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#1111464 - 01/15/09 02:45 PM Need some help with a SAR issue invloving Exec VP
Anonymous
Unregistered

This situation occured just prior to Christmas. It had been the "tradition" at our bank that we receive a Christmas card from our CEO with a $100 bill inside as a Christmas gift from the bank.

I was in our main branch lobby talking with my wife on 12/23/08 when an executive VP at our bank approached the teller window, handed the teller a withdrawal slip and asked for $12,000 in crisp $100 bills. I thought that perhaps this was being done for the aforementioned employee Christmas gift. After that, I didn't think anything of it. No employee ended up getting the CEO Christmas card, but I just chalked that up to the state of the economy, etc.

Following the holidays, our bank's BSA officer approached our bank's legal counsel about an issue regarding the executive VP's withdrawal (which I had initially witnessed).

What I didn't know, because I had walked away from the teller window at this point, was that the exec VP, upon handing over the withdrawal slip for $12,000, was told that there would have to be a CTR filed due to the amount. The transaction was later reversed in our system. The exec VP then made one $9,000 withdrawal on 12/23 and a $3,000 withdrawal on 12/24.

The withdrawals were made on behalf of one of our bank's biggest and best customers (like we all haven't heard that line before) from a money market account.

Our bank's president is not a big fan of Reg D. Somewhere along the way, someone in the bank created a special transaction code to put on the withdrawal slips. This trans code, for anyone looking at it against a legend of what they mean, will indicate that the transaction was done in person at a teller window. In reality, what it means is that a customer called into one of our branches to request a transfer, withdrawal, etc., and a bank employee completes the transaction in the branch.

In the instance detailed above, this "special" trans code was used for both the 12/23 and 12/24 transactions.

It is readily apparent to me that our bank needs to file a SAR on these transactions because the withdrawals were obviously structured. The main issue is, who gets named on the SAR? We name the customer, but do we name the exec VP as well?

What are the potential repercussions to the bank and the exec VP personally if she is named on the SAR?

I would very sincerely appreciate any input or answers regarding this situation.

Thanks for reading.

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#1111565 - 01/15/09 03:57 PM Re: Need some help with a SAR issue invloving Exec VP Anonymous
BrendaC Offline
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Sweet Home AL
First of all, teller should not have "reversed" transaction if it was actually completed in the system. The CTR should have been completed. (I would be concerned that a branch employee COULD reverse a transaction to avoid the CTR.)

Secondly, if decision is made to retain EVP, I would document counseling, warning and additional BSA training in his personnel file. Obviously, you cannot mention the existence of a SAR (and I hope he doesn't read the BOL threads).
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#1111594 - 01/15/09 04:20 PM Re: Need some help with a SAR issue invloving Exec VP BrendaC
JacF Offline

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Posts: 6,719
PA
Was the transaction reversed during the initial visit to the teller window, or did the EVP actually walk away with $12,000, and later bring a portion back?

If it's the latter, you will still need to file a CTR in addition to the SAR.

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#1111653 - 01/15/09 04:57 PM Re: Need some help with a SAR issue invloving Exec VP JacF
Anonymous
Unregistered

Original anonymous here.

According to transaction records, the withdrawal happened at 10:12:21 and returned to the account at 10:13:29. What I believe happened, which I can verify with the teller involved, was that the exec VP was told that a CTR would have to be filed and once the exec VP learned that, the transaction was reversed. I don't believe the exec VP physically received funds from the transaction.

As to the other part of my initial inquiry, does anyone have any thoughts as to whether the exec VP should be named on the SAR?

Thanks for the responses. I look forward to the follow ups.

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#1111720 - 01/15/09 05:51 PM Re: Need some help with a SAR issue invloving Exec VP Anonymous
MN Banker Offline
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Posts: 980
I say absolutely the Exec VP should be named on the SAR. He/she is the one who structured the transaction.

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#1111793 - 01/15/09 06:49 PM Re: Need some help with a SAR issue invloving Exec VP MN Banker
J2C Offline
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Big Brother knows and that's a...
I agree. The Exec VP should be named on the SAR...he conducted the transaction and then avoided the CTR requirements.
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#1111808 - 01/15/09 06:57 PM Re: Need some help with a SAR issue invloving Exec VP J2C
Anonymous
Unregistered

Original anonymous again.

Thanks for the responses. Before I go any further with this in discussions with our bank's legal counsel, would it be necessary, in everyone's collective opinion, to file the CTR as well?

The original $12,000 transaction does not show up on a regular statement printed out from our system. However, the individual "Teller Activity Module" for the teller involved does show the transaction, even though it was on the system for approximately 1 minute and 8 seconds.

Thanks again for everyone's input!

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#1111899 - 01/15/09 08:08 PM Re: Need some help with a SAR issue invloving Exec VP Anonymous
JacF Offline

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Posts: 6,719
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Talk to the teller- did $12,000 actually cross the counter? If not, then no CTR is required.

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#1112081 - 01/15/09 10:59 PM Re: Need some help with a SAR issue invloving Exec VP JacF
critter586 Offline
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Joined: Dec 2008
Posts: 20
Minnesota
And revisit BrendaC's comment "if the decision is made to retain the EVP".

For an executive officer to assist someone in structuring - I would consider termination.

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#1112126 - 01/16/09 12:23 AM Re: Need some help with a SAR issue invloving Exec VP critter586
DebL Offline
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Joined: Jan 2007
Posts: 314
CA
Just thinking out loud here...if the EVP structured the transaction at the teller window, without an interim call to the customer, should you really list the customer in the SAR?

Perhaps mentioning the customer in the narrative but not as a suspect is the way to go.
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#1112140 - 01/16/09 01:44 AM Re: Need some help with a SAR issue invloving Exec VP DebL
MagicCity Offline

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MagicCity
Joined: Apr 2003
Posts: 3,003
Fort Lauderdale, Florida
SAR on the EVP.
Mention customer in the narrative.
Show evidence of a review of that customer's activity.
No CTR.
Written warning for the teller.
Written warning for the EVP.

IMHO.

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#1112170 - 01/16/09 03:47 AM Re: Need some help with a SAR issue invloving Exec VP MagicCity
rlcarey Offline
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Joined: Jul 2001
Posts: 79,633
Galveston, TX
You need to involve legal counsel immediately, and I mean one that knows the Bank Secrecy Act and can comprehend the seriousness of this offense. This is not your attorney that normally helps in preparing your real estate loan documents.

The EVP directly violated the Bank Secrecy Act:

Sec. 103.63 Structured transactions.

No person shall for the purpose of evading the reporting requirements of Sec. 103.22 with respect to such transaction:

(a) Cause or attempt to cause a domestic financial institution to fail to file a report required under Sec. 103.22;

This is not something that should be swept under the table with a written warning to the EVP and a simple SAR filing and most likely requires an immediate a call to your regulator and possibly the FBI.

This EVP is looking at jail time and the bank does not want to be on the wrong side of this transaction. The bank being directly involved in assisting or performing the actual structuring for this customer on this transaction can invoke the "death penalty" for the bank, The "death penalty" involves the revocation of the bank's charter.

Termination is the least of the bank's or the EVP's worries and the bank needs to take the appropriate actions.
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#1112216 - 01/16/09 01:34 PM Re: Need some help with a SAR issue invloving Exec VP MagicCity
Anonymous
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Once the EVP is named on the SAR, there is no turning back. He/she will forever have that on their record and can no longer hold anything above the title of Assistant Vice-President. The SAR will be found in any future new bank applications, or new banking jobs involving that officer.

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#1112226 - 01/16/09 01:51 PM Re: Need some help with a SAR issue invloving Exec VP Anonymous
Anonymous
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"Once the EVP is named on the SAR, there is no turning back. He/she will forever have that on their record and can no longer hold anything above the title of Assistant Vice-President. The SAR will be found in any future new bank applications, or new banking jobs involving that officer."

I think you overrate the SAR system. How would another bank know there is a SAR in the record?

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#1112239 - 01/16/09 02:04 PM Re: Need some help with a SAR issue invloving Exec VP Anonymous
Anonymous
Unregistered

Originally Posted By: Anonymous
Once the EVP is named on the SAR, there is no turning back. He/she will forever have that on their record and can no longer hold anything above the title of Assistant Vice-President. The SAR will be found in any future new bank applications, or new banking jobs involving that officer.


I have never heard such a rule...nor is it stated in any of the regs I'm familiar with. There is no way another bank would know if a SAR was filed on that person or not. Where did you get this information from?

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#1112745 - 01/16/09 07:57 PM Re: Need some help with a SAR issue invloving Exec VP Anonymous
Anonymous
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Follow the advice of rlcarey, response #1112170 - in addition to your internal BSA Compliance protocol. File a SAR immediately including CTR. It's that simple.

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#1112867 - 01/16/09 09:13 PM Re: Need some help with a SAR issue invloving Exec VP Anonymous
Anonymous
Unregistered

We opened a new bank. All senior officers had to submit an application required by the state banking agency. Background checks were run, including for SAR's. One turned up and that person was still hired after an explanation was given, but they could not be more than an AVP.

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#1112891 - 01/16/09 09:26 PM Re: Need some help with a SAR issue invloving Exec VP Anonymous
Anonymous
Unregistered

Originally Posted By: Anonymous
We opened a new bank. All senior officers had to submit an application required by the state banking agency. Background checks were run, including for SAR's. One turned up and that person was still hired after an explanation was given, but they could not be more than an AVP.


There is no rule that says they can't be more than an AVP. IF there is, please inform of where.

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#1113741 - 01/20/09 08:50 PM Re: Need some help with a SAR issue invloving Exec VP JacF
YosemiteSamIAm Offline
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Joined: Jan 2004
Posts: 2,795
Guess
Originally Posted By: JacFSB
Talk to the teller- did $12,000 actually cross the counter? If not, then no CTR is required.
Has anyone thought to look at the cameras?
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#1114445 - 01/21/09 07:23 PM Re: Need some help with a SAR issue invloving Exec VP Anonymous
Anonymous
Unregistered

This sounds like a very familiar situation. Our Compliance/BSA officer was the one embezzling money. This person had the knowledge and expertise to know how to reverse and change trans codes to hide and disguise the moving around from examiners and other employees that might become suspicious. A good and safe bet would be to contact your regulators. Ours were helpful and discreet while helping to invistigate.

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#1115323 - 01/22/09 07:25 PM Re: Need some help with a SAR issue invloving Exec VP Anonymous
GenerousLife Offline
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Joined: Feb 2002
Posts: 1,466
USA
After the dust settles on this one, the "special" tran code to circumvent Reg D should be addressed.
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#1115326 - 01/22/09 07:28 PM Re: Need some help with a SAR issue invloving Exec VP Anonymous
RR Joker Offline
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RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
Originally Posted By: Anonymous
This sounds like a very familiar situation. Our Compliance/BSA officer was the one embezzling money. This person had the knowledge and expertise to know how to reverse and change trans codes to hide and disguise the moving around from examiners and other employees that might become suspicious. A good and safe bet would be to contact your regulators. Ours were helpful and discreet while helping to invistigate.


this is an amazing example of a lack of internal controls. A person in that position should have no maintenance/coding authority at all!
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#1115328 - 01/22/09 07:28 PM Re: Need some help with a SAR issue invloving Exec VP GenerousLife
BrendaC Offline
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BrendaC
Joined: Sep 2001
Posts: 6,029
Sweet Home AL
I would also address giving a branch employee the ability to reverse a CTR reportable transaction. Only specifically designated BSA Dept personnel should be able to do that IMHO.
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#1119920 - 01/30/09 03:25 PM Re: Need some help with a SAR issue invloving Exec VP BrendaC
Anonymous
Unregistered

"We opened a new bank. All senior officers had to submit an application required by the state banking agency. Background checks were run, including for SAR's. One turned up and that person was still hired after an explanation was given, but they could not be more than an AVP."


Hold up! Can you explain this? I have never heard of anyone being allowed to conduct a background check that included SAR's. Plus how did the person explain away the situation? Aren't you NOT supposed to confirm or deny a SAR was filed? If they are telling him he was mentioned in the SAR, then doesn't that violate SAR filing rules? I am confused........

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