We have a business customer who just found out that one of their employees had been writing checks and forging the signature on the checks of the business account. This has been going on for the past year and a half. The person committing the crime just got caught, and we are trying to decide if we need to file a SAR because of the forged checks. The individual forged over $50,000 over this time period. I think that we need to file the SAR, but the BSA officer does not think we need to. Ane help would be appreciated.

I do not think you need to file a SAR.
I think your customer needs to file a report with the local police.
IMHO.

Is the bank going to take a loss? I assume the checks were drawn on your bank; if that is the case a fraud was perpetrated through your bank and you may take a loss. I would consider filing.

I agree with KayBee. The amount of loss is one determining factor. The other factor is what type of business is this. Would they be a NBFI or an MSB? If so, they would be responsible for filing a SAR themselves. If there is no loss to the financial institution you MAY not have to file a SAR. At the ABARCC in Baltimore, Bill Fox specifically stated that the Defensive Filing of SARs would not cause your institution to get into trouble with your federal regulator. If you just don't feel comfortable with the situation, take the first steps and actually call FinCEN and simply provide them with a "scenario" and ask them if the BSA would require such filing.

Feel free to contact your primary regulator as well.

But if you DO NOT file the SAR, I would specifically state why a SAR was not file and retain that information in your records for review during your next federal regulator exam. Because they may want to see your reasoning behind not filing.

Check fraud is one of the specific activity types included on the SAR form. The mandatory filing threshold when you have a known suspect is $5000 aggregate activity conducted at or through the filing institution.

Because this situation meets the above criteria, I don't see any choice but to file.

I was trying to show the softer gentler side. I would always file on these if I hit the reporting threshold.

In my HMO you definitely need to file a SARand provide a copy to your friendly local detective and the FBI.

Just to amplify one point here. The facts (1) that you are aware of check fraud, (2) that the amount exceeds $5,000, (3) that you have the identity of the/a suspect, and (4) that it apparently took place in an account at your bank make this a mandatory SAR case.

As pointed out clearly in the AmSouth public documents, whether the bank will sustain a loss is not material to the filing of the SAR.

Fraudman,
You really going to give a copy of the SAR to a local detective?

John is absolutely correct. You MUST file an SAR if the conditions are met. I'm not so sure I would supply the SAR to a local detective. It would seem to me that the customer would have filed a police report.