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#2250635 - 03/16/21 02:32 PM The stupid ways that BSA math works
Harry Blotter
Unregistered

Trying to double-check my understanding of BSA math. Probably over-thinking it. Haven't had my morning kombucha yet.

- Bilbo Inc. deposits $11,000 cash and withdraws $11,000 cash the same banking day. For CTRs, $11,000 minus $11,000 does not equal zero; it equals a CTR reporting $11,000 cash in and $11,000 cash out.

- Aragorn LLC deposits $8,550 cash and withdraws $3,000 cash later the same banking day; all transactions are on behalf of and benefiting Aragorn LLC's operations. Since neither the in's nor the out's total over $10,000, a CTR cannot be filed.

Sound good so far? Okay let's talk about SARs:

- Frodo starts the month with a $1 balance, and today he deposits $4,000 in suspicious cash, then tomorrow spends all $4,000 of it suspiciously via debit card and ACH transaction debits. When you are considering a SAR, is that a $4,000 amount of money (therefore below the filing threshold for a non-insider SAR), or $8,000 (therefore above the filing threshold)?

I've seen bankers with many years of experience feel strongly about both positions: it's all the same $4,000 so it's only a grand total of $4,000. We'd be creating imaginary funds out of thin air, to pretend that Frodo's transactions involve $8,000. And yet, my reading of FinCEN's FAQs is that $4,000 in plus $4,000 out equals an $8,000 SAR.

(Source: FAQs on the FinCEN SAR: "23. How must I complete FinCEN SAR Item 29 “Amount involved in this report” when I have no amount or I have multiple amounts involving different transaction types? Item 29 records the total amount involved in the suspicious activity for the time period of the SAR. Multiple amounts will be aggregated and the total recorded in Item 29. This requirement applies even when the amounts involve different transaction types, such as when some are deposits and some are withdrawals. All amounts are aggregated and recorded as the total amount.")
https://www.fincen.gov/frequently-asked-questions-regarding-fincen-suspicious-activity-report-sar)

So based on that, I am in the minority, being in the "It's $8,000" camp. Is that how other BSA people handle SAR totals and SAR filing thresholds? I can't be the only one right? FAQs and guidance are not law, but generally we do try to follow them to the best of our ability, even when they try to reinvent the basic rules of mathematics and replace them with double-think nonsense.

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#2250685 - 03/16/21 07:29 PM Re: The stupid ways that BSA math works Anonymous
RockChucker, CAMS Offline
Diamond Poster
Joined: Jul 2013
Posts: 1,700
The Country
I generally report all suspicious activity without regard to the funds being the same deposited and those withdrawn. For example, if Bilbo makes a suspicious deposit of $8,000 but all the transactions leaving that account appear to be normal I wouldn't include them in my SAR filing. On the other hand, if the transactions leaving the account are suspicious I would include them. I hope that makes sense.

And yes, based on what you wrote above I would say your BSA math is good.
_________________________
A successful man is one who can lay a firm foundation with the bricks others have thrown at him.
-David Brinkley

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#2250706 - 03/16/21 09:49 PM Re: The stupid ways that BSA math works Anonymous
Harry Blotter
Unregistered

Thank you. Just to clarify on in's and out's, yes in my SAR scenario I'm imagining that the debits and ACH were in fact suspicious. We would not report any amounts that we don't consider suspicious.

Common scenario lately, for illustration, is that a customer gets $4,000 in suspicious unemployment benefits from a distant state where they have no ties, then spends $2,000 of it suspiciously (via ACH - likely through Facebook's Cash App - to a list of random third parties) the day after the deposit posts. So that would be a $6,000 SAR although I'd likely have to hear the argument that it's a below-threshold $4,000 case.

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#2250775 - 03/17/21 09:27 PM Re: The stupid ways that BSA math works Anonymous
RockChucker, CAMS Offline
Diamond Poster
Joined: Jul 2013
Posts: 1,700
The Country
Here is an additional resource that might convince you to file even if it was only $4,000 in transactions.

https://www.fincen.gov/news/news-re...insurance-fraud-during-covid-19-pandemic
_________________________
A successful man is one who can lay a firm foundation with the bricks others have thrown at him.
-David Brinkley

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#2250838 - 03/18/21 05:11 PM Re: The stupid ways that BSA math works Anonymous
Harry Blotter
Unregistered

Yeah we use that guidance but it doesn't suggest a SAR is required for transactions under SAR thresholds, unless I missed that bit somewhere skimming it again today.

We generally would not consider filing an under-threshold SAR, since we file plenty enough of them as it is. Our experience with law enforcement on cases like the ones in that advisory is that they are totally disinterested in cases where the money is already spent or withdrawn before the activity is detected and reported. That's been my experience anyway, just in this one area. If I'm reporting money in an account that they think they can get me to write them a check for, they come rushing over. But if I'm just reporting after-the-fact shady activity and the money is already gone, they won't even call me back. They're too busy chasing the money (so far anyway) to worry about money that is long gone. They may come back around later for clean-up of the rest, but we'll see.

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#2278569 - 12/07/22 09:04 PM Re: The stupid ways that BSA math works Anonymous
Anonymous
Unregistered

If you look at the instructions for the historic SAR form, they tend to go with the "non-double counting rule."

Item 17 *Total dollar amount. See General Instruction 14. If unknown, check box 17a. If the suspicious activity only involved purchases, or redemptions, or currency exchanges, enter the total U.S. Dollar value involved in the reported activity. For instance, if multiple money orders from more than one issuer were redeemed, enter the total of all money orders redeemed. If multiple activities are involved, such as a redemption of money orders combined with purchase of a money transfer, enter the largest activity amount in Item 17. For instance, if the transaction involved redeeming $5,000 in money orders and purchase of a $3,500 money transfer, the Item 17 amount would be $5,000.

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#2278588 - 12/07/22 11:35 PM Re: The stupid ways that BSA math works Anonymous
ColoradoAML Offline
Gold Star
Joined: Mar 2018
Posts: 338
The current instructions appear to have changed that guidance.

Item *29 Amount involved in this report: Enter the total amount involved in the suspicious activity for the time period of this report. Multiple amounts will be aggregated and the total recorded in Item 29. This requirement applies even when the amounts involve different transaction types, such as when some are deposits and some are withdrawals. All amounts are aggregated and recorded as the total amount.

We have always followed the same process Rockchucker described in their first post. If related credits and debits are suspicious, we aggregate them. For example, a customer receives fraudulent $100k wire and sends the $100k to an accomplice, the amount would be $200k. On the contrary, if a customer requests a $100k disbursement from their retirement account in order to pay that $100k out to a criminal, we may describe the circumstances of the disbursement but not consider it suspicious and file on only $100k.

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