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SARs: Common Violations
FDIC reports two common violations related to Suspicious Activity Reports ("SARs"). First, institutions often complete item 14, (Date closed) when the institution is still in business. This block is used by regulatory agencies to track information filed by an institution that is no longer in business. In short, "closed" means really and truly closed or out of business. It does not mean the date or time the bank locked up for the night relative to the suspicious activity. Simple instruction to correct this: tell staff not to fill out item 14.
The second most common violation relates to the effort of bank staff to be sure that they comply. As a result, they attach and file documentation with the SAR. This documentation should be retained in the bank. It should not be filed with the SAR. To prevent this violation, instruct staff that only the SAR - and no other piece of paper - should be filed. The SAR should contain a concise description of the suspicious activity. Attaching documentation cannot be used to substitute for the concise description.
The new SAR is designed to identify situations for law enforcement. When they open an investigation, they will be interested in the documentation, and not before. So keep the extra papers in the bank.
Noteworthy: In February 1997, FinCEN published preparation guidelines for SARs. Get a copy of these guidelines and make them part of your training.
Copyright © 1997 Compliance Action. Originally appeared in Compliance Action, Vol. 2, No. 7, 6/97
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