Improvements to Eliminate Reporting Deficiencies -

Overall, financial institutions continue to do an excellent job of reporting suspicious activity, but improvements can be made. As reported in Issue 5 of The SAR Activity Review - Trends, Tips and Issues, law enforcement and regulatory agencies (the primary users of SAR data) continue to report to FinCEN that SARs are filed with missing and incomplete data. Less than 2/100ths of one percent of SARs filed since 1996 had no suspect identification, no activity characterized, and no sufficient narrative to explain what activity was being reported. This situation most often occurs when filers check the activity characterization box marked ?Other? but fail to specify the suspicious activity on the line provided. The problem is compounded when filers enter the phrase ?see attached? in the ?Narrative? section of the form and attach items such as spreadsheets or computer printouts as documentation. When SAR forms are received at the IRS Detroit Computing Center (DCC), only information in an explicit, narrative format is keypunched; thus, tables and other numeric data contained in spreadsheets are not included in the narrative. SARs that do not specify the suspicious activity being reported or fail to provide an explanation as to what led the institution to become suspicious are of minimal value to law enforcement or regulators. Please do not include any supporting documentation with your filed report; keep the information in your records for five years. Law enforcement will contact you at the appropriate time to review the information.

The value of the ?Narrative? section of the report to law enforcement cannot be stressed enough. The care with which it is written may make the difference in whether or not the described conduct and possible criminal nature are clearly understood by law enforcement and regulators. Financial institutions must review and follow the instructions found in the ?Suspicious Activity Information Explanation/ Description? section of the SAR form. In addition, always select and mark the appropriate box(es) in the ?summary characterization of suspicious activity? section.

During the year from July 1, 2002 to June 30, 2003, financial institutions (as defined by 31 CFR 103) filed approximately 300,000 SARs. The following issues were identified:

• Four percent were filed without a suspect name.
• Eight percent did not list an address for the suspect.
• Twenty-three percent did not provide the suspect?s social security number.
• Four percent did not provide any indication of what suspicious activity occurred.
• Six percent did not complete the narrative.

There are valid reasons why some of this data could be missing. FinCEN requests that you review your SAR reporting program and make enhancements if required. If the data (name, address, or SSN) is not available or is unknown, please indicate ?not available? or ?unknown? in the data box requesting the information. This is an excellent opportunity for your back office reviewers to improve your SAR reporting program.

FinCEN, in consultation with the federal regulators, is producing a guidance package consisting of three parts: a report entitled, ?Guidance on Preparing a Complete and Sufficient Suspicious Activity Report Narrative? and two power point presentations, ?The Suspicious Activity Report Form? and ?Keys to Writing a Complete and Sufficient SAR Narrative.? This package will be available shortly on the FinCEN website, www.fincen.gov.

Excerpted from SAR Activity Review Issue 6 , page 49