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SAR = Something Ain't Right
By Doug Keipper, CAMS, with Terry Jones, CAMS
We all know that the SAR form stands for Suspicious Activity Report. When I taught BSA at the front line, I taught that it stood for "Something Ain't Right". It always got a giggle and that led us in to discuss several examples.
- The country club wife who was always on the cell phone with her husband (who wasn't on the account) when she conducted transactions. He later pled guilty to 19 counts of smuggling illegal aliens to work at gas stations.
- The story of a senior lender that read about one of his business customer's CFO who shot himself in the head. He immediately closed the account and avoided millions of dollars in kiting. He had a gut reaction that something ain't right.
- The elderly woman who comes in to the credit union with her grandson and withdraws cash and hands it to him on the spot. Is he taking advantage of her senility or is he really caring for her needs? Is he listed on a power of attorney?
- The man who has a vending machine route and brings in small bills and exchanges them for hundreds without a transaction. In this case, he had trained the tellers to not make it a transaction and always gave them a left over 12 pack of sodas for their trouble. It started with a few thousand dollars a month and ended with close to twenty thousand dollars a month. Once the tellers were trained to make this a transaction he closed the account. He wanted clean money (as opposed to money that had cocaine and marijuana remnants on it) to go past immigration officials and sniffing dogs where he bought the drugs.
To have your customer service rep call you and say "I don't know what they are doing - but something ain't right" is a comfortable way for them to pass on information without feeling like a tattle tale. Remember, we are unpaid treasury agents not juries. We don't decide if someone is guilty, we just report suspicious activity. As I told my staff, it is not our job to determine if Johnny stole the candy bar; it is our job to report that he has chocolate breath. All the sophisticated software in the world can't detect what isn't a transaction, so how do you catch it?
The flow of information
Each bank has their own policies and procedures and now some software even has a method for pushing the information up to the BSA officer. It is the bank SECRECY officer's job to do the investigation to see if the activity meets the four requirements for filing a SAR. In their investigation the BSA officer needs to have a method to push or pull commentary from the front line. How does this information get tracked (along with the transactions) so it doesn't get lost?
How does the BSA officer keep it SECRET? Do they report the names on SARs to the compliance committee? Do they report the names on SARs to the Board of Directors? Do the tellers know when a SAR has been filed? How well does it stay a secret?
The BSA officer upon filing a SAR sends it to the Detroit Computing Center where it gets disseminated among DEA, FBI, Department of Homeland Security and others. It may be a name that ends up on a 314(a) list. The justice department just reported in the March 1, 2007 USA Today page 11a, "DEA busts ring accused of sending tons of drugs to USA". There were 402 arrests over a 20 month period - think any of them were on a 314(a) list? There was $45.2 million confiscated - think any that cash was on a CTR or SAR? When you are evaluating software, policies and procedures, check to see that there are ways for the tellers, lenders, customer service reps and everyone to report - "Something ain't right".
Both Doug Keipper and Terry Jones have served as successful BSA/AML officers or compliance managers in financial institutions in high-risk markets. They bring a wealth of information to assist banks in finding creative and time-saving ways to address the current demands in the compliance arena. Both approach the area with a sense of commitment, realism and humor based on the realities of working in the world of BSA themselves. If you have concerns or need assistance in meeting requirements, you may contact them for direction.
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First published on BankersOnline.com 3/19/07
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