptly gives, offers or promises anything of value to a bank official with the intent to influence or reward that official.
c Check Fraud 18 U.S.C. Section 1344 - Bank Fraud This type of fraud takes on many forms including: altered checks; check kiting; charge-back check fraud; closed account fraud; and variations on check forgeries. Other common check fraud violations noted are the withdrawal of funds against checks with forged endorsements or maker's signatures and counterfeit checks.
d Check Kiting 18 U.S.C. Section 1344 - Bank Fraud
18 U.S.C. Section 656/657 - Embezzlement, Theft or Misapplication of Funds
A practice in which an individual with accounts at two or more financial institutions intentionally utilizes the delay in the check clearing process to write checks from one account to deposit into the second account, all the while knowing that the first account does not have collected funds. The subject continues this cycle, moving checks between accounts, to make it appear as if funds are available and using the balance in the accounts for expenditures.
e Commercial Loan Fraud 18 U.S.C. Section 1344 - Bank Fraud
18 U.S.C. Section 656/657 - Embezzlement, Theft or Misapplication of Funds
A fraudulent loan involving a corporation, commercial enterprise, or other type of business, usually secured by some form of collateral. One example includes banks advancing loan funds to car dealers via floor plan lines of credit secured by the automobiles in inventory. Collateral is later sold, out of trust, and proceeds are not applied to the loan thus creating a loss to the lender.
f Computer Intrusion 18 U.S.C. Section 1030 - Computer Fraud A person who gains access to a computer system of a financial institution to:
  • Remove, steal, procure or otherwise affect funds of the institution or the institution's customers
  • Remove, steal, procure or otherwise affect critical information of the institution including customer account information; or
  • Damage, disable or otherwise affect critical systems of the institution. Note: Does not mean attempted intrusions of websites or other non-critical information systems of the institution that provide no access to institution or customer financial or other critical information
See Issue 3, page 15, of The SAR Activity Review for additional information on Computer Intrusion at the following hyperlink:
g Consumer Loan Fraud 18 U.S.C. Section 1344 - Bank Fraud

18 U.S.C. Section656/657 - Embezzlement, Theft or Misapplication of Funds
A loan extended to an individual for personal or household use that is obtained fraudulently. Incidents of consumer loan fraud primarily involve the submission of false or forged statements by loan applicants.
h Counterfeit Check 18 U.S.C. Section 1344 - Bank Fraud A legitimate check that is altered or forged by hand or through the use of a computer or electronic/digital device that is compromised or scanned into a computer. The payee's name, dollar amount, check serial number, and date are changed though other data (including the authorized signature) remain as they appear on the original check. The counterfeit check is purported to be genuine and negotiated.
i Counterfeit Credit/Debit Card 18 U.S.C. Section 1029 - Fraud and Related Activity in Connection with Access Device 18 U.S.C. Section 1344 - Bank Fraud A person who knowingly commits fraud by producing, using, or selling one or more counterfeit credit or debit cards. A counterfeit or fake card is created through technology to emboss stolen or fictitious card numbers, along with hologram and card issuer images, and magnetic stripes on white plastic. The cards are used for fraudulent purchases or sold to other criminals for their use.
j Counterfeit Instrument 18 U.S.C. Section 1344 - Bank Fraud The manufacture, copy, reproduction, or forgery of an instrument with the intent to defraud a financial institution. Instruments could include notes, checks, securities, bonds, certificates and other negotiable financial instruments.
k Credit Card Fraud 18 U.S.C. Section 1344 - Bank Fraud The intentional procurement of goods, services or money, without the authorization of the cardholder, credit card member or its agent, by using a stolen, lost, or cancelled credit card. May include Illegal purchases made in person, via the Internet or telephone, or through cash advances.
l Debit Card Fraud 18 U.S.C. Section 1344 - Bank Fraud The unauthorized use of a stolen, lost, or cancelled debit card for payment of goods or to acquire services or money. Debit cards are used in place of checks or cash and usually are tied to a checking account. Fraudulent use of the debit card depletes available funds in that account causing a loss to the bank customer or to the bank.
m Defalcation/Embezzlement 18 U.S.C. Section 656/657 - Theft, Embezzlement, or Misapplication of Funds A person who, for unauthorized personal use, embezzles, abstracts, purloins or willfully misapplies any of the moneys, funds or credits of a bank, branch, agency or organization or holding company or any moneys, funds, assets or, securities entrusted to the custody or care of such bank, branch, agency, organization, or holding company.
n False Statement 18 U.S.C. Section 1001 - False Statements or entries

18 U.S.C. Section 1005 - False Entries

18 U.S.C. Section 1014 - False Statements on a Loan or Credit Application
A person who knowingly and willfully commits one of the following:
  1. Falsifies, conceals or covers up by any trick, scheme or device, a material fact;
  2. Makes any materially false, fictitious or fraudulent statement or representation; or
  3. Makes or uses any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry.
The false statement must occur in a matter within the jurisdiction of a branch of the United States Government; essentially, making a false statement to a government agency when it is carrying out its mission.

Section covers oral or written false statements or misrepresentations made knowingly on a loan or credit application to an insured bank (e.g., willful over-valuing of land, property, securities, or other assets or the understatement of liabilities). Such statements or misrepresentations must have been capable of influencing the bank's credit decision. Actual damage or reliance on such information is not an essential element of the offense. The statute applies to credit renewals, continuations, extensions or deferments and includes willful omissions as well as affirmative false statements. Obsolete information in the original loan application is not covered unless the applicant reaffirms the information in connection with a renewal request. The application will trigger the statute even if the loan is not made.
o Misuse of Position/Self Dealing 18 U.S.C. Section 656/657 - Theft, Embezzlement, or Misapplication of Funds

18 U.S.C. Section 644 - Banker Receiving Unauthorized Deposit of Public Money

18 U.S.C. Section 215 - Bank Bribery
A person, who is not an authorized depositary of public moneys, who knowingly receives from any disbursing officer, collector of internal revenue, or other agent of the United States, public money on deposit, or by way of a loan or accommodation, with or without interest, or otherwise than in payment of a debt against the United States, or uses, transfers, converts, appropriates, or applies any portion of the public money for any purpose not prescribed by law.
p Mortgage Loan Fraud 18 U.S.C. Section 1344 - Bank Fraud

18 U.S.C. Section 656/657 - Theft, Embezzlement, or Misapplication of Funds
A person who fraudulently obtains a mortgage for property or other asset primarily by the submission of false or forged statements on loan applications.
q Mysterious Disappearance 18 U.S.C. Section 656/657 - Theft, Embezzlement, or Misapplication of Funds Unexplained disappearance of moneys, or other instruments of value, in bearer form, from a financial institution's branch, agency, organization, or holding company.
r Wire Transfer Fraud 18 U.S.C. Section 1956 - Laundering of Monetary Instruments

18 U.S.C. Section 1343 - Fraud by Wire, Radio or other electronic means.
A person who, intending to defraud or obtain money or property by fraudulent means of false pretenses, representations or promises, transmits an electronic funds transfer.
s Other   A category used to report suspicious activity that does not fit into any other violations characterization.
t Terrorist Financing 18 U.S.C. 2339(a) and 18 U.S.C. 2339(b) - Harboring and Concealing Terrorists Persons or entities who provide material support or resources to various enumerated terrorist acts, including concealing or disguising the nature, location, source or ownership of the material support or resources.

Also, persons or entities providing material support or resources to designated foreign terrorist organizations, or attempting or conspiring to do so. The statute explicitly provides for extraterritorial jurisdiction, meaning it can be applied to actions occurring outside the United States.
u Identity Theft 18 U.S.C. 1028 - Identity Theft A person who knowingly transfers or uses, without lawful authority, a means of identification of another person with the intent to commit, or to aid or abet, any unlawful activity that constitutes a violation of Federal law, or that constitutes a felony under applicable state or local law.

See Issue 2, page 14 of The SAR Activity Review for further details about identity theft.