SAR/ Mgmt.

What does one do when there is obvious kiting occuring in a customer account and management is turning a blind eye because they are a good customer? The dollar amount is SAR reportable, so that will be taken care of. But, how does one handle management turning a blind eye again and again?

1. Good customers do not kite.
2. Sometimes mgmt doesn't get it until there's a loss. Sometimes not even then.
3. You can only do so much.
4. Document, document, document.

^^^^^^^ What she said.

All I can say is "wow". It's actually going to be funny (to me, not you) when the other bank catches on first and stops it and your bank loses. That's just dumb!

I wonder too, since kiting is illegal, can the management be charged with aiding and abetting?

I'd recommend that management document why they did not file a SAR or take some proactive steps to stop the kiting. First bank to stop the kite will have the smaller loss, if any. Good luck!

I agree with everyone here. Make sure you warn management of the loss potential. Also, make them aware of risk that your regulator will want to know why you knew, files a SAR and still did nothing. Not a conversation I want to have.

Who is responsible for filing the SAR?

My long-time mentor, who spent 30+ years working in corporate governance and compliance, told me that, as a BSA Officer, I need to file SARs when they should be filed. She told me "If you find something and you know you have to file a SAR, you file a SAR. If *I* tell you not to file it, you still file it. If the CEO tells you not to file it, you still file it." It's a rule I've lived by for over 6 years now...

Then again, I do understand that certain FIs operate differently and that senior management has final say. I do not agree with that, but it's reality. In that case, if your job is in danger, you document the heck out of the whole thing to show that you wanted to file but were prevented by the powers that be. Cover yourself.

is there another member of management you can approach? do you have softare that allows you to run reports detailing why it is kiting? Sad that management is turning a blind eye

I was thinking if managment was aware of such activity and did not file the appropriate report that they were also subject to a SAR.

This is not my realm of expertise but it does seem I remember reading this somewhere.

Org. Anon here. A SAR will be filed regardless of what mgmt says on this one. But, the question really is does management need to be reported as well for allowing this to happen? They have been given the facts and the risks involved and are still allowing it to happen. ugh.

I'm sure you'll also remember that if the activity continues you will be required to file a SAR every 90 days.

It just beats all I've ever seen, but it appears they have become a party to the crime, in my opinion.

unless this is a case that they feel if they stop it now they will sufer a loss and hope to be able to stop it when they don't think they will suffer a loss...not a valid excuse, IMO, but one I've heard before

Long as they aren't stopping you from filing a SAR, I don't see a problem with the good customer excuse for keeping their business. BSA tends to focus on the last 90 days of activity, and the next (dreading that next SAR), but management may have known them for 20 years, and remembers lots of loans and CDs and thinks this activity is temporary and will go away soon enough. I've had at least 3 cases where management gently confronted the customer, and the customer stopped.

I have also seen where the Bank has lost million of dollars and it cratered the bank. If this is a serious kite that might jeopardize the safety and soundness of the bank, a call to your regulator may be in order.

Any management that knowingly turns a blind eye to illegal activity for the profit of the bank or because of a "good" customer is not someone I would want to be working for...