I always thought that banks were required to document the reason why a SAR wasn't filed (subsequent to an investigation prompted by a referral from an operating area). However, in reviewing the FDIC Manual I note the following:
Page 41 - After thorough research and analysis, decisions to file or not to file a SAR should be documented.
Page 46 - Banks are encouraged to document SAR decisions.

* Should be documented vs Encouraged??? I see a difference between the two. While I am going to recommend that my bank document, it is certainly a stronger sell if I can indicate that we are required (vs just encouraged).

Can anyone reconcile these two phrases or am I just clueless as to the meaning of the word should?

We are under the OCC and are told we should be detailed in our documentation as to WHY a SAR was not filed.

Not the FDIC, I know, but regulatory agency instructions none-the-less :-)

Throw the old FDIC Manual away. The new BSA/AML Exam procedures has this step:

"Review the bank’s policies, procedures, and processes for identifying, researching, and reporting suspicious activity. Determine whether they include the following:

> Procedures for documenting decisions not to file a SAR."

But this IS from the New Manual.

What you quote is page 41 (which I also referenced). On page 46 of the New Manual is the phrase "encouraged"

On page 183, one of the examination procedures is to determine whether your SAR procedures include "Procedures for documenting decisions not to file an SAR".

That makes it "best two out of three"!

I can assure you they are very interested in your documentation as was evident from our recent examinedby the FED (pre guidance, but VERY thorough and in line with the guidance)

Best two out of three...EXCELLENT (unless of course it's a seven game series).

Thanks to all for the thoughtful responses.

I would go with where ever the examination procedures lead the examiners over the intro/overview section any day. They are only going to focus on the actual procedures. By the way - my quote is from page 183.

Good idea and nice response...Thanks

The bigger issue here is to have a process for identifying and reporting suspicious activities. We know that identifying all possibly suspicious activities is not a reasonable goal, just as having no system to identify any suspicious activities is unacceptable. Likewise, we don't expect that each and every transaction for which you make a decision not to file will be documented. Many of those decisions are going to be slam dunk non-files. The ones we'll be interested in are the not-so-clear cases. AR.

AnonRegulator makes a good point. My experience with the FDIC is that they want to understand your rationale for not filing on the not-so-clear cases. For example, the business customer that appears to be structuring, but your research leads you to the conclusion that the deposits are consistent with the nature of the business. At my last bank, we put a memo in the file to document our thought process along with supporting documentation.