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Criminal Referral Form (CRF) Becomes Suspicious Activity Report (SAR)
The proposal for the new Suspicious Activity Report (SAR) has been issued by all of the regulatory offices. Comment is due by September 1, 1995. Target date for the use of the new form is still October 1, the same date that the new Currency Transaction Report goes into effect.
The reporting rules will attempt to reduce the number of reports filed by raising the mandatory reporting dollar thresholds, and requiring that only a single copy of each referral be sent to one place-the Financial Crimes Enforcement Network of the Department of the Treasury (FinCEN). The address appears on the form.
The SAR will be used to report known or suspected violations and suspicious financial transactions. The SAR's two pages makes the new form shorter than either of the old Criminal Referral Forms (long or short), and on sight strongly resembles a 4789 (Currency Transaction Report). The instructions tell the financial institution that it may file in several ways-by writing or typing on an original form, or on a photocopy, or by magnetic means such as by computer disk or magnetic tape. Software will be made available so that the SAR can be completed and print a hard copy for filing. In the future, it is anticipated that the capability will also exist to be able to file a SAR electronically.
Except for the first of the four reasons for filing a SAR, the requirements for filing have been modified.
The first remains any violation, in any amount, by an employee, director, officer, or agent of the financial institution-filed within 30 days of discovery.
The second involves criminal violations with identifiable suspects. The required filing has been raised from $1,000 to $5,000 or more-within 30 days.
The third covers those violations where there is no basis for identifying a possible suspect. That required filing has been raised from $5,000 to $25,000-within 60 days. This is not to say the financial institution cannot file on lesser amounts if they choose to do so. But the required filing amounts have been raised.
The last filing category is for possible violation or evasion of the Bank Secrecy Act reporting requirements…or for suspected money laundering… or where the financial institution believes that the transaction involves "…funds derived from illicit activity…" or the financial institution believes the transaction "…to be suspicious for any reason." This would include suspicious transactions over and under $10,000. If the activity is $10,000 or under, just the SAR will be filed. If it is over $10,000, both the SAR and the CTR will be filed.
Although only one report to FinCEN is required, the proposal does spell out that financial institutions are encouraged to file a copy of the SAR with local law enforcement where appropriate.
Documentation-long a burr under the saddle of our legal people-is no longer to be filed with the SAR. It is to be identified on the SAR, and then the financial institution "…must make all supporting documentation available to appropriate law enforcement agencies upon request." Retention of records is ten years from the date of filing.
The board of directors, or a committee of the board must be notified of the filing.
Confidentiality is broadened in that even if subpoenaed, the filing of a Suspicious Activity Report is not to be disclosed. 31 U.S.C. 5318 (g) is to be cited and information declined.
Last, but not least, the estimated average burden associated with the collection of information contained in a SAR is approximately .6 hours per respondent. That's 36 minutes.
Copyright © 1995 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 5, No. 10, 7/95
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