BSA: Recognizing What Is Suspicious

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Identifying and reporting suspicious behavior is at the heart of Bank Secrecy Act compliance. It is so important that many of the BSA rules depend on suspicious activity reporting. For example, the current broad exemption rules rely on the alertness of banks and bankers to identify and report suspicious activity. If banks fail to do this, the exemption system will crumble - and something much more complex will be put in its place.

It isn't as ominous as it used to be. The name of the form and the reporting process has been changed from "Criminal Referral Form" to "Suspicious Activity Report." This change was designed to better describe the nature of the activity being identified and reported. And the change was made partly to overcome reluctance of people to label activity as criminal. Suspicious sounds so much less serious. The change helped. Bankers are more willing to report suspicious activity than they were with actions labeled as criminal. But it is still a challenge to train and remind staff of suspicious activity reporting. People find it much more tempting to explain away strange behavior by making assumptions in favor of the customer and the customer's peculiar behavior.

Training for suspicious activity reporting must get staff over this hurdle - the temptation to ignore the behavior or explain it away.

Anything strange or unusual can be suspicious. If it meets the strange or unusual test, it should be considered for suspicious activity reporting. Ask the trainees to share some stories of strange customer behavior. Then discuss whether or not the behavior should be reported as suspicious - and why.

One test of whether something should be reported is when the transaction leaves the teller wondering why the customer did that. When the transaction causes a teller to want to tell someone about it or ask someone about it, there is a good chance that the transaction should be reported as suspicious.

There are some "common" forms of suspicious behavior for which tellers should be alert. We include some examples below. We also suggest using examples that have happened in your bank.

It may also be important to discuss the consequences of suspicious activity reporting. The reports become part of a database - a really, really large database. When one customer - innocent at heart - behaves in a way that triggers a suspicious activity report, the report by itself does not label the customer as a criminal nor does it get the customer in trouble.

A single suspicious activity report is nothing more than white noise in the system. Law enforcement uses the data base to find a pattern. So reporting on a nice customer's single eccentricity won't get that customer into trouble with the law. It will only haunt that customer if the customer is part of a criminal enterprise - a larger pattern that can be identified by analysis of transactions and activity reported in the database.

Bank staff should also understand that what appears to be an isolated incident conducted by a nice customer may actually be part of a larger pattern. If the bank fails to identify and report it, the bank itself may become part of the pattern.

Having raised the comfort level with suspicious activity reporting, it should be important to remind staff of one more thing: the subject of a suspicious activity report should never know that one has been filed. Any SAR should be treated with the highest level of confidentiality.

"Common" forms of suspicious behavior

The customer explains what he or she is doing, and seems eager to explain it - too eager.
The customer refuses to explain what he or she is doing, and implies that the teller has no business being curious.
The customer loitered in the lobby - taking for ever to fill out a deposit slip - while watching the tellers handle customers.
The customer conducts an unusual transaction - much larger than is typical - at a different branch than the customer usually goes to.
The customer takes a complicated transaction to the drive-up window (and hopes that the teller will tire of sending information back and forth through the tray or tube.)
The customer deposits precisely $10,000 in cash and advises the teller that he need not prepare a CTR because the deposit is below the reporting level.