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#2008408 - 04/16/15 01:43 PM Auditor requesting access to SARs
NanaK Offline
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Outside of an annual BSA audit, how do other banks approach a request from their internal auditor requesting access to SARs? For example, an audit of employee expenses and accounts is being conducted. Auditor notices a transaction he/she deems as suspicious. Auditor wants to quiz BSA if investigation was performed on transaction in question and also wants to know if SAR was filed on transaction, with access to SAR if filed. Auditor states part of the audit findings includes a determination if the BSA department filed appropriate CTRs and SARs.

I personally feel this would be out of line and if the auditor finds suspicious activity, then the activity should be reported to BSA, as bank employees and departments are trained to do. If BSA determines after its investigation that suspicous activity did occur, then it would be referred to a SAR committee for a determination. If the auditor wants to determine if appropriate CTRs and SARs are filed related to suspicous activity, then that would show up in the annual BSA audits by the external audit and by the examiners.

Thoughts?

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#2008452 - 04/16/15 03:05 PM Re: Auditor requesting access to SARs NanaK
Sunshine Lady Offline
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The information below come from the FFIEC BSA/AML Examination manual on page 73.

The decision to file a SAR is an inherently subjective judgment. Examiners should focus on whether the bank has an effective SAR decision-making process, not individual SAR decisions. Examiners may review individual SAR decisions as a means to test the effectiveness of the SAR monitoring, reporting, and decision-making process. In those instances where the bank has an established SAR decision-making process, has followed existing policies, procedures, and processes, and has determined not to file a SAR, the bank should not be criticized for the failure to file a SAR unless the failure is significant or accompanied by evidence of bad faith.
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#2008456 - 04/16/15 03:13 PM Re: Auditor requesting access to SARs NanaK
PrimeTime Offline
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Given the stated FFIEC guidance above, was your audit's comments geared towards the fact that there wasn't anything in place to detect and/or monitor the activity that they found, or was it geared towards the fact that it was monitored and the decision was made not to file, which they disagreed with? If it's the former, they may have a point however if it's the latter they're out of line.
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#2008470 - 04/16/15 03:33 PM Re: Auditor requesting access to SARs NanaK
NanaK Offline
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Thank you for your responses. The auditor is not auditing BSA at this time--rather he is auditing employee expense accounts and employee accounts. The auditor simply wants access to the SARs. If he sees $XXX transaction on an employee account while conducting his employee audit, he wants to be able to ask BSA if we conducted an investigation on that same transaction and wants to know if we filed a SAR on that transaction. I see this as out of line.

If he were auditing our BSA program, then yes, certainly, pull a sample of transactions and see if our monitoring processes are working and proper CTRs and SARs were filed.

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#2008472 - 04/16/15 03:38 PM Re: Auditor requesting access to SARs NanaK
Elwood P. Dowd Offline
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Okay, now I read it much differently...

If your IA was looking at BSA I could not imagine any objection to allowing SAR access.

My response in this case would be that if he finds anything fishy in the expense reports or employee files it's his job to report that to you, not see if you found it otherwise. The decision on whether a SAR would be appropriate is simply yours, subject to review in your independent BSA examination. The conversation would end there.

Otherwise, you have opened the door to his bootstrapping his way into every SAR decision depending on where he's working this week. If you give a mouse a cookie, he's going to want a glass of milk...
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#2008477 - 04/16/15 03:46 PM Re: Auditor requesting access to SARs NanaK
NanaK Offline
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Thank you Ken, and I agree with you 100%.

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#2008533 - 04/16/15 05:54 PM Re: Auditor requesting access to SARs Elwood P. Dowd
RockChucker, CAMS Offline
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Originally Posted By Ken_Pegasus
Okay, now I read it much differently...

If your IA was looking at BSA I could not imagine any objection to allowing SAR access.

My response in this case would be that if he finds anything fishy in the expense reports or employee files it's his job to report that to you, not see if you found it otherwise. The decision on whether a SAR would be appropriate is simply yours, subject to review in your independent BSA examination. The conversation would end there.

Otherwise, you have opened the door to his bootstrapping his way into every SAR decision depending on where he's working this week. If you give a mouse a cookie, he's going to want a glass of milk...


I've read that book! One of the most difficult reads I've had wink
Last edited by RockChucker; 04/16/15 05:54 PM.
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#2008539 - 04/16/15 06:03 PM Re: Auditor requesting access to SARs NanaK
John Burnett Offline
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The citation from the Exam Manual is a red herring in this discussion. It's only applicable to exams, and the question is about an auditor's investigation. I agree with Ken -- unless the auditor is doing a review of your BSA program, the question should be deflected as irrelevant. And you don't want the auditor to become part of the SAR decision-making process.
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#2008706 - 04/17/15 01:41 PM Re: Auditor requesting access to SARs NanaK
LiveFromNYC Offline
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As failing to file a SAR timely to the suspicious event is a significant violation, why wouldn't it makes sense to look at facts now - instead of the next BSA Audit?

If OPs had previously looked at the facts and concluded that No SAR was warranted, then what's wrong with stating that to the Auditor and providing IA with information that supports the "SAR filing decision process" had indeed been triggered and worked as intended.

Not sure why the Internal Auditor is being treated like a problem when in fact Audit is a valuable tool in ensuring continued regultory compliance.

But I was in Internal Audit for 20 years before I became the bank's BSA Compliance Officer. Perhaps that's why I see the value
of an IA review.

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#2008723 - 04/17/15 02:12 PM Re: Auditor requesting access to SARs LiveFromNYC
HappyGilmore Offline
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Pulling people out of the ditc...
Originally Posted By LiveFromNYC
Not sure why the Internal Auditor is being treated like a problem when in fact Audit is a valuable tool in ensuring continued regultory compliance.



I don't think anyone is suggesting that IA is a problem, just questioning the validity of providing a copy of SARs based on an employee expense audit.
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#2009050 - 04/20/15 05:34 PM Re: Auditor requesting access to SARs NanaK
happyauditor Offline
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If the activity under review by the I/A is something that should have triggered a review of the activity by the BSA/AML group, then the I/A is perfectly within his rights to check to see that the process worked (activity was flagged and escalated appropriately, investigated and a SAR filed if appropriate, or reason not to file was documented). If the activity is not something that would have normally been flagged for review by the Bank's current processes, then maybe the I/A has a comment that the detection system may need to be enhanced (and yes I realize no monitoring system is foolproof), assuming the BSA/AML group now looks at it and in fact deems it suspicious. That is my personal opinion.
Last edited by happyauditor; 04/20/15 05:35 PM.
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