Person comes in bank to apply for a loan to buy a home. Tells the lender he is not a legal US citizen. His Visa has expired and has no other identification.
Further review finds this person has a checking account with us that was opened prior to his expired VISA and US issued driver's license.
What would be the approriate steps to take? Reg B says the application can be declined for illegal status without any fair lending violations. Question now remains as to whether a SAR would be required????

This person openly told you he's not a legal citizen. I'd file a SAR.

Several mega banks solicit accounts making it clear that no U.S. identification is required; they openly solicit accounts from people who are not U.S. citizens. Being "illegal" doesn't pull any SAR filing triggers that I am familiar with.

Just because the mega banks do it certainly doesn't make it the gold standard.

How can you properly identify the person who has only an expired Visa, expired driver's license, and no further identification? Second question would be how can you keep this person's account open? Check your CIP policy to see what it says.

Visa expired = person needs to return home. Staying on expired visa = crime. Knowledge of a crime = suspicious activity. File a SAR.

I'd close the checking account, decline the loan, and file a SAR.

That was my thought.

Sorry, apparently my points were not as obvious as I thought.

First, if the banks who were opening accounts for illegal aliens were required to file SARs they would have heard about it from their regulators and would have been filing SARs for that purpose. They would have shown up in SAR statistics long before now.

Second, banks do not file SARs based on the status of the person across the desk. To use a more powerful example, even if the person across the desk is on the FBI's most wanted list the appropriate response would not be the filing of a SAR. There are a number of rules that require SAR filing. This is not one of them.

Closing an account due to a lack of identifying documentation and filing a SAR for it is quite a leap. If I refuse to open an account for a customer with an expired driver's license because my CIP requried a current ID, we're not having a SAR conversation. While being in the US illegally may be a crime, the very same government is encouraging these individuals to obtain ITINs so they can file tax returns on the income they're receiving even though they are not legally allowed to work in the US.

Now...same senario and the individual presents a stolen Social Security number to open a checking account or apply for a loan, then you may have a SAR for ID Theft. As Ken stated, identifying an illegal alien is not a reason for filing a SAR.

I disagree. The criminal activity (the immigration violation?) has to occur at, to, or through your financial institution, for a SAR to be required.

They did not violate their Visa at your institution.
They did not violate their Visa to your institution.
They did not violate their Visa through your institution.

Done. No loan, probably close the checking account (all income reflected in it would probably lead to a SAR if it adds up to over $5,000).

I disagree. The criminal activity (the immigration violation?) has to occur at, to, or through your financial institution, for a SAR to be required.

They did not violate their Visa at your institution.
They did not violate their Visa to your institution.
They did not violate their Visa through your institution.

Done. No loan, probably close the checking account (all income reflected in it would probably lead to a SAR if it adds up to over $5,000).

I know that this is an old thread, but not finding much newer information. Wanted to follow up with an additional question. The consensus seems to be that you would not file a SAR for opening an account for an illegal immigrant, which I think I understand.

Lets say the illegal immigrant that an account was opened for starts to receive payroll deposits (ACH). Now we have illegal activity occurring through the institution. Maybe the employer is also a subject of the SAR?

Your customer received payroll for work they performed. I didn't see a basis for filing a SAR 11 years ago and I still don't see one today. You have no way of knowing if your customer has a work visa or what their immigration status is.

I agree with Brian, and would also add that I'm fairly certain that entering or residing in the country illegally is not a specified unlawful activity that predicates money laundering, unless you suspect the employer of human trafficking.

No, but the hiring of an illegal immigrant as an employee and working without proper documentation are both illegal.

I appreciate the opinions, but this is a bit confusing. Typical BSA process is to file a SAR when we have "suspicion" of illegal activity. I think I will proactively file. Our evidence that this customer is working as an undocumented immigrant is as strong or stronger than half the suspicious activities we file SARs on. I have difficulty understanding why we'd ignore the illegal activity in this instance without guidance from regulators.

1. How do you know this person is here illegally?
2.Do you check legal status at account opening and has that legal status been verified since account opening? How do you know that they have not since obtained a work permit? Who at your bank is an immigration expert?
3. If the person is in the country illegally, why would you ever open them an account to begin with if all it was going to cause is the future filing of SARs? These sorts of accounts cannot be profitable.
4. While it may be illegal for this person to be working in the US (if you want to get involved in making such judgements), depositing a paycheck in your bank is not illegal.

As stated above, if you do not suspect the employer of human trafficking, I suggest staying with things that matter.

It's important to note that an expired visa is not necessarily the same as unlawful presence. The visa only has to be valid on the date of entry into the US.

Student visas in particular are very often long-expired: in that case, the student can't leave the US and return without renewing the visa, but can stay in the US until the completion of studies. I've known of cases where someone stayed on the same one-year F-1 student visa from high school all the way through graduate school, with a few years of optional practical training (OPT) afterwards -- all perfectly legally. They just didn't go home during that time. They could be paid by their educational institution for on-campus work, and during the OPT years they could be paid a regular professional salary.