FAQs from FinCEN Help Line? Reporting Suspicious Activity by MSBs

FAQs from FinCEN Help Line ? Reporting Suspicious Activity by MSBs

Which MSBs are required to report suspicious activities?

The requirement that MSBs file a SAR applies only to money transmitters, currency dealers or exchangers, and issuers, sellers or redeemers of money orders and traveler?s checks. It does not apply to check cashers or to issuers, sellers, or redeemers of stored value. However, any MSB may voluntarily file a SAR for any suspicious transaction that it believes is relevant to the possible violation of any law or regulation, but whose reporting is not required. A statutory safe harbor from liability for reporting applies whether the filing is voluntary or required.

When must MSBs begin to report suspicious activities to FinCEN and how are they to be reported?

Money transmitters and issuers, sellers, or redeemers of money orders and traveler?s checks were required to begin reporting suspicious transactions occurring after December 31, 2001. Currency dealers or exchangers were required to file SARs beginning on August 11, 2003. MSBs must use the SAR form especially designed for them, the SAR-MSB, TD F 90-22.56. This SAR-MSB form should be sent to the: Detroit Computing Center, ATTN: SAR-MSB, P.O. Box 33117, Detroit, MI 48232-5980.

When is an MSB required to file a SAR?

An MSB is required to file a SAR on a transaction or series of transactions conducted or attempted by, at, or through the MSB if both of the following occur:

• The transaction or series of transactions involves or aggregates funds or other assets of $2,000 or more, AND
• The MSB knows, suspects, or has reason to suspect that the transaction (or a pattern of transactions of which the transaction is a part) falls into one or more of the following categories:

1. involves funds derived from illegal activity or is intended or conducted in order to hide or disguise funds or assets derived from illegal activity as part of a plan to violate or evade any federal law or regulation or to avoid any transaction reporting requirement under federal law or regulation; or
2. is designed to evade any BSA regulations; or
3. has no business or apparent lawful purpose or is not the sort in which the particular customer would normally be expected to engage, and the MSB knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction; or
4. involves use of the money services business to facilitate criminal activity.

An issuer of money orders or traveler?s checks is required to report a transaction or pattern of transactions that involves or aggregates funds or other assets of $5,000 or more when the identification of the transactions as suspicious is derived from a review of clearance records or other similar records of money orders or traveler?s checks that have been sold or processed.

An MSB is required to file each SAR no later than 30 calendar days after the date of the initial detection by the MSB of facts that may constitute a basis for filing a SAR.

I?m worried about being sued by the customer if I file a SAR. What protection do I have?

Federal law (31 U.S.C. 5318(g)(3)) provides a ?safe harbor? or protection from civil liability to financial institutions and their directors, officers, employees or agents that report suspicious activity to FinCEN or appropriate law enforcement or supervisory agencies. A financial institution is prohibited from notifying any person involved in the transaction that the transaction was reported on a SAR (31 USC 5318(g)(2)). If you receive a subpoena for a SAR, or a request of any kind to produce a copy of a SAR (other than a request by FinCEN, or an appropriate law enforcement or supervisory agency), you should contact FinCEN?s Office of Chief Counsel at 703-905-3590 immediately; federally regulated depository institutions should also contact their regulator.

I?m worried about damaging someone?s reputation or getting someone in trouble if I?m wrong about a transaction being suspicious. What happens to SARs after they are filed and who looks at them?

A SAR is not an accusation against someone or an allegation that they have committed a crime. A SAR indicates that a transaction may be suspicious. SARs are not disseminated to the public; rather, they are provided only to appropriate law enforcement and financial supervisory agencies.

Is an MSB required to have an Anti-Money Laundering (AML) Compliance Program? If so, what is an AML Program?

All MSBs are required by law to have an effective anti-money laundering (AML) compliance program. The regulation requiring MSBs to develop and maintain an AML compliance program as of July 24, 2002, or 90-days after establishment, is contained in 31 CFR 103.125.

Each AML program must be commensurate with the risks posed by the location, size, nature and volume of the financial services provided by the MSB. For example, a large money transmitter with a high volume of business located in the Los Angeles area is at higher risk than a small check casher with a low volume of business located in Boise. Therefore, the large California money transmitter would be expected to have a more complex AML compliance program, commensurate with its higher risk, than the smaller Idaho check casher, who is at lower risk of being used to facilitate money laundering. An effective AML program is one designed to prevent the MSB from being used to facilitate money laundering.

An AML compliance program must be in writing and must:

• incorporate policies, procedures and internal controls reasonably designed to assure compliance with the BSA;
• designate a compliance officer responsible for day-to-day compliance with the BSA and the compliance program;
• provide education and/or training of appropriate personnel; and
• provide for independent review to monitor and maintain an adequate program.