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#1547471 - 05/06/11 04:47 PM SAR Committee?????
Polo Offline
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Polo
Joined: Feb 2003
Posts: 178
I am the BSA officer.
Executive management at my bank has decided to form an official SAR committee (on which I will sit) that will review all suspicious activity reported to my department and ultimately make a determination of whether a SAR should or should not be filed. If more that one person of the five person committee disagrees with the decision, then the chairperson (bank’s attorney) will make the ultimate call as to whether a SAR is filled or not.

My question is:
If I am the board appointed BSA officer and the committee makes a decision that I (alone) do not agree with (i.e., not to file a SAR on a “good customer or employee”) will I be held liable for the decision or will the committee?

Personally, I am totally against this committee formation. I have always consulted with our legal department as needed. However, if I hold the title and in actuality our committee/attorney really is making the decision, would that usurp my authority? Also, wouldn’t such a decision to form the committee have to have board approval first?

Where is the liability going to fall in the eyes of a bank examiner or worse, FinCEN/DOJ? On me or on the committee?

I need help with this issue.
Please!

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#1547502 - 05/06/11 05:02 PM Re: SAR Committee????? Polo
rlcarey Online
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rlcarey
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Galveston, TX
First it would fall on the Board of Directors and then management and then the attorney. I would hope that this attorney is highly skilled in BSA/AML regulations and theories otherwise you a paddling upstream. In my humble opinion, attorneys are for legal issues - involving them in SAR decisions is always usually a disaster.
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#1547513 - 05/06/11 05:06 PM Re: SAR Committee????? Polo
ACBbank Offline
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New York City
From the 2010 BSA/AML Manual under "SAR Decision Making" section:

The decision maker, whether an individual or committee, should have the authority to make the final SAR filing decision. When the bank uses a committee, there should be a clearly defined process to resolve differences of opinion on filing decisions. Banks should document SAR decisions, including the specific reason for filing or not filing a SAR. Thorough documentation provides a record of the SAR decision-making process, including final decisions not to file a SAR.

So, yes you can use a committee. However, I agree with you 100%. SAR committees are usually a bad idea. Most high level BSA compliance professionals oppose them. As you alluded to in your post, many non-qualified personnel don’t want to file SARs due to the fact that Customer X is a “good customer.” That is most certainly not an acceptable reason to not file an SAR. In terms of liability, at the end of the day, the Board is accountable for the bank’s BSA/AML program. In reality, BSA Officers are usually blamed by Management if an examiner has an issue with the overall program.

This is my opinion and only my opinion. SAR Committees (where the BSA Officer doesn’t have final say) relegate the BSA Officer to a BSA Analyst. You do all the research and someone else makes the decision.
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#1547516 - 05/06/11 05:07 PM Re: SAR Committee????? rlcarey
ACBbank Offline
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ACBbank
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New York City
Originally Posted By: rlcarey
In my humble opinion, attorneys are for legal issues - involving them in SAR decisions is always usually a disaster.


Boom.
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#1547519 - 05/06/11 05:11 PM Re: SAR Committee????? ACBbank
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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Originally Posted By: ACBbank
From the 2010 BSA/AML Manual under "SAR Decision Making" section:

The decision maker, whether an individual or committee, should have the authority to make the final SAR filing decision. When the bank uses a committee, there should be a clearly defined process to resolve differences of opinion on filing decisions. Banks should document SAR decisions, including the specific reason for filing or not filing a SAR. Thorough documentation provides a record of the SAR decision-making process, including final decisions not to file a SAR.

So, yes you can use a committee. However, I agree with you 100%. SAR committees are usually a bad idea. Most high level BSA compliance professionals oppose them. As you alluded to in your post, many non-qualified personnel don’t want to file SARs due to the fact that Customer X is a “good customer.” That is most certainly not an acceptable reason to not file an SAR. In terms of liability, at the end of the day, the Board is accountable for the bank’s BSA/AML program. In reality, BSA Officers are usually blamed by Management if an examiner has an issue with the overall program.

This is my opinion and only my opinion. SAR Committees (where the BSA Officer doesn’t have final say) relegate the BSA Officer to a BSA Analyst. You do all the research and someone else makes the decision.

Agree 100%. You get the risk and no way to control it. I would document very well all decisions I disagreed with in the event any come back to bite the bank.
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#1547528 - 05/06/11 05:15 PM Re: SAR Committee????? rlcarey
Polo Offline
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Polo
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Thank you Randy.

I agree with your statement about attorney involvement. They generally look to “black & white” issues. Guilty or not!
As we both know, the grey area of “Suspicious” tend to evade them. They do not see in “Grey” and are more likely to come to a conclusion that something is not SAR reportable because they can’t pin-point a definite violation of law.

Do you know where I can find some language that explains the concept of this “Grey - suspicious” area from a SRA review of any other materials? I think it would be essential that the attorney & committee fully understand this concept.
Any help would be greatly appreciated.

As it relates liability of the board appointed BSA officer (me), should there be some sort of acknowledgement from the board as to which way the liability shall fall, or is that what an examiner will ultimately decide?

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#1547549 - 05/06/11 05:28 PM Re: SAR Committee????? Polo
ACBbank Offline
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New York City
[quote=Diputs]
They do not see in “Grey” and are more likely to come to a conclusion that something is not SAR reportable because they can’t pin-point a definite violation of law.

They are most certainly mistaken in that regard. Again, from the 2010 BSA/AML Manual.

Banks are required to report suspicious activity that may involve money laundering, BSA violations, terrorist financing, and certain other crimes above prescribed dollar thresholds. However, banks are not obligated to investigate or confirm the underlying crime (e.g., terrorist financing, money laundering, tax evasion, identity theft, and various types of fraud). Investigation is the responsibility of law enforcement.
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"100 victories in 100 battles isnt the most skillful. Subduing the other's military w/o battle is the most skillful." Sun-Tzu

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#1547551 - 05/06/11 05:29 PM Re: SAR Committee????? Polo
rlcarey Online
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Galveston, TX
You are not going to be held personally liable by any regulatory body for acting in the capacity in which the BofD and management has set for you. The decision to form a SAR committee and the effectiveness of the committee lies squarely on their shoulders and not yours. The SAR Committee's role should be fully outlined within your BSA/AML Policy and that has to be approved by the board before the first meeting and any action is taken by the committee.
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#1547596 - 05/06/11 06:07 PM Re: SAR Committee????? rlcarey
Polo Offline
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Thank you for reminding me of that. This has me so frustrated that I forgot about the policy revisions.
Again, to all... THANK YOU!

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#1547621 - 05/06/11 06:24 PM Re: SAR Committee????? rlcarey
BC78a Offline
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New York
I report to a SAR Committee. A few time that they have disagreed on a judgment call SAR; however if I indicated that I felt strongly that a SAR was required, they went along with the recommendation (even though they voted against it originally). An additional point, once they approve a first SAR, repeat SARs do not need to be approved by the Committee, only reported to it.

Our SAR Committee was recommended by the regulators.

Do not get me wrong, I do not like SAR Committees, but I think you need to see how yours works, before getting sick over it.
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#1547716 - 05/06/11 08:05 PM Re: SAR Committee????? BC78a
Elwood P. Dowd Offline
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Next to Harvey
One of my friends is the senior BSA examiner for one of the regulatory agencies in one region of the country. One of his better quotes was "I really like SAR committees as long as the BSA officer doesn't get outvoted."

His point was that he did not want the only knowledgeable person in the room outvoted over this "good customer" garbage. I hate committees in general, but can make a very strong case for SAR committees.

However, if the decision has been made for you, then it's been made. Remember, all BSA training must be job specific. Start working on the training program you're going to put them through... That's right, make it plain that you are running the show and they are not going to get to vote based on half baked personal opinions.
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#1547734 - 05/06/11 08:19 PM Re: SAR Committee????? Elwood P. Dowd
AML247 Offline
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Posts: 127
SC
My issue is that I am not the BSA Officer - my supervisor is. However, I am a Risk Officer responsible for BSA/AML. My supervisor has not been to training (even the bank wide training I have done)nor have they conducted any training in at least 3 years. What this means is that they are totally out of touch. So, we tried a SAR committee made up of myself, the Security Officer, and my supervisor. They were so inconsistent and it would take at least 30 minutes to review a simple case of structuring. My supervisor seems to think that there is a "one-time pass" for any structuring cases. The "committee" idea had been brought up in the past but was a nightmare. In a nutshell, I get to do all the research, the responsibility, and the blame when things go wrong, but they keep the bigger title of BSA Officer so their resume looks better. Sorry, I had to vent. Anybody have any positions out there they're trying to fill?

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#1547735 - 05/06/11 08:20 PM Re: SAR Committee????? BC78a
Deena Offline
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Deena
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PA
I can offer the other side of the SAR Committee coin. We've had one in place for several years and it works great. I think it depends on who is on your committee. We have the BSA officer (me), a BSA/AML fraud analyst, our security officer, and our risk management officer. We have good discussions and different members bring different perspectives. Our policy says I have the final say in the event of a disagreement - which we haven't had to date. I don't think I'd like legal counsel on the committee - and I wouldn't like the business people who weigh in on the "good customers." The way ours is structured works for us and the examiners like it.
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#1547749 - 05/06/11 08:29 PM Re: SAR Committee????? Deena
AML247 Offline
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SC
Deena,
If I may ask, how often does your committee meet?

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#1547759 - 05/06/11 08:37 PM Re: SAR Committee????? AML247
Deena Offline
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Deena
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PA
We generally meet every two weeks unless we need a special meeting sooner, which is rare.
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#1548232 - 05/09/11 05:14 PM Re: SAR Committee????? BC78a
Tocomply Offline
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Posts: 650
We also have a SAR Committee. We review all the cases and vote to file or not. As a BSA Officer I was told by a regulator that even if they all vote no and I feel it should be filed I must have power to over ride the decision. Just document why I feel strongly about my decision. We had to change our procedures and policy to reflect that.

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#1548275 - 05/09/11 06:09 PM Re: SAR Committee????? Tocomply
Retired DQ Offline
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Our SAR committee consists our head of IA, myself and my BSA Officer. We meet as needed.
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#1548314 - 05/09/11 06:53 PM Re: SAR Committee????? Retired DQ
Compliance Nut Offline
Member
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Posts: 88
Our SAR Committee consists of our five members of the BSA Department. It works well for us, as we are all in the same department with the same goals. In the event of a dispute the BSA Officer has final authority. Prior to committee all decisions were made by the BSA Officer, this allows us some depth if he were to become ill, leave, etc.

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#1549630 - 05/11/11 06:28 PM Re: SAR Committee????? Compliance Nut
cheech Offline
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Chatsworh PA
We also have a SAR Committee, our BSA Officer has final decision, always. The Committee is maily there to help with investigations or to offer specific information that the BSA Officer may not be aware.

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#1549809 - 05/11/11 09:32 PM Re: SAR Committee????? cheech
banker bee Offline
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We used to have a SAR Committee, but it was treated more as a formality. The BSA Officer (which was me at the time) always had the power to override the committee. The committee was mostly helpful because we were a fairly small bank at that time and we'd usually have someone that knew the person/situation we were discussing which could shed some light to what was happening. But it also led to "he's such a great guy, he'd never do anything wrong! i know his grandparents!" So yeah, veto power was a good thing. Now the BSA Officer only shares the filings (with limited detail) with the committee so the decision is made before they are involved. Makes it easier for us...much less time consuming!

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#1592962 - 08/17/11 04:43 PM Re: SAR Committee????? BC78a
Polo Offline
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Polo
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Posts: 178
It’s me again…

Our SAR Committee chairman (legal counsel) is arguing with me relative to filing based on a customer’s inconsistent statement.
Here’s an example of the situation.

Customer #1 tells bank employee that they do not want their cash transactions to be tied back to them and commences to conduct a cash withdrawal from their account and physically hands the money to another person that is there with them. That person #2 immediately deposits the cash into their account at the same bank bank. When customer #2 is asked by bank employee what they were doing, customer #2 says they borrowed the money and was going to pay customer #1 back. Later, (after monitoring the account activities, it was discovered that customer #2 subsequently began making internet purchases of art and antiques for the first (#1) person, shortly after the deposit.
Further deposits and internet purchased continues. Finally, bank employee asks customer #2 what they were doing. Customer #2 say the Customer #1 is addicted to internet art and antiques and wanted customer #2 to make the purchased for him.
Additionally, there was no evidence that customer #2 paid back customer #1, at least from the account involved. All deposits were used to conduct internet purchases.

Normally, cash deposit transactions and internet purchases would not be identified as an attempt to launder money. Although, the activity appeared to be “unusual for the customer and not the type of transaction normally expected” the customer did give a reasonable explanation. So, our “counsel” says that regardless of the customer’s (#1) original statement that he didn’t want the transaction to be tied back to him, his and #2’s subsequent actions and “reasonable explanation” do not warrant suspicion.

So, I’m stumped.
Are banks expected to file based on customer’s inconsistent comments which may be followed by activities normally not considered suspicious relative to the statement made and the fact an explanation was given?

IMO, the “reasonableness” of the explanation is subjective and in the eye-of-the-beholder.
Our committee agrees that the explanation is reasonable. I think it’s garbage and something else is going on here. However, I have no evidence and don’t have a leg to stand on in defense of my opinion. Consequently, I (the BSA Office) is over-ruled by the SAR Committee and Chairman.

Any thoughts on this?

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#1592977 - 08/17/11 04:55 PM Re: SAR Committee????? Polo
BrendaC Offline
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Sweet Home AL
Are you comfortable with the source of the money used to make the purchases? If so, I don't know that I would see anything worth reporting at this point. It is definitely worth watching, but can't see where any law has been broken. What do you suspect the customer is trying to accomplish?
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#1593032 - 08/17/11 05:35 PM Re: SAR Committee????? Polo
AquaMarine Offline
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Posts: 156
New York, NY
This is why appointing a cousel in a SAR Committee can be disasterous. As a fellow BSA/AML professional, I clearly see suspicious activity which would trigger filing a SAR.

1) How much was the withdrawal and did the transactions require a CTR? If yes, did it look like customer #1 was trying to evade the filing by "tossing" the cash to customer #2?

2) What is the source and is it consistent with the customer's nature of employment?

3) How are the two customers related?

Keep in mind that the bank is not obligated or required to identify and confirm the type of crimes to file a SAR. Leave that to the law enforcement. It could well be the customer making the withdrawal after a "cooling" period. Internet shopping through another person's account would seem as if customer #1 is trying to conceal the beneficiary of the cash withdrawal.
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#1593082 - 08/17/11 06:20 PM Re: SAR Committee????? AquaMarine
AFaquir Offline
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Top of the world... and never ...
I'm with AquaMarine... regardless of inent the exchange of cash and subsequent activity is suspicious to me. If we are talking a few hundred bucks in cash, meh... approaching the de-facto $5,000 standard and I'd say ring em up!

How many times do they play the cash withdrawal shell game?

Cheers!
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#1593269 - 08/17/11 08:53 PM Re: SAR Committee????? AFaquir
DebL Offline
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Posts: 314
CA
I'm still trying to figure out why bank counsel, and not the BSA officer, is the chairman of your SAR committee.....

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