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#349669 - 04/21/05 04:17 PM SAR Question
Chiquita Banana Offline
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Chiquita Banana
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We received information about a shared customer from another institution. The information was given to give as a 'heads up' to a potential fraud situation. If we were to monitor the account as we would for any other customer, I don't know if we have enough to trigger a SAR. With the information is a different matter entirely. Opinions?

I know that we *shouldn't* have been given the information so informally but we are both on the 314(b) lists and this could be a potential money laundering situation.

Advice on how to proceed?
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#349670 - 04/21/05 05:21 PM Re: SAR Question
JacF Offline

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Provided the information shared is limited to what is allowed by 314(b)- you're covered. Make sure you document what who/what/when of the shared information in your file, including documentation that the other institution is a 314(b) participant.

For SAR purposes, it doesn't matter how you became aware of suspicious activity. Once you have said knowledge, you have a duty to act. And sometimes that knowledge can and does come from external sources.

Personally, I think it is worthwhile to mention the 314(b) contact in the narrative of the SAR, especially since it is a key consideration in your bank's assessment of the SARworthiness of the underlying activity. Furthermore, it is reasonable to predict that your SAR will not be the only one, so noting your contact with another institution provides additional means of cross referencing other related SARs, adding to their collective usefulness.

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#349671 - 04/21/05 07:24 PM Re: SAR Question
John Burnett Offline
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My read of 31 CFR 103.110 (which implements 314(b)) is that it only covers interbank sharing of information relating to suspected money laundering or terrorist activity. It doesn't expand to include "fraud" unless the "fraud" involves ML or terrorism.

That said, banks have for years participated in anti-fraud networks. And I don't believe they do so illegally.
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#349672 - 04/25/05 01:09 AM Re: SAR Question
Elwood P. Dowd Offline
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If you only received, but did not send information, you do not have a problem per se. Nevertheless, it is an "overshare" unless both institutions believe money laundering or terrorist financing is involved. In the current environment, I doubt seriously that anyone would have the courage to criticize a bank for a bit of overzealousness if it resulted in a SAR filing.

I agree with John and JacFSB, if the information is credible, you should use it in evaluating your responsibility for filing, incorporate it in the narrative of any SAR you file and fully identify the source and circumstances.


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#349673 - 04/25/05 01:18 AM Re: SAR Question
Kathleen O. Blanchard Offline

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Don't forget thst the "definition" of money laundering (list of crimes considered to be money laundering) is broad and movement of funds gained fraudulently or used to perpetrate a fraud is often prosecuted under money laundering statutes.
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#349674 - 04/25/05 06:32 AM Re: SAR Question
Princess Romeo Offline

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Hows this for an umbrella:

Fraud is illegal, and therefore money obtained through fraud and moved through accounts is a step in the money laundering process. Ergo, fraud is tantamount to money laundering and information can be shared under 314(b).

OKAY - NOW THIS IS ONLY MY OPINION AND YOU SHOULD RUN THIS BY A FEW ATTORNEYS WHO SPECIALIZE IN THIS AREA FOR THEIR OPINION.
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#349675 - 04/25/05 03:04 PM Re: SAR Question
Chiquita Banana Offline
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<>

Do you know of any written guidance that supports that? I believe and agree with you fully but we're having 'discussions' here. There is a concern that there could be liability about including in our narrative the information that was received. From what I remember, it doesn't really matter how you got the information but that you got it and it supports the position of the SAR along with our own facts.
The flip side is that we wouldn't have caught this account if it wasn't for the information. In my opinion, that just leads us to better our monitoring practices but doesn't change the facts in this particular case.

*sigh* Why can't everybody just be law abiding citizens?
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#349676 - 04/25/05 04:27 PM Re: SAR Question
Chiquita Banana Offline
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I've been doing some digging this morning and it got the brain wheels turning. (I hate it when they do that! haha)

If I understand correctly: Banker from X Bank calls me and gives information that involves a current customer. It doesn't fall under the 314(b) category...it's just information. I do a review, see nothing. No SAR is warranted.

But if I do a review and see that the activity that we now have supports the information we can file a SAR because knowing all that we know it's suspicious. Right?

So, what if the banker never called, and we're looking at the account by itself and say, "Yeah, it's odd but doesn't fit the SAR requirements?"

Am I babbling or am I making sense? I guess we shouldn't play 'what if'. This is what we know right now and it ain't pretty. Here's who told us the information. It's not our fault that he blabbed but it helped us spot something suspicious.

Is that our stance?

Sorry for all the questions, but I'm still relatively new and since we're small, we don't get this stuff often.

To quote the old Bartles and James commericials, "I thank you for your support." (Is it too early to think about drinkin'?)
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#349677 - 04/25/05 04:30 PM Re: SAR Question
Kathleen O. Blanchard Offline

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Can you give us a hypothetical of what type of info the other bank gave you? It's difficult to understand your quandry without it. No names or locations of course.

If you feel more comfortable, post it in the private forum.
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#349678 - 04/25/05 04:45 PM Re: SAR Question
Chiquita Banana Offline
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I've heard about this private forum but have yet to see it. I feel a little left out. haha.

And yes, I would feel better putting it there.
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#349679 - 04/25/05 04:48 PM Re: SAR Question
Kathleen O. Blanchard Offline

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You can contact BOL directly to sign up for the private forum.

HOw about this. PM me and I will give you my 2 cents worth on what was shared and how we would treat it.
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#349680 - 04/25/05 04:55 PM Re: SAR Question
Greg Offline
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Amy,

Don't overthink this one. When someone tells you something it's not your fault that they told you. If it leads you to something suspicious, file the SAR.

If a customer walked into your office and told you one of your other customers was a crook you would investigate and, if you found anything, you would file.

It's not you fault so stop beating yourself up about it.
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#349681 - 04/25/05 05:00 PM Re: SAR Question
Princess Romeo Offline

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One thing to remember, in your discussions with other banks, you do NOT discuss the filing or not filing of a SAR. Yeah, we all dance around because we know what we are really talking about, but still, you cannot mention whether or not you are thinking about or have filed a SAR or not filed a SAR.

Amy - as far as my position, there is nothing written to support that. That's why you would want to run this by an attorney. It would be nice if FinCEN would just say that fraud is part of the money laundering cycle.
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#349682 - 04/25/05 05:03 PM Re: SAR Question
Kathleen O. Blanchard Offline

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Many banks just say they are "taking the appropriate action". Absolutely no mention of the SAR.
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#349683 - 04/25/05 05:15 PM Re: SAR Question
JacF Offline

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Quote:

But if I do a review and see that the activity that we now have supports the information we can file a SAR because knowing all that we know it's suspicious. Right?
...
I guess we shouldn't play 'what if'. This is what we know right now and it ain't pretty. Here's who told us the information. It's not our fault that he blabbed but it helped us spot something suspicious.



Without knowing the specifics, it's difficult to say if an actual privacy breach occurred. But, with the situation being as unpretty as it is, I would guess the subject would have a difficult time playing the privacy card (especially considering the confidential nature of SARs). Whether information was passed along 'to prevent fraud', or whether it falls under 314(b), I'd be willing to bet that enough information was shared within the letter and spirit of the law to legitimize the contact.

Plus, any liability for a privacy breach would fall on the other bank. Although I'm sure you don't want the other bank to face any repercussions, it's a risk that you have to take at this point. Like Ken said, it's not likely that anybody would face any criticism for sharing information (unless it was done maliciously). So it is a small risk in comparison to the much larger risk of failing to file a SAR.

Quote:

So, what if the banker never called, and we're looking at the account by itself and say, "Yeah, it's odd but doesn't fit the SAR requirements?"



It's not unusual for activity to not appear suspicious until external knowledge is added to what you can see bankside. For example: Individual purchases a $5000 check, payable to the local court, and paid for with $100 bills. In and of itself, that does not rise to SAR levels. But add the news article from the prior week, indicating that this individual was arrested and charged in a fairly large drug bust, and it becomes quite SARable.

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#349684 - 04/25/05 06:27 PM Re: SAR Question
Chiquita Banana Offline
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Chiquita Banana
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The banana bin
Thanks again. I agree with everything that is being said. In fact, a lot of it is my argument to the opposing person at my bank.
I just want to be able to defend my opinion and am playing devil's advocate.

I'm still a little green so I can understand going through the wringer in order to support my opinions.

Thanks again!
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My opinions are definately my own. I could be wrong. But I don't think so.

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