We recently received a Grand Jury subpeona for information relating to accounts that have been closed for over 3 years. In gathering the documentation, activity came to our attention that we previously had not caught. It appears that there was transaction structuring occuring on one of the accounts. This activity took place 4 years ago, but for a variety of reasons is now just coming to our attention. SAR filing requirements state that "A bank is required to file a SAR no later than 30 calendar days after the date of initial detection by the bank of facts that may constitute a basis for filing a SAR."
Should we file for this activity? We no longer have any account relationships with the entities or principal parties and as I stated the activity is 4 years old - but has just now been detected. Thank you in advance for any feedback.

"A bank is required to file a SAR no later than 30 calendar days after the date of initial detection by the bank of facts that may constitute a basis for filing a SAR."

Since the GJS brought this to your attention, you now know that it should have been reported. Since you just "detected" the suspicious activity upon your account review, you should go ahead and file. Better safe than sorry.

Hrm, I would contact the person requesting the information to find out if they reason for the subpoena is for money laundering. If it is I would say a SAR is redundant at this point and document that due to the subpoena, you did not feel a SAR was necessary as law enforcement officials were already aware of the issues identified by the bank while pulling the information.

Kind of like how you don't have to record monetary instruments over $10,000 because a CTR is filed. I've always loved answering that question.

But again, I would contact the law enforcement personel requesting the information first.

From FFIEC Manual

Law Enforcement Inquiries and Requests

Law enforcement inquiries and requests can include grand jury subpoenas, National Security Letters (NSLs), and section 314(a) requests ...

... Mere receipt of any law enforcement inquiry, does not, by itself, require the filing of a SAR by the bank. ... For example, the receipt of a grand jury subpoena should cause a bank to review account activity for the relevant customer.

The bank should determine whether a SAR should be filed based on all customer information available. Due to the confidentiality of grand jury proceedings, if a bank files a SAR after receiving a grand jury subpoena, law enforcement discourages banks from including any reference to the receipt or existence of the grand jury subpoena in the SAR.

Rather, the SAR should reference only those facts and activities that support a finding of suspicious transactions identified by the bank.

SAR Activity Review Issue #10
Grand Jury Subpoenas and Suspicious
Activity Reporting

In an effort to improve the consistency and quality of information being reported in SARs, and to guide financial institutions on compliance with suspicious activity reporting requirements, FinCEN is issuing this guidance about whether, when and how a financial institution should file a SAR after being served with a grand jury subpoena.

Grand juries issue subpoenas in furtherance of conducting investigations of subjects and targets of their proceedings, and therefore the receipt of such a subpoena does not, by itself, require the filing of a SAR.32 Nonetheless, the receipt of a grand jury subpoena should cause a financial institution to conduct a risk assessment of the subject customer and also review its account activity.33 If suspicious activity is discovered during any such assessment and review, the financial institution should consider elevating the risk profile of the customer and filing a SAR in accordance with applicable regulations.34 Unless there is something suspicious about the activities of a customer, apart from the service of the grand jury subpoena, a SAR should not be filed.

Receipt of a grand jury subpoena also does not alter the standards for filing a SAR. Financial institutions should only file a SAR for transactions conducted or attempted by, at, or through the financial institution involving or aggregating at least $5,000 when the financial institution knows, suspects, or has reason to suspect that (1) the transaction involves funds derived from illegal activity or is intended or conducted in order to hide or disguise funds or assets derived from illegal activities; (2) the transaction is designed to evade any requirements under the BSA; (3) 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 all the available facts; or (4) the transaction involves use of the financial institution to facilitate criminal activity.35

32 See note 33, infra.
33 See, e.g., In the Matter of the Federal Branch of Arab Bank PLC, Financial Crimes Enforcement
Network, Enforcement Action No. 2005-2 at fn.15 (August 17, 2005) (“while a subpoena from law
enforcement does not represent, in and of itself, cause for filing a SAR, the subpoena is an important
piece of information that places a financial institution on notice of the need to conduct a further review
of accounts or activity involving the subject of the subpoena to identify potentially suspicious activity”).
34 See 31 C.F.R. § 103.16(b)(2) (suspicious activity reporting requirements for insurance companies); 31
C.F.R. § 103.17(a)(2) (for futures commission merchants and introducing brokers in commodities);
31 C.F.R. § 103.18(a)(2) (for banks); 31 C.F.R. § 103.19(a)(2) (for brokers and dealers in securities);
31 C.F.R. § 103.20(a)(2) (for MSBs, which are required to report suspicious activity involving or
aggregating funds or assets of at least $2,000); and 31 C.F.R. § 103.21(a)(2) (for casinos).
35 See id. FinCEN’s suspicious activity reporting requirement for banks does not contain the fourth
reporting category listed above. However, banks are also subject to the suspicious activity reporting
requirements of their federal functional regulators, which contain a similar reporting category. See
12 C.F.R. §§ 208.62, 211.24(f), and 225.4(f) (Board of Governors of the Federal Reserve System); 12
C.F.R. Part 353 (Federal Deposit Insurance Corporation); 12 C.F.R. Part 748 (National Credit Union
Administration); 12 C.F.R. § 21.11 (Office of the Comptroller of the Currency); and 12 C.F.R. § 563.180
(Office of Thrift Supervision).

The failure to adequately describe the factors making the reported transaction or activity suspicious in the narrative of a suspicious activity report lessens its usefulness to law enforcement. Therefore, if a financial institution does prepare a SAR following the service of a grand jury subpoena, it should provide detailed information about the facts and circumstances of the detected suspicious activity, rather than the mere fact that a grand jury subpoena has been received.

Finally, grand juries are confidential proceedings conducted by state and federal prosecutors to determine whether enough evidence exists to formally accuse the subjects of criminal charges. A financial institution that receives a grand jury subpoena in connection with an investigation relating to a possible crime against any financial institution or supervisory agency, or certain other crimes, is prohibited from directly or indirectly notifying any person named in the subpoena about the existence or contents of the subpoena, or information that the financial institution has furnished to the grand jury in response to the subpoena.36

If a financial institution has any questions about SAR filing related to grand jury subpoenas, or about suspicious activity reporting in general, it should contact FinCEN’s Regulatory Helpline at (800) 949-2732.37 Financial institutions with a federal functional regulator may also wish to call that regulator with questions related to that regulator’s suspicious activity reporting requirements, procedures and records the financial institution should maintain.

36 See 12 U.S.C. § 3420(b). In addition, because of the confidentiality of grand jury proceedings and the
unindicted status of the subjects, financial institutions should take appropriate measures to ensure
the confidentiality of grand jury subpoenas and their contents, which could include refraining from
referencing in the SAR the fact that the bank received a grand jury subpoena.
37 Financial institutions need not notify FinCEN of requests for SARs that are made by law enforcement
pursuant to grand jury subpoenas. If a financial institution needs to notify FinCEN about a request for
a SAR, the financial institution should contact FinCEN’s Office of Chief Counsel directly at
(703) 905-3590

That's a very risky position to take. Whether or not the subpoena relates to an investigation of money laundering, your SAR can provide additional information that could add to the prosecutorial effort or it could lead to other charges (structuring is a crime in and of itself).

No one expects a bank's monitoring practices to turn up every instance of suspicious activity. So the fact that this problem has been festering in your records for four years isn't a problem (unless you should have caught it with your program and it fell through the cracks). But now that you have identified suspect activity, you have to determine whether it is SAR-worthy. If it's SAR-worthy on its own "merits," file even if there's already an investigation going on. By the way, the 30-day clock doesn't start ticking until you've decided that activity is suspicious, so you're not in violation -- yet.

The CTR/Monetary Instrument Purchase Record analogy doesn't apply here. The MIPR requirement was added to provide a ready reference for law enforcement when they're chasing smaller cash transactions that are often used to fly under the CTR-radar. But that's a case in which the MIPR supplies no additional information beyond a CTR. That's not the case when considering a suspicious activity report in the wake of receipt of a subpoena.

I guess I was thinking that if the information that was discovered by the bank was identical to what law enforcement already knew and was just getting records of, you would have justification to not file a SAR.

That's what I get for trying to think around the box and lessen the burden a little.

Thanks for the good information there guys.

Thank you all for your responses. The information is all most helpful.