Reporting SARs to the Board of Directors
Answers by Barbara Hurst, Dana Turner and Ken Golliher, BOL Gurus
Question: I know I have to let the Board of Directors know when a SAR is filed. I was told all I can tell them is that one is being filed. Is this correct... how does it get in the minutes and what does it have to state?
Answer by Barbara Hurst: BIO AND CONTACT INFO
I take an even harder line than Dana and Ken do below, because the less the Board of Directors knows about an SAR the safer the financial institution is from committing disclosure. Years ago a very knowledgeable speaker from Chase shared a letter she had been using for some time that met with the approval of both FinCEN and her BOD. It said:
Date: _________________
To: Board of Directors
___Name of Institution_____
Re: Notification of suspected crimes from __Date__ to __Date__.
All instances of suspected crimes have been reported to the regulatory authorities as required by law. These reports include a total of __#__ INTERNAL cases with losses/exposures totaling $________, and __#__ EXTERNAL cases with losses/exposures totaling $______.
The required reports have been filed with FinCEN (Financial Crimes Enforcement Network) as required, and with other law enforcement agencies as were deemed appropriate.
Copies of the actual Suspicious Activity Reports have been provided to the Secretary's office, and will be maintained on file as required.
_____(Signed)_______________
(The Reporting Officer)
cc: Senior Staff - including the Chief Compliance Officer
Answer by Dana Turner: BIO AND CONTACT INFO
Please don't tell the board that you're filing a SAR -- tell the board that you have filed one. I suggest that you include only minimal information when you advise the board, including only:
That a SAR has been filed;
The date the SAR was filed;
The title and section of the law or regulation that was used.
Answer by Ken Golliher: BIO AND CONTACT INFO
Like Dana, I recommend that the board be told after the fact, not before. We also concur in the suggestion that it is not necessary or advisable to disclose the specific contents of the SAR to the board. There is no regulatory prohibition that the board cannot see the SAR or (involuntary shiver) vote on it.
I might be willing to give them a bit more information than Dana. Following is a sample from some of our recent seminar materials:
SAR File 02-18 - Consumer account opened approximately two months prior with no significant activity since, suddenly had deposits of several large, non-local checks. Funds were verified by calls to drawee institutions, but when we attempted to verify checks with issuers, checks were determined to be counterfeit. No loss incurred. Classified as "counterfeit check." Also reported to local law enforcement authorities.
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