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#2145966 - 09/13/17 05:49 PM SAR-Potential Insider Abuse?
Compnerd Offline
Junior Member

Registered: 10/13/11
Posts: 28
Loc: Ada, OK
So if we find a vault was short some $$ at a branch location. All investigations ranging from audits of all drawers, all work, scrutiny of cameras on the teller lines and the vault have been completed and we still cant identify the source of who is off balance.

My first instinct was insider abuse. But we have found none. All the tellers balanced. We have since revamped our process on who goes in and out of the vault at all times, etc. We did not find if there was any potential insider abuse.

Do we need to file a SAR?

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#2145970 - 09/13/17 05:55 PM Re: SAR-Potential Insider Abuse? [Re: Compnerd]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 66648
Loc: Galveston, TX
You have an operational loss. You can't pin it on an insider. Somebody might have thrown the money away or failed to verify a currency shipment correctly for all you know.
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#2145972 - 09/13/17 06:07 PM Re: SAR-Potential Insider Abuse? [Re: Compnerd]
RockChucker, CAMS Offline
Diamond Poster

Registered: 07/03/13
Posts: 1128
Loc: The Country
Agree with Randy, write off the loss and run with your new process that will avoid this issue going forward. No SAR based on the info you provided.
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A successful man is one who can lay a firm foundation with the bricks others have thrown at him.
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#2145982 - 09/14/17 06:09 AM Re: SAR-Potential Insider Abuse? [Re: Compnerd]
Ken_Pegasus Offline

10K Club

Registered: 08/30/01
Posts: 21817
Loc: Another trip around the sun
Write a memo to file explaining why you are not filing and go on to what's next.

Keep in mind that if you were to file a SAR on insider abuse you would need to have one or more subjects. It sounds as if you might have several candidates, most of which (if not all) would be innocent.
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#2160277 - 01/11/18 08:38 PM Re: SAR-Potential Insider Abuse? [Re: Compnerd]
bcompliance Offline
Platinum Poster

Registered: 09/04/14
Posts: 939
I'm working on our BSA procedures and want opinions on the following scenario:

An employee steals money from another employee while at work and there was another individual that witnessed this happen. The money is taken from the individual personally, not out of a teller drawer or vault. Would this be considered insider abuse? This is the closest thing I have seen to a definition of insider abuse and it isn't real clear:

https://www.fincen.gov/sites/default/files/shared/sar_tti_23.pdf


"What is Insider Abuse?

The specific term “insider abuse” is not defined in the BSA, but appears in SAR

rules issued by Federal financial regulators. For example, regulations of the Federal

Reserve, Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller

of the Currency (OCC) and National Credit Union Administration (NCUA) require

banks to file SARs on insiders, for “insider abuse involving any amount . . . and the

bank has a substantial basis for identifying one of its directors, officers, employees,

agents or other institution-affiliated parties as having committed or aided in the

commission of a criminal act, regardless of the amount involved in the violation.”11

The term “institution-affiliated party” is further defined as “any director, officer,

employee, or controlling stockholder (other than a bank holding company) agent,

shareholder, independent contractor (including attorney, appraiser, or accountant)

. . . who knowingly or recklessly participates in the conduct o f the affairs of an

insured depository institution.”12The General Accounting Office13 (GAO) reported that absent a “universally agreed upon definition of the term ‘fraud and insider abuse’ it would adopt the term as

defined in a 1988 Federal Home Loan Bank Board (FHLBB) Report to Congress:14

“ . . . individuals in a position of trust in the institution o r closely affiliated with it

have, in general terms, breached their fiduciary duties; traded on inside information;

usurped opportunities or profits; engaged in self dealing; or otherwise used the

institution for personal advantage. Specific examples of insider abuse include

loans to insiders in excess of that allowed by regulation; high risk speculative

ventures; payment of exorbitant dividends at times when the institution is at or near

insolvency; payment from the institution funds for personal vacations; automobiles,

clothing and art; payment of unwarranted commissions and fees to companies owned by a shareholder; payment of consulting fees to insiders or their companies;

use of insiders’ companies for association business; and putting friends and relatives

on the payroll of the institutions.”15

Other published definitions include:

• Self-dealing, undue dependence on the bank for income or services by a board

member or shareholder, inappropriate transactions with affiliates, or unauthorized

transactions by management officials. “Insider” refers to principal shareholders,

directors, executive officers, and other officers or staff who, as a result of their

position, are able to influence operations or decisions within a bank.16

• A general term that encompasses various activities which may or may not be

lawful. While an abusive situation usually violates one or more banking laws

or regulations, legal violations are not a necessary element. Insider abuse

includes the broader range of actions where an insider takes action or fails

to take action; where the bank is harmed, takes on additional r isk, or loses

an opportunity; and where the insider or a related party somehow benefits

because of his position.17

• “Insider abuse is abuse that falls short of being a criminal act.18 It occurs when

an insider (as defined by Regulation O)19 benefits personally from some abusive

action he/she takes as part of his/her position at the bank. Not all insider violations

are necessarily abusive; the violation must be accompanied by personal gain to

the insider to be considered abusive. Insider fraud is a criminal act. Such action

includes embezzlement, falsifying documents, and check kiting.”

• Unlike insider abuse, insider fraud does not have to benefit the individual

perpetrating the crime. For example, if a bank president falsifies loan

documents to improve the apparent creditworthiness of a borrower, this is

fraud – even if no personal gain by the president can be identified.”20"
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#2160279 - 01/11/18 09:01 PM Re: SAR-Potential Insider Abuse? [Re: Compnerd]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 66648
Loc: Galveston, TX
It did not involve bank assets - fire them and move on.
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