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#58708 - 02/03/03 04:05 PM Loan-Sar
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Scenerio>>>> A customer came in to the bank and has borrowed several small loans which has added up to be quite a big loan...over 50,000. However on her finanical statement she stated she made well over 100,000. a year, but her tax returns state less than 10,000.00...I have discussed this issue with the Loan Officers, and some of the Execs. my concern for a needed SAR. But no one seems to be very concerned...Is this something that I need to address further???

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#58709 - 02/03/03 05:03 PM Re: Loan-Sar
Miss Kitty Offline
Platinum Poster
Joined: Mar 2002
Posts: 721
California
Has anyone sent in a request to IRS to verify previously filed taxes? How long have they been in business? The questions go on and on. If you have "suspicion", file. For us, "Know your Customer" is a requirement for the deposit and lending side.

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#58710 - 02/03/03 06:19 PM Re: Loan-Sar
KYAuditor Offline
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KYAuditor
Joined: Jan 2003
Posts: 138
Kentucky
What is suspicious about the activity? Does the loan activity in itself seem suspicious or is it just the fact that the customer appears to have overstated his/her income substantially?

I have seen several instances of discrepancies in income reported by the customer and income from their tax returns. For example, sole proprietors reporting gross revenue, etc. If repayment of the loan was based on the higher income level, you may have a sound lending issue.

However, unless the structure or the nature of the loans is suspicious it does not seem to merit a SAR filing.

Opinions expressed here may not be the same as the opinions of my employer.
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#58711 - 02/03/03 07:40 PM Re: Loan-Sar
Don_Narup Offline

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Joined: Jul 2001
Posts: 3,708
Las Vegas Nevada
It doesn't necessarily mean income is not being reported. The customer may be allowing business expense items such as car payments, medical insurance, long term care insurance and a host of other item if they drew the money out of the company personally to pay for.

There is a difference between Tax Avoidance and Tax Evasion
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#58712 - 02/03/03 08:06 PM Re: Loan-Sar
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,293
You would need to review the loan file and tax returns in that file to determine how the income was calculated. If $10,000 is adjusted gross, you need to dig further to see what the gross was, deductions including non-cash expenses such as depreciation, etc. However, the loan file should lead you to seeing what income was used and how it was arrived at. Only then would you have information to determine what the bank relied upon, what the customer really said, etc.
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#58713 - 02/04/03 09:19 PM Re: Loan-Sar
WildTurkey Offline
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WildTurkey
Joined: Jan 2003
Posts: 921
Down South, USA
Are the loans in her personal name or a business (Inc/LLC)name? Is it possbible that she has given you the business income but you are looking at her personal tax return data?
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This is my opinion; it is not legal advice, nor the view of my employer, and it may change tomorrow.

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#58714 - 02/04/03 11:55 PM Re: Loan-Sar
Princess Romeo Offline

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Princess Romeo
Joined: Jun 2001
Posts: 8,272
Where the heart is
IMHO - if your customer submitted fraudulent financial statements for loans exceeding $5,000, then you are required to file a SAR.
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CRCM,CAMS
Regulations are a poor substitute for ethics.
Just sayin'

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