Prohibition on Notification

As set forth in the October 2000 SAR Activity Review (Section 5 - Disclosure of SARs and Underlying Suspicious Activity), federal law (31 U.S.C. 5318(g)(2)) prohibits the notification to any person that is involved in the activity being reported on a SAR that the activity has been reported. This prohibition extends to disclosures that could indirectly result in the notification to the subject of a SAR that a SAR has been filed, effectively precluding the disclosure of a SAR or even its existence to any persons other than appropriate law enforcement and supervisory agency or agencies. Self-regulatory organizations such as the New York Stock Exchange and the National Association of Securities Dealers are not appropriate supervisory agencies under current law for purposes of SAR disclosure by financial institutions. This prohibition does not preclude, under federal law, a disclosure in an appropriate manner of the facts that are the basis of the SAR, so long as the disclosure is not made in a way that indicates or implies that a SAR has been filed or that information is included on a filed SAR.

In the rare instance when suspicious activity is related to an individual in the organization, such as the president or one of the members of the board of directors, the established policy that would require notification of a SAR filing to such an individual should not be followed. Deviations to established policies and procedures so as to avoid notification of a SAR filing to a subject of the SAR should be documented and appropriate uninvolved senior organizational personnel should be so advised.

The prohibition on notification of a SAR filing can raise special issues when SAR filings are sought by subpoena or court order. The SAR regulations direct organizations facing these issues to contact their primary supervisor, as well as FinCEN, to obtain guidance and direction on how to proceed. In several matters to date, government agencies have intervened to ensure that the protection for filing organizations and the integrity of the data contained within the SAR database remain intact.

Excerpted from SAR Activity Review Issue , page 36