I have a customer that discussed applying for a $30,000 loan with a branch manager. When he was told we would need to verify his income he asked what he needed to make for income because he is self employed and can make it any amount between $28,000 and $78,000. Should I file a SAR on this or monitor things for now? I'm looking at the False Statement box definition on the SAR. Other than the discussion nothing else has been done, no credit report obtained, no written application, just a discussion at this point.

"he needed to make for income because he is self employed and can make it any amount between $28,000 and $78,000"

If you do a proper job of underwriting, including requesting a copy of his tax return from the IRS, this should be easy to prove once you get the application. I would wait.

Agreed. Your customer has not lied to you yet; he has only expressed a willingness to lie, either to you or to the IRS. The problem is you cannot tell which.

Tell him that you need a copy of his tax return from the IRS as verification of income and that his application will be evaluated based on the income shown there.

Then make sure you also get him to sign a 4506T for verification purposes on the tax return that he provided to you. If they are different, then you have your SAR material.

http://www.irs.gov/pub/irs-pdf/f4506t.pdf