Here are the highlights:
- Can a financial institution maintain an account or customer relationship for which it has received a written “keep open” request from law enforcement, even though the financial institution has identified suspicious or potentially illicit activity? The answer is Yes. FinCEN states that the decision to maintain or close an account should be made by a financial institution in accordance with its own policies, procedures, and processes. In addition, FinCEN indicates that Law enforcement may have an interest in ensuring that certain accounts and customer relationships remain open notwithstanding suspicious or potential criminal activity in connection with the account. A financial institution may decide to maintain an account based on a written “keep open” request from a law enforcement agency, however, it is not obligated to do so. The written request should be specific and indicate both that the law enforcement agency has requested that the financial institution maintain the account, as well as the purpose and duration of the request. Keeping such an account open as requested may be highly useful to law enforcement and may further efforts to identify and combat money laundering, terrorist financing, and other illicit financial activities. A financial institution should not be criticized solely for its decision to maintain an account relationship at the request of law enforcement or for its decision to close the account.
- Should a financial institution file a SAR solely on the basis of receiving a grand jury subpoena or other law enforcement inquiries? The answer is No. The receipt of a law enforcement inquiry, such as a grand jury subpoena, does not by itself indicate that the criteria requiring the filing of a SAR have been met. However, receipt of a grand jury subpoena or other law enforcement inquiry is pertinent information relevant to a financial institution’s overall assessment of risk and the risk profile for the relevant customer(s) and account(s).
- Is a financial institution required to terminate a customer relationship following the filing of a SAR or multiple SARs? The answer is No. There is no BSA regulatory requirement to terminate a customer relationship after the filing of a SAR or any number of SARs. The decision to maintain or close a customer relationship as a result of the identification of suspicious activity is a determination for a financial institution to make based on the information available to it, its assessment of money laundering or other illicit financial activity risks, and established policies, procedures, and processes.
- Is a financial institution required to file a SAR based solely on negative news? The answer is No. FinCEN states that the existence of negative news related to a customer or other activity at a financial institution does not by itself indicate that the criteria requiring the filing of a SAR have been met and does not automatically require the filing of a SAR by a financial institution. A financial institution may review media reports, news articles and/or other references to assist in its performance of customer due diligence, as well as its evaluation of any transactions or activity it considers unusual or potentially suspicious. As with other identified unusual or potentially suspicious activity, financial institutions should comply with applicable regulatory requirements and follow their established policies, procedures, and processes to determine the extent to which it investigates and evaluates negative news, in conjunction with its review of transactions occurring by, at, or through the institution, to determine if a SAR filing is required.
- If there are multiple negative news alerts based on the same event, is a financial institution expected to independently investigate each of those alerts? The answer is No. In circumstances where there are multiple negative news alerts (as identified through monitoring for unusual or suspicious activity) based on the same underlying events, a financial institution does not need to independently investigate each alert, but rather may consider whether the alert contains new or different information that warrants further investigation or whether the negative news otherwise assists or informs the evaluation of the activity at issue.
- Do financial institutions need to repeat information in the SAR narrative that has already been included in other SAR data fields? The answer is No. As stated in the SAR instructions, information provided in other sections of a SAR does not need to be repeated in the narrative unless necessary to provide a clear and complete description of the suspicious activity. Consistent with FinCEN’s SAR instructions, financial institutions should focus the SAR narrative on the information necessary to enable the reader to understand the activity reported, including what was unusual or irregular about the activity that caused suspicion.
- Should financial institutions file additional SARs on the same suspicious activity to accommodate narratives that are longer than the SAR narrative character limits? The answer is No. Filers must provide a clear, complete, and concise description of the suspicious activity that led to the decision to file the SAR. A financial institution that reaches the SAR narrative character limit should not file an additional SAR to continue a narrative in order to avoid duplicate filings on the same activity in the database. Instead, filers should focus the relevant information in the narrative as much as possible, and may include additional, relevant information as an attachment to the SAR, or note that it is available as supporting documentation.
Does your Financial Institution understand the regulatory requirements related to SARs to assist with their compliance obligations?
Financial institutions ought to focus resources on activities that produce the greatest value to law enforcement agencies and other government users of Bank Secrecy Act reporting. Financial Institutions must have policies, procedures, and processes in place that establish the correct process for SAR filings.
Who is assisting your Financial Institution with its Corporate Governance obligations?