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#279519 - 11/24/04 04:51 PM suspicious activity reports
Anonymous
Unregistered

What is common practice at community banks regardiing the reporting of SAR's to the Board of Directors? i.e. Do you send each director a copy in the board package, or does someone give an executive summary? We have a board member who is an attorney who approves the SAR's before the filings are done. Thanks, Steve

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#279520 - 11/24/04 04:56 PM Re: suspicious activity reports
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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I present a report that details how many SARs, reason for filing (broad reasons (structuring, etc.). No names, no copies of SARs. We do not want to put Board members in the position of possibly knowing a local person on whom we file and risking them saying something inadvertently.
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#279521 - 11/24/04 05:01 PM Re: suspicious activity reports
RR Joker Offline
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RR Joker
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The Swamp
Quote:

I present a report that details how many SARs, reason for filing (broad reasons (structuring, etc.). No names, no copies of SARs. We do not want to put Board members in the position of possibly knowing a local person on whom we file and risking them saying something inadvertently.




ditto here.
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#279522 - 11/24/04 05:33 PM Re: suspicious activity reports
David Dickinson Offline
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David Dickinson
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Posts: 18,762
Central City, NE
Quote:

We do not want to put Board members in the position of possibly knowing a local person on whom we file and risking them saying something inadvertently.



I don't understand this. Doesn't your BOD look at past due loans, new loans, charged off accounts, etc.? If you're concerned about your board members "saying something" you have more headaches than SAR's. If your board members have loose lips, you need new board members.
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#279523 - 11/24/04 06:14 PM Re: suspicious activity reports
Nanwa Offline
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Nanwa
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Posts: 5,564
Clintonville, WI, USA
Agreed, David. The Board needs to be informed. I don't believe numbers of SARs filed is very meaningful.
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#279524 - 11/24/04 07:27 PM Re: suspicious activity reports
berico Offline
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Joined: Jun 2004
Posts: 290
California
We give the Board the full information at the Board meeting, but only a synopsis is sent out beforehand in the written Board package.

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#279525 - 11/24/04 08:42 PM Re: suspicious activity reports
blvsinangels Offline
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Joined: Aug 2003
Posts: 372
We were told by outside examiners that it was against regulation to give a full disclosure to the board on SAR's filed. We just tell them the number that has been filed. It is my understanding that they cannot receive any more info than that.

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#279526 - 11/24/04 09:20 PM Re: suspicious activity reports
John Burnett Offline
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John Burnett
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Cape Cod
Quote:

We were told by outside examiners that it was against regulation to give a full disclosure to the board on SAR's filed. We just tell them the number that has been filed. It is my understanding that they cannot receive any more info than that.




Your outside examiners are mistaken. While it may or may not be advisable to provide detailed information on a SAR that's filed (due to loose lips concerns), there is nothing in the regulations that prescribes how much information to supply.
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#279527 - 11/24/04 09:35 PM Re: suspicious activity reports
Kathleen O. Blanchard Offline

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We don't need new board members. We give extensive detail on the individual SARs but we have made a choice, as we are well within our rights to do (and many other banks do as well) that we do not name names unless there is some major issue and then of course the board would be informed. We do not want anyone having information on SARs that could result in a violation of the BSA.

It is a management decision that every bank can make and I truly resent sarcastic remarks. I have been doing this for very many years as an actual banker and know what I am doing.

We tell what occurred, whether it is a repeat, are we considering asking them to leave the bank, extensive detail. We discuss employees who have been fired. But we do not take a chance on exposing the bank on BSA unless it is absolutely necessary.

Many people who post here at BOL and occasionally ask questions are actually very experienced bankers. Just because we are not consultants does not mean we are stupid.

Now that I have that off my chest - this is not the first time I have felt like saying it - Happy Thanksgiving.
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Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#279528 - 11/25/04 01:28 AM Re: suspicious activity reports
Princess Romeo Offline

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Princess Romeo
Joined: Jun 2001
Posts: 8,272
Where the heart is
One other issue to consider if you are reporting names and such to the Board:

If the information goes into the "Board Package" (Agenda, minutes, etc.), then you have to be VERY CAREFUL who has access to that information. Consider that your outside auditors, accountants, and other persons doing "due diligence" work for or on your Bank will be given access to the Board Package. By having those names in there, you may inadvertently disclose the SAR filing to outside persons.

SOX 404 squares off against BSA....

Also, if your Board Package is subpoened, you are going to have an ever bigger headache and hasssle to "redact" the SAR names and such.
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#279529 - 11/26/04 03:12 PM Re: suspicious activity reports
Security Guy Offline
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Joined: Oct 2004
Posts: 327
Upstate N.Y.
We recently changed our procedure. We were disclosing names, but effective immediately, we are just issuing each SAR a number, and when the SARs are reported to the Board, no name will be given, just a number. That way, the suspicious activity can be detailed, but no customer or business name will be disclosed. We feel it is safer that way.

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#279530 - 11/26/04 03:14 PM Re: suspicious activity reports
1 Peter 5:7 Offline
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1 Peter 5:7
Joined: Jun 2001
Posts: 1,339
TX
Quote:

Also, if your Board Package is subpoened, you are going to have an ever bigger headache and hasssle to "redact" the SAR names and such.





This is a good argument for providing summary information only w/ no names to your board. I faced all the issues of subpoenaed board minutes too many times in a prior life.
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#279531 - 11/26/04 05:15 PM Re: suspicious activity reports
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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Exactly, Security Guy. If a situation gets to be a much bigger deal, with law enforcement involved, or a commercial customer we are asking to leave the bank, etc., the Board is given the name at that point. Hope you had a nice holiday!
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Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#279532 - 11/26/04 10:45 PM Re: suspicious activity reports
Anonymous
Unregistered

I've heard in several seminars that you should only provide to the board the number of SARs that were filed in the previous month and nothing else, the reason being that you may have filed a SAR on a board member. He may be able to identify himself from the details even if no names are given.

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#279533 - 11/27/04 01:12 AM Re: suspicious activity reports
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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I would list how many were filed for each "category", no names, with some description of any that were particularly unusual but that the
board member couldn't identify his own.

We would also be determining separately how to address this with the board member so that the questionable activity stopped (hopefully it would "just" be structuring).
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Kathleen O. Blanchard, CRCM "Kaybee"
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The HMDA Academy
www.kaybeescomplianceinsights.com

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#279534 - 11/27/04 02:32 PM Re: suspicious activity reports
rlcarey Online
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rlcarey
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Galveston, TX
This subject has been beat to death a number of times, i.e., Reporting SARS to the Board

Do a search and read away!
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#279535 - 11/28/04 06:01 PM Re: suspicious activity reports
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Quote:

We don't need new board members. We give extensive detail on the individual SARs but we have made a choice, as we are well within our rights to do (and many other banks do as well) that we do not name names unless there is some major issue and then of course the board would be informed. We do not want anyone having information on SARs that could result in a violation of the BSA.

It is a management decision that every bank can make and I truly resent sarcastic remarks. I have been doing this for very many years as an actual banker and know what I am doing.

We tell what occurred, whether it is a repeat, are we considering asking them to leave the bank, extensive detail. We discuss employees who have been fired. But we do not take a chance on exposing the bank on BSA unless it is absolutely necessary.



I assume you were referring to me, so I need to respond. Nothing sarcastic was meant by my statements. If your BOD members can't keep them mouths shut, they need to be removed from the Board - Period! No joke, no sarcasm, serious business. The BOD has access to many confidential things, SAR's being just one.

You indicated you made a choice about how much info you want to provide them, but they are the Board and I think we have this backward. They tell YOU what they want, not the other way around. It is not a management decision either. I, too, have been doing this for many years and I think it is best (just my opinion) to provide them with full information.

Quote:

Many people who post here at BOL and occasionally ask questions are actually very experienced bankers. Just because we are not consultants does not mean we are stupid.



I don't believe that I have ever inferred or stated this. What drove this comment? BOL is an exchange of info from bankers of all types. Why wouldn't you want my opinion or others? To state such a negative comment only hurts BOL - it doesn't foster free exchange. No wonder so many want to be anonymous - so they don't get blasted incorrectly.
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http://www.bankerscompliance.com

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#279536 - 11/28/04 07:43 PM Re: suspicious activity reports
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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David, your response came across sarcastically whether you intended it or not. Even not sarcastically, it is not stated in very polite terms that would be conducive to a meaningful dialogue. I am not the only one who took it that way. After my response, I received several PM's from registered members saying that they too get tired of the style of response of a few members - and we are not talking Paragon here.

You can read through my years of responses here and you will see that I do not last out at people.

Our board was part of the decision that, except in extreme cases, we do not put customers names in the board reports re SARs. It is a decision our bank made. Our board is highly involved in all decisions at the bank.

Banks get to review the requirements, weigh their options and make decisions. Some may choose to include names, other may choose to include detail but no names. Our regulators are fine with our method of reporting.

The Board and Audit Committee are fine, I (as a senior manager) am fine with it, the rest of senior management is fine with it and the OCC is fine with it. This method works for us.

It might not work for another bank. But I would not last out at them and tell them they are totally wrong. The question was how do other banks report. I stated how my bank reports. Others stated how they report.

It is possible to disagree by saying something like "That is interesting. Has anyone such as your regulator ever commented on whether not including names is a problem?"

That would have led to a meaningful discussion.
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Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#279537 - 11/29/04 03:04 PM Re: suspicious activity reports
Elwood P. Dowd Offline
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Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
There is no regulatory guidance on this point, but I'm in the "give them every fact they need" camp. That means the board gets only summaries or statistical breakdowns of most SAR filings, not the raw information. Acknowledged exceptions would unquestionably involve SARs involving employees and those representing significant losses to the bank. (In both cases, the board can do something with that information. For example, they can question the bank's hiring practices or internal controls.)

Beyond that, it simply isn't business information - there is nothing a board member can do with it and disclosing it to them involves only risks, no rewards. The "real" safe harbor lies in the fact that the fewer the number of people who know about the SAR, the stronger the protections afforded to the bank. If I were a board member and these were discussed at board meetings I would view it as an attempt at "upward delegation."

This debate only exists among smaller institutions - a bank that files 100+ SARs a month is not going to report them to the board on an individual basis.
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#279538 - 11/30/04 12:29 AM Re: suspicious activity reports
Dolly Nugent Offline
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Dolly Nugent
Joined: Nov 2000
Posts: 1,820
Southern California
I know some of us are concerned about releasing names. But at some banks the BOD is interested in knowing who SARS are filed on. If you disclosed names, make sure the report is clearly labeled CONFIDENTIAL and a reminder that disclosing the names in the report is prohibited.

Most board members take their positions very seriously and would never do anything that would cause a problem to the bank.

For a definitive answer, ask YOUR REGULATOR what they would recommend.
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Dolly Nugent
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Opinions expressed are my own.

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#279539 - 11/30/04 02:54 AM Re: suspicious activity reports
David Dickinson Offline
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Central City, NE
kaybee: I apologize for coming across sarcastically. It wasn't intended to be. I truly believe that the BOD should see all of the facts of filed SAR's, especially in the strict BSA environment that we are currently in. You will see that others agreed with me (Nawna, berico). If I was a BOD member, I would want to know more than the simple facts.

I believe that a large part of communication is missing when I type comments and others read them, but I do apologize that my statements were taken in manner that they were not intended. It is possible to disagree. That's what I did (as the first few responses were in disagreement with me). However, I feel that you were very harsh with me ("Just because we are not consultants does not mean we are stupid.") I believe that this comment leads to people not sharing their believes - and less meaningful discussion.
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#279540 - 11/30/04 11:55 AM Re: suspicious activity reports
Anonymous
Unregistered

If a board member wants to review a SAR, so be it. However, I would have them do it "off the record". In other words, keep the details out of the Board Minutes, but make the actual reports available for review with the understanding that SARs are confidential and information in them is not to be disclosed to anybody period.

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#279541 - 11/30/04 10:41 PM Re: suspicious activity reports
Greg Offline
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Joined: May 2004
Posts: 833
Michigan
Quote:

If a board member wants to review a SAR, so be it. However, I would have them do it "off the record".




I would be very uncomfortable having one or more board members review SAR's "off the record."

I report the number of SAR's and reasons for filing to the audit committee of the board. The audit committee is free to ask questions (and often does). The audit committee makes the decision on a case by case basis about how much detail to give the full board. In my five year tenure they have never asked to see a copy of a SAR nor have they chosen to give names or specifics to the full board - but that's their decision, not mine.
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#279542 - 12/01/04 02:49 AM Re: suspicious activity reports
David Dickinson Offline
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David Dickinson
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Posts: 18,762
Central City, NE
I agree that "off the record" is not a good idea. Why not let the BOD review the SAR's and simply state "reviewed SAR's" in the minutes?
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http://www.bankerscompliance.com

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#279543 - 12/01/04 02:03 PM Re: suspicious activity reports
Anonymous
Unregistered

This probably belongs in the General Discussion or another forum, however I wanted to follow-up on the valid points that were brought to the table by kaybee.

I have concluded that BOL has become a forum for many egos. I once made an anonymous post and one “Power Poster” (not anyone that has posted to this thread) stated, and I am paraphrasing, that he was “…not providing free research, not serving as your compliance research department and all that anonymous posters do is beg for information.”

Last time I checked, a definition for forum is a public medium for open discussion.

That same attitude often comes across in the “Ask a Banker” forum. Typically the original posters in that forum are laymen looking for guidance, not condescending responses that makes all members of BOL appear arrogant.

Lighten-up guys ---- it just a job.

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#279544 - 12/01/04 09:16 PM Re: suspicious activity reports
John Burnett Offline
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Posts: 40,086
Cape Cod
Getting back to the subject at hand, this Thread has listed a number of the issues that your bank should deal with when deciding the who, what, where, when and why of reporting SARs to your board. If what you are doing currently works for you and has not been criticized by examiners or auditors, I'd suggest you not rock the boat.

If, on the other hand, you need to reevaluate this process, weigh the factors described in the Thread and present the pros and cons to the Board. Let them make the final decision on what makes it to the boardroom, and have it recorded in the minutes.
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#279545 - 12/02/04 03:14 AM Re: suspicious activity reports
David Dickinson Offline
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David Dickinson
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Central City, NE
I'm really dumbfounded by this issue. A question was asked and I provided my opinion. Then I was accused of being sarcastic. 75% of communication is in tone, volume, facial expressions, etc. that are not the words used. When we type and read typed words, we are not getting most of the communication. I have always tried to re-read posts that I thought were rude or strong and tried to give the poster the benefit of the doubt.

Put yourself in my shoes. What did I do wrong? Yet, I honestly feel that I was flamed for providing my honest opinion. Anon said Last time I checked, a definition for forum is a public medium for open discussion.
Isn't that exactly what I did? I have always tried to be professional here and have often deleted a sentence after writing in fear that it might be taken wrong, but when I go back and read my first post, I really can't see any sarcastic or wrong about it. If you feel that there is something you can point out to me, please do. I don't see it.

Anon: I know exactly who the "Power Poster" that you refer to is. I actually had a phone discussion with him one day when I saw a similar comment. I can't speak for him, but I'm truly sorry you were not treated professionally here at BOL.

Let use this as a reminder that communication is incomplete at BOL, give the posters the benefit of the doubt and (I echo Anon's comment) Lighten Up!
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#279546 - 07/11/05 11:59 PM Re: suspicious activity reports
Anonymous
Unregistered

Yes, but disclosing that a SAR has been filed or the contents of a SAR consitutes a crime.

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