I am finishing up research for a kite that involves 8 accounts at our bank and at least 8 more at several other banks. There is a mountain of money going back and forth among our accounts and in and out of the others. Some of it might actually be part of legitimate transactions

How would I quantify the dollar amount to be reported on the SAR as "amount involved in known or suspected activity"?

(There was no loss to us.)

Use the sum of the dollar amounts of allegedly kited checks deposited at your bank. This at least puts a framework on it and lets law enforcement know whether the scheme was penny-ante or worth kicking up the dust for.

I considered this, but I am including a four month period in the review. During that time, there is probably the same money circulating round and round. It seemed like the amount would be inflated if I added up all of the deposited items coming in and the checks going out to related accounts. However, I really can't think of a better way. I imaagine that I could average it over the 4 months reviewed and describe it fully in the narrative.

I have a related question. What are people reporting when the suspicious activity involves only a customer's deposit accounts, but the customer also has loans at the bank. Do you list only the deposit accounts in the SAR?

Do not -- repeat, DO NOT -- refer in your SAR to any other accounts of the suspect (loans, other deposits, etc.) unless they are somehow involved in the suspicious activity on which you are reporting.

To do so only adds extraneous information to the file at FinCEN.

Your "safe harbor" protection under privacy laws only extends to the information concerning the alleged suspicious activity. To provide information on a loan account when there does not appear to be an involvement in the suspicious activity could endanger your bank's safe harbor protections.

From my experience lately when you show no loss to the bank the SAR is going to be pushed aside anyway. We worry about doing these when necessary and getting them correct then no one seems to want to accept any responsibility and do anything. They end up at the FBI and when they see "no loss to the bank" it gets filed away.

That's my opinion anyway.

Thnaks, John. Boy, was I uneasy during our last BSA exam, when the examiner reviewed one of our SARs (that mentioned only deposit accounts) but then came across loans for the same customer and started asking questions. We had done everything properly, but I wasn't sure how well it would be received if I told her to refer to the official SAR documents and nothing else.

The examiner, of course, can look at (almost) anything he or she pleases, regardless of whether it's referenced in the SAR. It's law enforcement that cannot look outside the material in your SAR report (and the documents reference in the report), without first presenting their required warrant/subpoena, etc.

I've pondered this one lately, too! The advice I got from my regulators was just what John said - add up all the activity and report that number. It makes for a huge number sometimes, but maybe that just makes someone notice it! My sympathy on all that research, by the way!

As an aside - somebody is looking at these - even if they don't list a loss. I filed one (not kiting related) several months ago that didn't list a loss. The FBI picked it up, began investigating, indicted the guy, got a confession and scheduled a sentencing hearing before we even knew anything was going on. They never even asked to see our supporting docs!! Probably a fluke, but nonetheless - it makes all that effort a little more worthwhile!

Thanks. The research is taking a ridiculous amount of time on this one. Its nice to know that someone at FinCEN might look at it. I have turned in some pretty interesting SARs (especially after casinos opened in the area a few years ago) and never heard anything.

For emphasis only, I want to reiterate a couple things John said.

In determining whether the reporting threshold has been exceeded for SAR filing on a kite, the most logical approach is to aggregate the amount of the deposited checks used to create a fraudulent balance. John did not offer any regulatory citation for authority on this point and neither can I; there is none. It is simply the most logical approach. As to the degree of precision used in the calculation, once you pass the reporting threshold, the rest is gravy. The dollar figure primarily reflects the gravity of the situation.

On the second point, the SAR instructions ask for a description of the "supporting documentation" for filing the SAR. If you did not use it in completing the SAR, it is not supporting documentation and should not be listed.

Properly identifying supporting documentation is one of the most important internal controls on SAR completion. First, it establishes the records you are required to keep. Second, it lists the records you are willing to turn over to law enforcement without compulsion; i.e. summons, subpoena, etc. This area of the SAR should literally be audited in comparison to the narrative prior to filing. The supporting documentation should include the point of origin for every salient fact in the narrative, but it would be wrong to incorporate a listing of unrelated accounts.

Thanks, Ken. That is the approach I take when completing SARs. Every now and then I need a little reasurance.

Oops. The last post was from me.