Do I file a SAR if an activity is a violation of state law? The activity involves metal recycling centers paying customers in cash which is against state law in my state.

How is the bank involved? Is the recycler withdrawing cash for this purpose?

And out of curiosity, which state? I had not heard of such a restriction before.

Search this publication (2012) for the word "cash." Apparently, there are a few states that do limit cash payments by scrap dealers, particularly in connection with certain kinds of scrap. Who knew (besides Piano Man)?

Look at the specific prohibition for your state. If 1)it is a crime under state law and 2) you can answer JacFSB's question about how your bank is involved, then a SAR is appropriate. If either of those doesn't work out, put it in your "dud" file and say why you did not file.

So, assume the following:

1. You have a prohibition against paying cash for scrap except under certain circumstances.

2. You have scrap dealers that routinely withdraw several thousand in cash.

3. The scrap dealers say that the purpose of the cash is to buy scrap.

Now, would this be reportable or would you need knowledge that they are paying cash under specifically prohibited circumstances?

I am in Georgia. At this point, there is an assumption that the customer is getting the cash to purchase metal. The amounts are several thousand per day, up to $16,000 one day last week. The account officer has contacted the customer to inquire about the cash. Thanks for your help.

I don't see how that bank has a duty to file a SAR in this case. If a customer came into the branch 3 minutes before closing and said "wow, i had to drive 125 mph to get here before you closed" would you file a SAR? After all, speeding is against state law as well.

Georgia's law was to deter the great amount of metal theft that was occurring. There are numerous other requirements of the law, but if our customer is paying cash to customers for their scrap metal, there is a good possibility that the metal has been stolen. Yes speeding is breaking the state law, however it doesn't have the possibility of purchasing stolen goods.

well, i still don't think you have a duty to file, but that is your call. if you feel the need to file, by all means, file. or, place an anonymous phone call to your local police department.

Louisiana also has a similar law, we would not file.

Are there limits on cash payments? I can't see a recycler writing checks for every dumpster diver that comes in with four or five pounds of aluminum cans. A lot of those types of customers probably don't even have bank accounts to transact business with. I would think that the law would have a lot more specifics regarding types of metal (aluminum cans versus copper piping) or at least a minimum poundage or dollar amount. It seems to me that whether or not there is suspicious activity would depend on the specifics of the law. You could also review the checks they are writing to see if they are writing checks for amounts over the minimum. On the other hand they might write the check to the customer and then cash it for him. It really all comes down to the specifics of how the law is worded.