Here's the situation:
My customer has an account here that is funded almost exclusively by his funds from another bank. The deposits come in the form of personal check, ACH, and an occasional wire, but they are all from his other bank. The funds going out of the account are mostly credit card payments and transfers to other banks. There are some cash withdrawals, but not in signifigant amounts. There is an apparent lack of 'customary' activity, such as payments for living expenses, payroll deposits, etc. For the most part, the transaction amounts are not very large (often under $1000) but it seems that this account is nothing more than a turnstile.
Any thoughts?

The first thing that came to mind was the practice that some couples have of keeping their checking accounts separate. Could this be your customer's 'part of the money' and his wife pays the normal living expenses out of the account at the other bank? Just a thought...

What type of criminal activity do you suspect?

My first thought is money laundering.

Update: the branch staff doesn't know what the customer does for a living, but they told me he travels alot.

And I have other indications that the wife scenario does not apply here.

I keep a seperate account for travel expenses and items to be reimbursed for. It's easier for me when I do my expense reports. I've been doing this for many years and my account could be described exactly as that one is. It's not enough money to make any laundering activities worthwhile but sometimes its a few thousand here and there as I am terribly lazy about expense reports and they tend to pile up.

I'm with Dawn. This sounds like a special purpose account to simplify the customer's accounting. I wouldn't worry too much unless the amounts spiral upward, or there's any indication of terrorism. Flag this customer's accounts and keep an eye on the total relationship.

Thanks for the input, everyone.

Jack - I hate to say this, but the activity sounds like my employee account! My husband and I have direct deposits to an account with another bank, but I like to have money in my employee account so I can get money from the ATM and use the Debit Card. I don't want a Debit Card on the account where my paycheck goes!

So my only deposits are checks from my other account, and my activity is ATM, ACH, and POS. (Oh yeah, since I control how much money is at risk, that's the account I use for PayPal. I really, really dislike PayPal, but I LOVE eBay!)

Also, if you have an ATM network coverage that is different than the one of the bank where the deposits come from, it may be your customer's way of avoiding those nasty double surcharges (assuming the account doesn't have a monthly maintenance fee or he keeps a minimum balance.)

Just keep an eye out for foreign wires, and ATM transactions that take place outside the country.

(Good golly - is my employee account going to be considered higher risk under USA PATRIOT/AML???)

I understand what you are all saying, and in lookin gback through the posts, I realize I may have understated the reasons for my concerns. Specific transactions seem quite odd.
For example:
-Large wire into account in mid November from the customer's account at another bank. The same day the wire arrives, the customer withdraws the same amount in a cashier's check. Six weeks later, he deposits the check into the same account the wire originated from.
-Payments made to the same credit card days apart.

Maybe reading the horror stories of Banco Popular and others has augmented my naturally abundant paranoia. I could be chasing a windmill here, but I'm still not sure. I've got the branch staff working on K'ing my C, and I'm hoping that will answer some more questions.

JacFSB:

Based upon the facts stated, I don't think a SAR would be appropriate (yet).

However, the situation that you explained would bug me also. Although there appears to be a consensus that it could be an expense account or a spouse's separate account, I wouldn't rest until someone asks the customer himself.

What type of ACH does the customer receive into his account? Other than a payroll, I can't think of any regular credits that would apply to a personal account.

Ask the customer about this account (and also what he does for a living).

Tha ACH credits are direct transfers from his account at the other bank that he initiates himself through the other bank's online banking service. I have already ruled out the spouse possibility, as he simply doesn't have one.
As for what he does for a living- this is the big question that I have instructed the branch to get an answer to.

Richard, you mentioned the words "criminal activity". Didn't they remove the word criminal from the old CRF and rename it the SAR, so that criminal activity doesn't have to exist for a SAR filing to take place, just "suspicious" activity? The problem is defining suspicious activity. But with the increased scrutiny from the regulators, and the safe harbor provision, I always lean on the side of filing.

Read the SAR's "When to Make a Report" instructions #1.a. - 1.d. and tell me where it says you simply need to have "suspicious activity."

Not the same poster that you asked this question of Richard, but your reply made me curious. What about 1(d)iii. that mentions neither criminal nor suspicious activity, but merely that the transaction "has no business or apparent lawful activity or is not the sort in which the particular customer would normally be expected to engage." That to me sounds broader than either of the other two (criminal or suspicious) standards being discussed. I don't mean to jump into a debate, just curious about you take on this provision. It doesn't really seem to me to be limited in any significant way. Thoughts?

I agree with the separate account theory, I have two checking
accounts, one for regular stuff and one for mortgages and a savings
for rental income at one bank. I frequently transfer between these accounts
and sometimes Online bank some checks (of even denominations)
to my account at a different bank. Maybe they could inquire as to
what he does for a living.

Instruction 1(d)(iii) is a subheading under the heading "Transactions aggregating $5,000 or more that involve potential money laundering or violations of the Bank Secrecy Act." Since both money laundering and BSA violations are criminal offenses, the subheading can only be read as applicable to unusual transactions that are suspected to be the crime of money laundering. If you can't point to something about the transactions that is characteristic of ML, then you shouldn't do a SAR.

In reply to:

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-Large wire into account in mid November from the customer's account at another bank. The same day the wire arrives, the customer withdraws the same amount in a cashier's check. Six weeks later, he deposits the check into the same account the wire originated from.
-Payments made to the same credit card days apart.

---

I don't think this is quite SAR-able yet.

There could be an explanation for that activity:
Customer travels frequently and attended an auction where he must have a verified Cashier's Check before bidding. This is common for Repo Auto sales. Customer doesn't buy anything from the auctions, and deposits the check back into his account when he gets home.

I make several payments to my credit card from my account because I'm trying to keep from carrying large balances.


You have leeway of time because just because you noticed the activity doesn't mean you must report it in 30 days. Keep checking, and at the point that you have more information that indicates a greater suspicion, then you would need to file in 30 days.

You may want to point blank ask him - "We noticed this activity and are required to ask you the reasons for this activity."

I've already decided to give this one the 30 day watch. I'll see what happens from here.

I posted the question earlier to you. My problem with your reasoning is that that heading is only included in the SAR filing instructions. I understand that those are issued by FINCEN, but they've still got to live by the statute and/or reg. The reg has no such heading that I can locate. Instead, 103.18(a)(2)(iii) merely states the "no business or apparent lawful purpose..." language with no apparent limitations or modifications. I understood the heading of the money laundering section of the instructions to mean only that these are the things that might be indicative of money laundering or other violations of the Bank Secrecy Act. In any event, though, I don't think the instructions can be read in a way that limits the scope of the reg, which is the pronouncement that has the actual effect of law, absent some permission in the reg to do so. If I'm on the wrong track here, I would definitely appreciate a pointer back to the right path. I would love to see the reach of this reg cut back from purely libertarian reasons, but it looks like it reaches beyond violations to things that merely "smell funny".
BTW, we have been told by our regulators that we shouldn't have to be in the business of detecting violations. Instead, our guidance was that if transaction didn't pass the smell test, report them and let law enforcement make that call. I don't like it, but that's what we were given.

This is another fine example of FinCEN's poor draftsmanship. There's a contradiction within Section 103.18. Section 18(a)(1) clearly indicates that you should submit "... a report of any suspicious transaction relevant to a possible violation of law or regulation." Notice that this, like the SAR instructions, requires at least the suspicion of some type of violation of law. Meanwhile, Section 103.18(a)(2) appears to be broader in coverage.

Given the history of information overload and the purpose of the SAR, I still maintain that you must suspect something in particular before filing a SAR. With ML, kiting, account fraud, tax evasion, terrorism, and countless other possibilities to choose from, it shouldn't take too long to come up with a theory about what's going on. "Unusual" isn't going to be valuable to law enforcement officers and no one's ever been convicted of "unusual conduct."

Good enough. Your reasoning makes sense to me. Thanks for your responses. We have a very cautious (file-it-all) BSA officer. Sometimes I need good arguments to pitch to him to pull back from the edge. Your replies have given me just that. That's why you're the expert!

I think Bonnie and I are working off the same account (Yup I'm an ebay freak too). I receive both devits and credits !ach) from paypal. I've received wires from my ex husband in that account in larger dollar amounts. I also pay my credit card often because I use it for miles and don't want the balance to accrue interest. It's easy bookkeeping for me.

I dont' think this account sounds suspicious, and as the owner of a similar account, if asked about it, I'd probably change banks. I know I know I know, BSA bs and all, but without more distinct issues (for instance is the cashiers check/wire issue HUGE, daily, weekly?) I think I'd leave it alone until you have some more concrete issues.

Dawnie - we're not supposed to know this, but I think a SAR has been filed on both of us.

eBayers of the world beware! Just wait till they figure out how to tax us through PayPal.....

Hey Dawnie,
I'd really like to receive large wire transfers from my ex-husband, how can I
make that happen?

Heh Heh, Unfortunately the SAR was a waste of time. He's quit sending the wire's darnit. Now he just sends bills