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Securities Industry: SAR Analysis? Indications of Suspicious Activity

Securities Industry: SAR Analysis ? Indications of Suspicious Activity

A small part of the total volume of SARs filed is for reports filed voluntarily by brokers and dealers in securities that are not affiliated with banks. In August 2001, FinCEN conducted a study to determine the number of SARs being filed voluntarily. Between April 1996 and April 2001, securities, investment, and brokerage services had filed 1,930 SARs of the 572,835 SARs filed.

FinCEN has not performed a full analysis of the SARs that were submitted specifically by broker-dealers. However, FinCEN's staff conducted an analysis of all SARs submitted by depository institutions, affiliates of depository institutions, and those voluntarily filed by broker-dealers, MSBs or gaming businesses from the years 1996 through 2002. These SARs were identified by searching the narrative section for key words related to the securities industry (e.g., investment companies, mutual funds, hedge funds, private investment trusts, venture capital funds, investment advisers). This analysis was not conducted to assess the money laundering risks associated with securities sector; rather, it was done to provide a snapshot of what SAR filers were reporting related to the securities industry.

For each of the sets of SARs linked to the terms, an analysis was conducted to identify baseline statistical information, including the total number of BSA violations reported; the range of violation amounts; and violation categories. In addition, an analysis was conducted to identify the primary types of suspicious activity reported by the filing institutions. Due to the large number of SARs identified for several of the terms, those data sets were sampled to provide a workable number of significant findings from the narratives. The following provides a synopsis of the data related to key terms of the securities industry.

Excerpted from SAR Activity Review Issue Feb. 2003, page 38

First published on 02/01/2003

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