Skip to content
BOL Conferences
Thread Options
#1205397 - 06/22/09 06:42 PM Employee theft
bls Offline
100 Club
Joined: Oct 2005
Posts: 138
Alabama
Any advice? We have uncovered an employee stealing money. We are going to file a SAR and the employee has been terminated. I am receiving conflicting advice from different regulatory agencies. One regulator instructed us to also contact local law enforcement. Another regulator said it is not necessary to inform local law, as we are filing the SAR. Any advice?

Return to Top
BSA/AML/CIP/OFAC Forum
#1205445 - 06/22/09 07:15 PM Re: Employee theft bls
Skyline Offline
Platinum Poster
Skyline
Joined: Sep 2005
Posts: 590
Is the bank planning to prosecute?
_________________________
CRCM, CLBB

Return to Top
#1205451 - 06/22/09 07:17 PM Re: Employee theft Skyline
WonderWoman Offline
Diamond Poster
WonderWoman
Joined: Mar 2007
Posts: 2,108
gone fishin'
My concern would be that other Banks can't check the SAR database - but they do run background checks on employees.

If you don't file a report with Law Enforcement, this employee could work & potentially steal from another bank.
_________________________
My opinions are my own, and not that of my employer.

Return to Top
#1205514 - 06/22/09 08:03 PM Re: Employee theft WonderWoman
bls Offline
100 Club
Joined: Oct 2005
Posts: 138
Alabama
We would prefer not to prosecute, due to reputational risk, but will do whatever is required by law and regulation.

Return to Top
#1205593 - 06/22/09 09:10 PM Re: Employee theft bls
Elwood P. Dowd Offline
10K Club
Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
The reporting of insider abuse, embezzlement, etc. is governed by regulations promulgated by your federal functional regulatory agencies, not FinCEN. Their regulations say:

(c) Reports to state and local authorities. A bank is encouraged to file a copy of the suspicious activity report with state and local law enforcement agencies where appropriate. (emphasis supplied)


You have identified one of the few circumstances where I believe such "local" reporting is entirely appropriate. However, I am obligated to note that "encouraged to" is not the equivalent of "shall."

Your reputation risk is enhanced if it comes out later and it's apparent that it was swept under the rug. Moreover, everyone has stories about thieves with untarnished reputations who were able to find employment at another bank.

I think Wilford Brimley would report it. Me too.

Return to Top
#1205654 - 06/23/09 01:10 AM Re: Employee theft Elwood P. Dowd
Kathleen O. Blanchard Offline

10K Club
Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,293
Regulators sometimes go after insiders reported in SARs and enforce consent agreements (the banned from banking list). That is public. I would rather be driving that bus than under it for not having notified law enforcement. The upside is to be able to say "we identified it, we reported it, we enforced the law, we don't allow our customers' trust to be abused".
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

Return to Top
#1205741 - 06/23/09 01:08 PM Re: Employee theft WonderWoman
J2C Offline
Diamond Poster
Joined: May 2004
Posts: 1,475
Big Brother knows and that's a...
Originally Posted By: (not as) newbsa
My concern would be that other Banks can't check the SAR database - but they do run background checks on employees.

If you don't file a report with Law Enforcement, this employee could work & potentially steal from another bank.


In some states just because there has been an arrest noted in a background check...doesn't mean that you can use that as a reason to not hire someone. I do know in some states if you are going to base your determination on whether or not to hire someone based on information you find in a background check, there needs to be a conviction for the crime. You can't solely base your decision on an arrest. Again...this is in some states, not all.
_________________________
My opinion is mine only- not my employer's!


Return to Top
#1205798 - 06/23/09 01:53 PM Re: Employee theft J2C
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Related topic:

[b]Notification to the Bonding Company[b]
The FDIC has a mutual interest with management of each insured bank to be certain that all of a bank's employees are protected by a fidelity bond. When a bank files a SAR involving an employee, it normally will be required to notify its fidelity insurer of the subject activity. However, a bank may not provide a copy of the SAR to the insurer.

The notification requirement is usually among the terms of the insurance contract and is not dependent upon the filing of a claim against the insurance coverage. The standard financial institutions bond contains a termination clause which automatically cancels coverage of any employee as soon as there is knowledge of any dishonest or fraudulent act on the part of such employee. The insurer need not give notice of such termination; in fact, the decision of the insurer may be made at a subsequent date. In the rare case in which a bank official has knowledge of a suspicious act on the part of an employee and yet the bank wishes to continue to employ that person, it is very important for the bank to obtain either an assurance in writing from the main office (agents generally are not so empowered) of the insurer that such person is still covered under the bond, or a new bond covering that person. Also refer to the Fidelity and Other Indemnity Protection section of the Manual.


You can find the entire guidance here:
http://www.fdic.gov/regulations/safety/manual/section10-1.html
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top
#1206049 - 06/23/09 04:33 PM Re: Employee theft David Dickinson
bls Offline
100 Club
Joined: Oct 2005
Posts: 138
Alabama
In reviewing the insurance, it appears that we only need to notify if the amount involved is more than one-half of our deductible, which this amount clearly is not. I do understand the desire to let law enforcement know, as it is a crime and how would other potential employers know about it unless law enforcement is notified. However, is it required is the question. A SAR will be filed, but it appears thus far that notifying law enforcement is not required.

Also, we have terminated the employee, which I believe was required by Section 19 of the Federal Deposit Insurance Act. I do not believe we had a choice, but even if we did, we would have terminated the employee anyway. The employee was in a position of trust, and that trust was broken.

Return to Top
#1207020 - 06/24/09 05:58 PM Re: Employee theft bls
CantBeShocked Offline
Gold Star
Joined: Apr 2006
Posts: 260
MS
We contact our regulator and also the FBI.
_________________________
]

Return to Top
#1209167 - 06/29/09 09:45 AM Re: Employee theft bls
Elwood P. Dowd Offline
10K Club
Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
Resurrected only to add a footnote. This is not the issue that blskms presented, but I'm appending it to this thread because I do not remember the point being made here before.

Banks oftentimes focus on "Can we disclose the SAR to this third party?" when the real question should be "Can we dislcose the facts?" FinCEN and functional regulatory agency regulations either prohibit the disclosure of the SAR to the object of the SAR or they simply say SARs are confidential. The latter instruction is nearly void for vagueness. It has been mis-interpreted by many banks to mean that the filing of a SAR cannot be disclosed within their walls or to their independent BSA/AML examiners. One BSA officer even concluded she was not allowed to tell the bank's CEO about individual SAR filings. None of that is true.

SARs can be disclosed in measured circumstances, but the issue should be whether an essential or an optional disclosure can be made by less dramatic means.

Examples discussed here in the past include putting a copy of the SAR filed on a miscreant employee in his personnel file, providing a copy of a SAR to a bonding company, telling a loan officer that the bank has filed a SAR on his customer, providing a copy of the SAR to local law enforcement, etc.

Every one of those cases can be analogized to the bank wanting to use the SAR as some form of shorthand. In every case it would be possible to communicate or record the SAR subject's actions or the bank's concerns without mentioning the SAR filing.

Discussions about SAR disclosures should first be preceded with a discussion about why disclosure of the filing vs. disclosure of the facts is even necessary.

Return to Top

Moderator:  Andy_Z