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#780712 - 07/23/07 03:41 PM When is it suspicious? $64,000 Question
Anonymous
Unregistered

We have observed a customer visiting his safe-deposit box more often than any other customer. From 4 to 15 times in a month.
Recently he visited the box as his gentleman friend stood in the lobby. After leaving the box area, he then left the bank with his friend. Less than two minutes later his friend returns to the bank and purchases a BMO for $50,000 cash.

We reviewed the box sign-in logs and observed the frequency of visits.

If this is suspicious, due to the excessive frequency of visits and the situation with his friend, that is “presumed” to be related to the box visit what would a SAR filing reference as being unlawful.
The box owner is a known customer of many years and not under suspicion by us for being involved with drugs, etc.. (but who really knows)

What do you do????

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#780834 - 07/23/07 05:30 PM Re: When is it suspicious? $64,000 Question
A D Virr Offline
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Posts: 398
Derry, NH
I agree it seems to be suspicious but unless you really know what part the SD box plays in this scenario, the only really suspicious activity may indeed be the purchase of the BMO for $50,000. Is there a pattern and practice involving the purchase of these instruments?
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#781021 - 07/23/07 08:09 PM Re: When is it suspicious? $64,000 Question
Trees Offline
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Posts: 4,013
We had a similar scenario, amounts not as high. One of the biggest issues is Proving (actually drawing the conclusion) that the cash is in the box and coming out of it for the purpose you indicated.
We just didn't have any proof that the box contained cash. We did monitor, document the monitoring but were never feeling it was correct to draw the conclusion. Also, we did not conclude that the "frequency" (which were not every day, for example, or on any patterned visit) of the box visits were warranting a SAR. the amounts in question would play a bigger part for us...that is, if the customer was transacting large amounts of cash that did not fit his/her history or "station in life". In our case, the amounts did not present any red flags either.

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#781025 - 07/23/07 08:12 PM Re: When is it suspicious? $64,000 Question Trees
devsfan Offline
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You sell monetary instruments to non account-holders (especially large amounts)?

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#781139 - 07/23/07 09:46 PM Re: When is it suspicious? $64,000 Question
AnonRegulator Offline
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Everywhere, USA
Devsfan raises a good question about selling monetary instruments to noncustomers. Until that question is answered, though, let's assume the gentleman friend is also a bank customer.

In that scenario, you should have information on the gentleman friend that allows you to determine if his having $50000 in cash is consistent with his job/profession, source of wealth, etc. In other words, if this guy is the school janitor, $50000 in cash is probably a little inconsistent and suspicious.

If he isn't a bank customer, you can see the point of devsfan's question. Selling monetary instruments to someone you don't know can make you an unwitting participant in a layering scheme, subjecting your bank to high BSA/AML risk. AR.

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#781342 - 07/24/07 01:56 PM Re: When is it suspicious? $64,000 Question
Elwood P. Dowd Offline
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Next to Harvey
The BSA/AML Handbook has a number of examples of suspicious activity that connect cash and safe deposit boxes. A couple are:

* Unusual traffic patterns in the safe deposit box area or unusual use of safe custody accounts. For example, more individuals may enter, enter more frequently, or carry bags or other containers that could conceal large amounts of currency, monetary instruments, or small valuable items.

*A customer rents multiple safe deposit boxes to park large amounts of currency, monetary instruments, or high-value assets awaiting conversion to currency, for placement into the banking system.


There is an "elastic clause" in the SAR filing requirements that makes it abundantly clear that financial behavior that is merely bizarre is reportable:

(iii) The transaction has no business or apparent lawful purpose or is not the sort in which the particular customer would normally be expected to engage, and the bank knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction.

There is enough guidance to put your bank in a position to decide whether a SAR filing is appropriate. I will echo the previously mentioned concerns about selling monetary instruments to non customers for any amount that would trigger a record retention requirement.
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#782962 - 07/25/07 08:37 PM Re: When is it suspicious? $64,000 Question Elwood P. Dowd
Anonymous
Unregistered

Thank you all for your comments.
And YES, we do sell to non-customers and Yes, I have mentioned this risk factor to management until I’m blue in the face. It’s risky, not smart and well, stupid! IMO

Any-way,
We have no idea for what reason the non-customer purchaser bought the BMO. However, our customer who went to the Box, may have this kind of money.
He has been our customer for nearly four years and has visited his box more than most of our customers but not as frequent as he has in the last few months.

However, we have no evidence that he is doing something wrong. As it relates to unusual or bizarre, I have struggled with that. Mainly because it describes 1/3 of our customers, especially the elderly and those who live way back in the woods. We are a VERY rural bank with many back-woods customers. They bank much different that urban customers. I came from Wells Fargo to a mom & pop owned bank in the country. Big change!

If we report this activity on a SAR, to what infringement of law would we cite?

Again, thank you all.

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#783301 - 07/26/07 01:22 PM Re: When is it suspicious? $64,000 Question
devsfan Offline
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Joined: Jun 2004
Posts: 1,927
NYC
If you do file a SAR the violation would be the first box (BSA) and in the narrative you would quote something similar to Ken's (iii) above since the activity has no apparent business or lawful purpose ...

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#783322 - 07/26/07 01:35 PM Re: When is it suspicious? $64,000 Question
Retread Offline
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Retread
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It might help if you can obtain a copy of the paid BMO. Look at the payee and the endorsement, and maybe you can figure out where the money went. That may help you understand the transaction a little better.
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#783451 - 07/26/07 02:45 PM Re: When is it suspicious? $64,000 Question
samsara Offline
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Joined: Mar 2004
Posts: 102
New York
Originally Posted By: Overloaded
And YES, we do sell to non-customers and Yes, I have mentioned this risk factor to management until I’m blue in the face. It’s risky, not smart and well, stupid! IMO


At my bank we finally convinced management to stop selling monetary instruments to non-customers by documenting how incredibly unprofitable that business was. It's hardly worth the paperwork for the tiny fee and few times they are sold. The vast majority are sold to customers.

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#783492 - 07/26/07 03:07 PM Re: When is it suspicious? $64,000 Question samsara
Elwood P. Dowd Offline
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Next to Harvey
That's very good advice.

One community banker I know made several requests for a policy change prohibiting wire transfers and official check sales at or above the record retention amount for people who were not " established customers," but the board just didn't think that was very "friendly."

He finally demonstrated that the bank had generated only a few hundred dollars in fee income from the practice in the past 12 months, but that those transactions greatly expanded their manual 314(a) searches (26 times a year) and record retention in general. He also pointed out that dealing with non customers generated more intense regulatory review of both wire transfers and official check sales.

Faced with the facts, the board finally agreed to the policy change.
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#783835 - 07/26/07 07:33 PM Re: When is it suspicious? $64,000 Question Elwood P. Dowd
WButler Offline
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Joined: Jul 2007
Posts: 1
It could be aboslutely nothing. We are accostomed these days to assume that extraordinary behavior is nefarious. He must be dealing drugs, or he's a terrorist. Actually, what's certain is he deals in cash, which these days is out of the ordinary, but nothing to be concerned about. The confidentialy of your customers is a higher priority than any suspicions we may dream up.

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#784705 - 07/27/07 05:18 PM Re: When is it suspicious? $64,000 Question WButler
Data Offline
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Data
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Posts: 226
Houston
I agree that we spend too much time evaluating idiosyncratic behaviour. A parley with the offender is in order to truly understand that what he is doing is uncomprehensible. Just tell the man (in your nice banker voice) that what he is doing looks bad. I love Fridays.
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#784754 - 07/27/07 05:54 PM Re: When is it suspicious? $64,000 Question WButler
Elwood P. Dowd Offline
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Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
Quote:
The confidentialy of your customers is a higher priority than any suspicions we may dream up.


Spoof.
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In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.

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