Filing SARs For Kiting

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Question:

Certain articles say you must file an SAR for kiting. I thought there was a $5,000 threshold where the suspect is identified, unless it is an insider. Additionally, if there is a $5,000 threshold, would each kite attempt be added together to get an aggregate, or is each separate, since the total amount of the kite doesn't exceed the individual transactions? For example, I may be depositing $2,000 every 3 days to cover a kite, but the amount of the kite is $3,000, not $3,000 times the number of deposits.

Answer:

Answer by David Dickinson

31 CFR 103.18 states you are required to file a SAR following the discovery of ....

Transactions aggregating $5,000 or more where a suspect can be identified. Any known or suspected criminal violation, or pattern of criminal violations, committed against the financial institution or involving a transaction or transactions conducted through the financial institution and involving or aggregating $5,000 or more in funds or other assets, where the financial institution believes that it was either an actual or potential victim of a criminal transaction, and that the financial institution has a substantial basis for identifying a possible suspect or group of suspects.

Notice that the instructions don't say "within a 30 day period" or any other time frame. Rather it says "involving a transaction or transactions ... involving or aggregating $5,000 or more...." When determining whether a suspect kiting activity meets the threshold of $5000 or more, add up every deposit and withdrawal that you think is linked to the kiting. It is not hard to achieve this limit.

Answer:

Answer by Lucy Griffin

Since September 11, 2001, FinCEN has emphasized that the $5,000 is a trigger at which point you MUST file the SAR. They encourage filing for smaller amounts, particularly if there is any suspicion of connections to terrorism or a pattern of fraud.

First published on BankersOnline.com 10/21/02