Important note: FinCEN indefinitely delayed their implementation of the form discussed in this article, and pulled it off their site. FinCEN's announcement of the delay is here.
The Financial Crimes Enforcement Network (FinCEN) and the federal financial institution regulatory agencies announced the release of a new Suspicious Activity Report form for Depository Institutions (SAR-DI, FinCEN Form 111) designed to accommodate jointly-filed reports. The new SAR-DI form was released about six months before June 30, 2007, when use of the form will be permitted.
Instructions for the use of the form span three full pages, plus a half page devoted principally to completion of the all-important Narrative in Part V. There are a great many more item-specific instructions, including details on how to complete items for which information is unknown. A number of questions raised in the past about dollar amounts and multiple suspects have been addressed.
Missing instruction:
One SAR-DI instruction is surprisingly missing, and it is probably the most important instruction for institutions that contemplate sharing information for a SAR. Depositories that wish to cooperate in the filing of joint SARs must first comply with 31 CFR 103.110(b) -- the so-called "314(b) Rule" on voluntary information sharing -- including the filing of the institution's notice of intent to share. Failing to comply with that section of the regulation could void an institution's "safe harbor" protections against liability for sharing information.
There are a number of cosmetic changes designed to make the form more user-friendly, but the most significant change is the addition of items designed for jointly-completed reports. As one might expect, this is one area where the instructions get a bit complicated. For example, there is this requirement: "If filed jointly, a Part III and Part IV must be completed for each institution. If reporting multiple subjects (box 2a checked) complete Part III, items 33 through 42 for each subject reported by the institution."
FinCEN wants to encourage joint filings to help consolidate cases in which suspicious activity involves or is detected by multiple institutions. Particularly when a jointly-developed narrative is included, a fuller picture of the suspicious acts can be given to law enforcement. If an insider of an institution is involved, however, joint filing is not permitted.
Note: Since section 103.110(b) of the regulation was added, there has been a good deal of BOL Bankers' Threads discussion about what information can be legally shared. Frequently, the advice has been not to inform the other institution of a SAR filing or intent to file. Clearly, that advice, which had no specific basis in the regulation, is now invalid. It's obvious that a joint filing would necessarily be known to each of the filing institutions.
The agencies said that they released the form early to provide institutions lead time for making any procedural changes needed to adapt to the new format. Both the current SAR form and the new SAR-DI form can be used beginning on June 30 and through December 31, 2007. Beginning January 1, 2008, only the new form will be accepted for filing.
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