SARs/Account Closure

Our customer runs a small convenience store. As of late there has been an increase in cash activity, which is not typical of the anticipated account activity. In addition, the customer blatantly structures cash deposits. We have filed numerous SARs on this individual and have made the recommendation to close the account. The problem here is that they have a loan with the bank and asides from the Structuring and increase in cash deposits there are no other issues. e.g. loan payments made on time, never overdrawn, no adverse account activity, etc. Any suggestions on how to proceed from here? I would hate for the examiners to come in and see that we have filed multiple SARs on this customer yet did not close down the account.

“Chance favors only the mind that is prepared”. Louis Pasteur

I'd start with an understanding of what your policy (if any) says about closing accounts for recurring SAR filings. If you do have such a policy, you need to follow it. In the absence of policy, I'd recommend you determine what it costs to continue whatever extra monitoring/due diligence you do in order to keep the customer on your radar, analyze activity and file those quarterly SARs. Share that cost estimate with the appropriate people and let management make the decision on whether to close out the account. You already know to expect push back from your lending management.

If structuring is the only suspicious activity you see, and there's no apparent safety and soundness risk in maintaining the account relationship, I don't think you'll be challenged by examiners for keeping the account open if you've done your homework and documented it.

Has anyone talked to the customer? It's possible that they are just ignorant about reporting requirements or has received bad information from someone.

"Our customer runs a small convenience store. As of late there has been an increase in cash activity, which is not typical of the anticipated account activity."

Sounds like they have a bunch of eight liners in the back room and are operating an illegal gambling operation. That is usually a sure sign of such activity that I have seen in Texas. Do a site visit, see if they have video gaming machines. Even if labeled for amusement only, they usually pay under the counter.

Agreed. I have never had an issued with keeping accounts accused of just structuring. However, you might want to perform a site visit per Randy's suggestion.

That is the key. Feeling comfortable that they are "just structuring" and not structuring illegally obtained funds. The money has to make sense.