Employee SARs

So let's pretend that there's a bad apple among our employees, I know hard to imagine. So we file a SAR because we suspect this employee is money laundering. Questions:

1. Do you terminate this employee? If so, is that written in your policy?

2. How much due diligence is performed before you file this SAR?

3. Do you interview this employee to ask what he/she was doing; what the transactions were for? If so, does someone in your BSA team conduct this interview, or does someone from your internal audit team?

I really appreciate feedback regarding this topic!! Thank you!

It's not as hard to imagine as you think, but I digress. If I’m going to even think about terminate an employee based on the belief he/she is laundering money through the bank, I would dig very, very deep. I would review all activity going through their account and any accounts they have control over. I would try to very the origin of funds on any large deposits and obtain beneficial ownership on any business accounts maintained by the employee.

After you have completed your investigation, I would confront the employee. I would ask a lot of questions in particular why the employee is using the account in such a manner that you are concerned they may be laundering money. Management and possibly bank’s counsel should be present.

I wouldn’t accuse the employee of money laundering without substantial proof. If their innocent, I can only imagine a law suit would follow. I will say that if you file an SAR on an employee for possible money laundering, I don’t see how you can justify keeping them on the payroll.

Absolutely agree. This is a very serious matter. You cannot overlook it and must make sure that you have conducted a thorough investigation and considered all legal aspects. If after a thorough investigation the conclusion is you have an employee likely laundering money, I don't see how you could retain such an employee in a financial institution.

A question for ACBbank.

You suggest: "After you have completed your investigation, I would confront the employee. I would ask a lot of questions in particular why the employee is using the account in such a manner that you are concerned they may be laundering money..."

If this were a regular customer would you go to them and ask them this same question? My concern here is that we cannot alert the employee of our suspicions just as we cannot alert our customers.

If we go to the employee with our suspicions they will likely know eventually a SAR may be filed. I am only playing devils advocate here. I really am not sure how to handle the situation I would allocate the advice of your independent auditor to be honest.

Good Luck

I'm obviously not ABCbank, but we often question customers as to the reason(s) why they may be conducting transactions in a particular fashion. Each situation has to be reviewed on its own merits and such decisions made on a case-by-case basis.

Occasionally you discover that there is a logical reason for some type of activity that, on the surface, appeared suspicious.

I cannot count how times I have spoken to customer's of all types and backgrounds to finalize AML investigations. Do I speak to every single customer, no I don't. But do I have a conference call with those I deem higher risk? Yes, I do.

I don't come out and accuse them of money laundering, structuring or any crime. I simply inquire as to the nature of the account activity. For example, I have asked multiple customers about why they are conducting deposits and/or withdrawals on one day, which when aggregated, exceed $10,000. I have also spoken to customers who after years of no foreign wire activity have four or five in one month. I know this sounds crazy, but some times a conversation with a customer actually stops me from filing an SAR. Most of the time, the customer understands and is happy to explain.

To be honest, just because the employee thinks an SAR could/is filed doesn’t mean the bank has violated the prohibition on disclosure. As Kathleen indicated, this is a very serious matter and if you cannot complete your investigation, you need to speak to the employee. Don’t reference anything about an SAR. I would simply ask about the nature of the activity and why the transactions are being conducted in such a manner as to raise your suspicions that money laundering could be taking place. I’m sure there are other factors going on that you cannot post about, but you simply have to take prompt action on something like this.

Check your bank's code of ethics or code of conduct or maybe your personnel policy. Our code of ethics has an entire section about money laundering & structuring.

Thank you everyone for your responses, they all helped validate what I've been doing!

Good luck SuperHero! you may keep my cape for a while longer to help you through

Since we do not currently have a section regarding BSA regulations (money laundering and structuring) within our personnel policy, I was wondering if someone wouldn't mind sharing their employee BSA policy with me?

Thanks in advance!

Ok, another question that my HR department has:

If we decided to make it our policy to terminate employees because we filed a SAR for structuring or money laundering, how do you approach that with the employee? What reasons do you give them as to why he/she is being terminated?

The reason you terminate the employee is for THEIR behavior, not your reaction to it. Discuss the actual facts with the employee. And the policy does not need to necessarily state "if we file a SAR..." but rather, "if an employee is suspected of structuring or money laundering..."

Short, sweet, and to the point...

You do not fire the employee because you filed a SAR; you fire her because of what she did. You file the SAR because the law requires it. There is no connection between the two actions.