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SARs filed by Money Services Business

The suspicious reporting requirements of the BSA became applicable to certain MSBs, effective January 1, 2002.19 Money transmitters and issuers, sellers, and redeemers of money orders and traveler?s checks are now required to report suspicious activity.

A search of the SAR database from January 1, 2002 through September 31, 2002, revealed 16,692 SARs submitted by MSBs. The MSB SARs were filed by 518 separate entities, including both money transmitter companies and/or individual authorized agents.

Violation amounts ranged from $0 dollars to $705 million (which included an unsolicited e-mail offer for foreign exchange totaling more than $700 million; no currency or other monetary instruments were actually involved.) The following is a breakout of violation amounts reported:

The MSB SARs were filed in 49 states as well as the District of Columbia, Guam, Puerto Rico, Canada, the Dominican Republic, and Japan (by the U.S. Navy Exchange.) The following top five state filers (by volume) accounted for 57.33% of all filings:

The MSB SARs referenced 15,235 violations. Often, more than one violation was cited per SAR. In 1,408 (8.43%) cases, the violation field was blank. The top three reported violations were: BSA/Structuring/Money Laundering - 12,304 (80.76%); Other-1,282 (8.41%); and Wire Transfer Fraud - 686 (4.50%).

More than half of the narratives dealt with structured money transfer activity. The majority of those SARs described outgoing wire activity and to a lesser degree, incoming wires. Outgoing wires were primarily destined for recipients in Central America (predominantly the Dominican Republic), as well as within the United States, the Middle East, and Europe. The typical scenarios involved multiple senders to the same recipient, individual senders to multiple recipients in a very short period of time (often within minutes), and an individual remitter to a single recipient.

Other reported activity dealt with the suspicious purchase of money orders.

  • Customers purchased excessive amounts of money orders for no apparent reason.
  • The source of cash used for the purchases was unknown.
  • Individuals purchased money orders in structured amounts at multiple locations.
  • The purchaser line on the money order was left blank or was illegible.
  • The payee and purchaser names on the money order were the same.

Identity theft or fraud was reported in a number of SAR narratives. One particular MSB reported numerous cases of identity theft where the perpetrator obtained the log-in and user ID to access victims? accounts on-line. The perpetrator then moved funds to his own accounts or used the victims? money to effect wire transfers to a third party.

Most high-dollar violations reported by MSBs dealt with "Nigerian Advance Fee" scams via unsolicited faxes or e-mails.

Excerpted from SAR Activity Review Issue 5, page 48

First published on 02/01/2003

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