VIDEO: When is a Suspicious Activity Report Required?
In this Compliance Clip (video), Adam discussed the three times a financial institution is required to file a Suspicious Activity Report. This is a BSA topic.
Video Transcript
The following is a transcript of this video.
This Compliance Clip is going to be a BSA topic and we're going to discuss when a Suspicious Activity Report is required. So when is it required by rule from the regulators? When do we have to file a Suspicious Activity Report?
A Suspicious Activity Report must be filed when you suspect criminal violations in one of three incidents. So there's three times that you have to file a Suspicious Activity Report when you have suspected criminal violations.
When you have a suspected criminal violation of insider abuse, you must file in any amount. So any amount of insider abuse is required to be a filed Suspicious Activity Report. What is insider abuse? This is anytime one of your employees has a potential suspected criminal violation for their activities inside your financial institution. So this could be things like embezzlement. This could be where an employee has created a fraudulent loan, committed a loan fraud. This could also be potentially where a teller has misappropriated funds of their teller drawer. You may have already called the police. They may already be arrested or you may, or if you caught them taking $20, you may not have called the police, but let them go, you may have fired them. That's an insider abuse of any amount that requires a Suspicious Activity Report .
For this specific incident, it's very important to make sure that you talk with your HR department to help them understand that anytime there's a suspected criminal violation from an employee, you have to file a Suspicious Activity Report, so the BSA officer needs to know this. Now, sometimes HR people will keep these types of things on the down low and not make it public and keep it pretty secretive, and this is where training is very important that your HR team understands this requirement because insider abuse of any amount for a potential suspected criminal activity requires your financial institution to automatically file a Suspicious Activity Report. Make sure you pass this video onto your HR department so they understand that.
That's the first time you must file a Suspicious Activity Report.
The second incident relates to when we know who a suspect is, and this is in amounts of $5,000 or more. If you know who the suspect is, maybe it's your customer, and the amount is $5,000 or more, your financial institution is required to file a Suspicious Activity Report when there's a suspected criminal violation. Now, if your customer comes in and you suspect something that is a criminal violation, but the amount is under $5,000, it's optional. But if it's $5,000 or more, you are absolutely required to file it. This could be something as simple as structuring. Structuring is a criminal violation. In fact, it's a felony. You could serve time in jail. There's fines that could go with that. And so structuring, of course, is a very common way that we file SARs. And this of course would require a Suspicious Activity Report if in aggregate, the amount of funds being processed by or through the bank would be $5,000 or more. So this is when you identify the suspect and you know who it is.
There are incidents when you don't know the suspect. You have an unidentified suspect and the threshold is a little bit higher in those cases. Specifically, it's $25,000 or more.
Now I was talking to somebody just yesterday who said, what would be an example of this? An example of this might be a case where your customer is a victim and maybe your customer thought they knew somebody on the other end of the phone, they gave them controls to their computer and that individual then got into their online banking and committed wire fraud or stole money or committed some sort of criminal violation through your financial institution. So your customer is the victim, but you don't know exactly who the person was that was the scammer. In this case, you wouldn't have an unidentified suspect. So the amount here for an unidentified suspect is $25,000 or more.
If you have a case where you have an unidentified suspect, somebody comes into your teller line and tries to cash a check and you realize they have a fraudulent ID, which was a case that I experienced several years ago, and that person, they realized it was a fake ID so they took the ID and that person ran out of the bank, jumped into the car and drove away. But the check being cashed was only $300, $500, or 1,500. It was less than $25,000. You had no idea who that person was, it was under this threshold, that would be optional. You could file that if you choose to, but it is only required if it's in an amount of $25,000 or more and you have an unidentified suspect for a suspected criminal violation.
To recap, we have three reasons why we are required to file a Suspicious Activity Report. These are really the three different thresholds. The first is any amount for insider abuse. The second is $5,000 or more for an identified suspect and the third is $25,000 or more for an unidentified suspect.
Those are the three incidents where we would be required to file a Suspicious Activity Report. And that's all I have for you today for this Compliance Clip.