Interesting story. Doesn't mention a SAR, but makes you wonder.
Man Sues Wells Fargo

What a mess. The fact that it was a bank employee who stole the customer's identity and laundered the money is going to muddy the water considerably.

Whitepages dot com list 100 Carlos Gomez in Florida. One would think that the authorities would check who opened the account prior to arresting him. Also if the account was closed in 02 and reopened in 05 he would be subject to CIP and ID would need to be documented.

Somewhere between asleep and awake, it occurred to me that bank employees (low level employees at that) could market "closed" bank accounts to evil doers for a pretty penny.

In this instance, given the dollar amounts involved, resurrecting the account of an individual was a foolish choice. They should have chosen a non interest bearing account in the name of a small business, supplying only a new mailing address in the form of a P.O. box and trying to keep the activity within the boundaries described by previous histories.

No CIP. No due diligence. Certainly no enhanced due diligence would take place when the account was re-opened. The account could be used, then eventually "closed" for a second time. Perhaps it could even be reincarnated later for a different enterprise...

On the other hand, all a bank would have to do to prevent this is to prohibit in policy and process the "re-opening" of closed accounts or, as it has been described here, the recycling of account numbers.

Naaah, our frontline people would complain about the extra work...

One flaw in that scenario. A CIP process is supposed to be applied to resurrected accounts if there's not already another deposit account open for the customer. Of course, I'm fairly certain that Ken is right when he suggests that CIP would not take place if there's fraud afoot.