Our loan customer purchased a truck.
This customer, historically has never engaged in a transaction quite like this one.

The customer has purchased vehicles in the past, relying on the bank for the majority of the loan amount, purchasing older model vehicles, even renewing these loans with cash out for medical expenses...

Then the customer purchased a newer vehicle, putting $9,000 down at the dealer and borrowing the rest (around $3,000). Looking at the invoice, I can see that the $9,000 was cash.
Talking to the lender, he informed me that the customer does not seem the type to save that amount of cash.

"But the $9,000 did not flow through the bank," is what I am being told when I ask if we should file a SAR.

Does the $$ need to come to the bank?
I don't think so since 31 CFR 103.18 says "any suspicious transaction that it believes is relevant to the possible
violation of any law or regulation but whose reporting is not required by this section."

But I'm not the BSA officer and may not be as well versed. Could one of you weigh in for me?

: : Jumps up on Soap Box : :
Invasion of Privacy

I love the following Quote - It was from the Electronic Frontier Foundation (whoever they are / were) and was in a comment letter to the Regulatory Agencies back in 1998 when Know Your Customer was a Proposal - - They received about 200,000 comments that basically said you are invaiding consumer's privacy & back off ; So they withdrew the proposal. As we all know about 3 years later was 9/11 and the Patriot Act gave us the same KYC / CIP requirements that cerated a public outcry in 1998.

The Electronic Frontier Foundation said that the KYC proposal
“… was not calling for monitoring of customers who are suspected of engaging in illegal activity. Rather, this move is to monitor and profile every bank customer. Nowhere in our society, with the exception of the monitoring of prisoners, is such constant surveillance tolerated. ”

: : Gets back down off Soap Box : :

Seriously - I think this is going too far & could set a precedent that the regulators would want you to "Track" all customers this closely for a SAR - & why put yourself under that scrutiny

It's not that I want to track or even that I am advocating for that at all.

But I wonder, if by virtue of "finding" this in a loan audit, should we not at least consider the transaction for filing? Since we now know about it, must we do something?

Or should the loan officer have asked, where funds pertaining to this transaction came from?

IMO it would be an irresponsible waste of your time and the government's data storage space to file a SAR if your bank hasn't even made an attempt to find out the source of the cash (if it bothers you).

Cases like this help illustrate why a lot of banks use SAR decisioning teams or committees.

Also, having worked for a car dealership in a former life, if there is a down payment whether that money was a personal check, cashiers check or cash money, it was all classified on the form as cash. So even though it says 'cash' it probably wasn't truly a cash transaction as we know it in the financial industry. To a car dealer, if its not financed, its cash.

I second Georgia Plum. Having also worked at a car dealership boarding, anything not financed was 'cash'.

I will third that - car dealerships think either "loan" or "cash". One time I purchased a used car by taking a cash advance on a credit card, and the dealer considered it a "cash sale."

I know a lot of people who have taken money from a HELOC to pay down a substantial amount on a car. It may not be fiscally sound but it's not illegal.

Just to frost this cake, don't forget that car dealers (and other merchants) have a unique "cash" transaction reporting requirement that includes as cash such things as cashier's checks that are not loan proceeds. So if your customer bought a cashier's check for $9K and used it as a big chunk of his down payment, that amount is likely to have been listed as "cash" on the dealer's paperwork.