What is the best course of action to undertake when we receive notice that a subpoena is coming on an account (we had already been looking at the account prior to hearing about the subpoena, so a SAR is already in process)? What I am asking is do we take steps to freeze/close the account now, thus tipping off the accountholder that something is "wrong" (I suppose we could use as a reason our own concerns about possible suspicious activity since I know we can't mention the subpoena to the customer) or do we leave the account alone and let the activity continue so the police can build their case? I am really getting sick of being stuck in the middle between "big brother" and criminals!

I'd check with the investigating agencies to find out if closing the account would impact their case before closing the account. If there was an imminent concern of loss or exposure to the bank, I'd probably close the account even if the authorities suggested leaving it open.

I think you need to determine if there is a risk to the bank if you do keep the account open. Obviously the risk is increased when you receive a subpoena on someone, but you don't know what the subpoena is exactly for.

Sometimes law enforcement will request that you leave an account open, but if there is a material risk to the bank that should be evaluated.

We have received many subpoenas on customers (some of which we filed SARs on) but we don't close every account we get a subponea or file a SAR on.

Also, if law enforcement asks that you keep the account open, you should obtain that in writing. Ultimately though, the decision is up to the bank. They cannot force you to keep an account open that could have a material risk to the bank.

In my opinion, taking steps to close an account prior to knowing the contents of the subpoena is premature.

On the topic of a law enforcement request to keep an account open, please remember that you have no 'safe harbor' here. It is your risk-based decision whether to comply with the request.