NEW SAR FORM - Bank Secrecy At-Suspicious Activity Report Changes (FIL-56-2003)

Written By: Holly Collins

Beginning July 1, 2003, all financial institutions as well as any state-licensed branches of foreign banks, are requested to use the new form when filing a Suspicious Activity Report (SAR). The SAR must be filed when a known or suspected criminal violation of federal law occurs, violation of the Bank Secrecy Act, and/or a suspicious activity related to money laundering is detected. Banks and other agencies may continue to use the old form while their procedures and systems are updated, but must start using the revised form no later than January 1, 2004.

The revised SAR form includes the following three changes:

• Part III- The addition of two boxes to check for terrorist financing and identity theft;
• Part V-A statement has been added that directs an individual to tips on preparing and filing the SAR form;
• SAR Instructions-The Safe Harbor provisions have been updated to incorporate USA PATRIOT Act changes.

Preparers should adequately evaluate the situation that warranted the filing of the SAR form in order to classify it as “Terrorist Financing” or “Identify Theft”, if applicable. Several indicators and patterns have been associated with funds collection related to terrorist financing and the movement of funds related to terrorist financing. They include use of a business account to collect and funnel funds to foreign beneficiaries, significant wire transfer activity, large currency withdrawals, and same-day transactions, to name a few. Also, the concept of identity theft could involve a bank insider or employee in addition to outsiders. Those individuals within the bank could be guilty of employee misconduct including unauthorized use of account information without permission and/or criminal activity involving possession of customer information outside of the bank area or manipulation of the computer system allowing alteration of customer information and accounts.

The revised SAR form is available at or www.fdic.gov. Or http://www.fincen.gov/reg_bsaforms.html. Also, the complete FDIC memorandum issued to financial institutions and other agencies can be found at http://www.fdic.gov/news.

Contact Nichols, Cauley & Associates by Email, phone, or online form with your questions.

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