We have a customer who is making a very large (almost 6 figure) cash withdrawal, and has informed the bank rep that he is opening up a safe deposit box and putting the cash in there. Once this transaction takes place (I know that we should not know what is going in the box, but we are not deaf), is a SAR warranted? We will be filing a CTR. (He also asked about insurance we have on our boxes !!!)

More and more banks are now posting notices that safe deposit box contents are NOT insured. Once that cash leaves the account it is not even FDIC insured.

And while I've heard "banking myths" that cash in a SD box is illegal, I've never read it. No SAR, nothing illegal.

It shouldn't make any difference to the bank where the customer decides to keep their cash. They could just as well keep it a can in the back yard. Is that suspecius or eccentric? However, If a customer has no qualms in telling bank staff they keep cash in the box, be careful.

Not that they will do it, but its an open door for a law suite stating someone in the bank took money out of it. Be sure there are no exceptions your safe deposit procedures for anyone.

As he has made it known, I would tell him because of that it woud be best if he took a box somewhere else.

Andy's suggestion of the sign is a great idea. Make sure your customer knows that.

Check out this training course on BOL. It looks like some good and timely information.

My opinions are my own and not those of my employer.

While there are no laws that I am aware of regarding where a customer keeps his/her cash, I think the filing of a SAR might not be so far-fetched. According to an article I read, your institution does have an obligation to watch for any suspicious behavior. Staff should be trained to look for suspicious patterns of activity in or around safe-custody areas. They should have a process to follow if they observe any such suspicious activity. If this customer is announcing that he is placing large sums of cash in his safe deposit box, my first question would be "Why?". If the answer doesn't make sense, it could be anything from stupidity to tax evasion to terrorism. If in doubt, I'd file.
Leslie

I'll vote no on the SAR, as a CTR is being filed and just because a customer states that cash is going into a safe deposit box does not mean that it is. In addition, the fact that there is no law against placing currency is a safe deposit box should prompt no action, report wise.

There is no logic to reporting the safe deposit activity, since the customer is electing to secure currency in a safe deposit box, versus walking out the door with a bundle of cash – that’s just a smart thing to do. Since you, I assuming, would not prepare an SAR based on the customer walking out the door with the cash, it follows that placing the cash in a safe deposit box would not warrant reporting.

Grist,
Before I posted my reply, I checked with our BSA Offocer and asked her if a SAR should be filed in the circumstances stated by the original poster. She felt that it could be suspicious, and as such, should be reported. Truthfully, a customer walking out the door with large sums of cash on a regular basis could also be suspicious and reportable.
Before Y2K, we had a lot of customers who were uneasy about the banking system placing their cash in their safe deposit boxes, or converting it into multiple cashier's checks. That was not really suspicious, given the circumstances at the time. I think you just need to judge each scenario on its own merit and decide whether it is prudent to file.
Leslie

I tend to agree that anyone withdrawing a large amount of cash from an interest bearing account protected by FDIC insurance and placing it into a safe deposit box is highly unusual, bordering on suspicious. The regulators are really looking for banks to report anything they deem as suspicious. Who is to say what is suspicious. The fact that the branch called the Security Dept. lets you know that the branch thought there was something unusual about the situation. I think if you asked a regulator their opinion, they'd say "File". Any regulators out there want to anonymously voice your opinion ???

Leslie- Unless you have something else to go along with "customer has a bag full of cash", a SAR will be a waste of law enforcement's time. Cash is legal tender and anyone can have as much as s/he can legally acquire. SARs are "value-added" reports. Cash alone is not suspicious--and even if a particular cash event IS suspicious, what SUA do you suspect?

These kinds of SARs are the cholesterol of the BSA reporting system.

I would have to agree with Rich. Although I would concider it a stupid (yes, I said STUPID)move to make, a lot of people are worried about banks going under after 9-11 and the Enron thing, so maybe this guy is thinking, "It's REALLY safe cause it's in the vault AND it's cash." So if the bank goes under he's totally covered.

You may think it's suspicious because you'd never do that, but after 9-11 we had a few people come in says "My friend told me I should take all my money out of the bank..."

What is the basic suspicion, he has a lot of cash?

When we had a customer want over $100K in cash we had an off duty cop there to escort him off our property. The cop thought we were weird because this is common in that part of the state. Well, while it would be common for me. it wasn't suspicious, just irregular.

I'm not convinced. You are basically saying that every customer that prompts the filing of a CTR will also have a SAR filed on them as they walk out the door. Your suspicion: They not only withdraw the cash, but the walked out with the cash!

All the regulators need to know is that the customer withdrew cash and it's none of our business (at the bank level) what they do with it, it's a matter for the government to sort out.

If you take your scenario one step further, if the same customer deposits the same cash back to their account you would naturally file a CTR and, in your world, a SAR.

I do not think (nor did I state) that EVERY cash transaction is suspicious. What I said was that I beleive you have to look at each situation and judge it on its own merits. According to The U.S. Suspicious Activity Reporting regulations, FinCEN requires that "every bank" file with Treasury "a report of any suspicious transaction relevant to a possible violation of law or regulation." The SAR regulations define a "suspicious transaction" as any transaction involving $5,000 or more that is "conducted or attempted by, at, or through the bank... and the bank knows, suspects, or has reason to suspect that":

* "The transaction involves funds derived from illegal activities or is intended or conducted in order to hide or disguise funds or assets derived from illegal activities… 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"

* "The transaction is designed to evade any requirements of this part or of any other regulations promulgated under the Bank Secrecy Act..."

* "The transaction 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 bank knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction."

I still believe that in the safe deposit scenario, the bank must determine if this is normal, everyday activity, or if this is something designed for an unlawful purpose such as to evade taxes. As I stated in my first response to this post, I would want to know WHY the client chose to place huge amounts of money in his SD box before jumping to any conclusions. Maybe he is hiding money from a greedy ex-wife, or maybe he just doesn't like banks. I just do not think the bank can turn a blind eye when something is this unususal. (and obviously the original poster thought it was unususal, or he/she would not have asked the question!)
Leslie

I have also been involved in many safe deposit drillings and in the past I have asked council if we should be filing a CTR/SAR for these type of transactions. The attorney did say that (within reason) customers can put what ever they like into their safe deposit box. I once had a customer from Thailand who couldn't wait to show me the contents of her sd box, there were several artifacts dating back hundreds of years in her family, one of which was a pipe used to smoke cocaine (or some drug). I didn't file anything on her because it was obvious in this situation that it was just an heirloom. I agree with all the previous posts that you really have to look at the situation to determine if it's appropriate to file or not.

Opium, probably, don't you think, rather than cocaine? JUST going on my reading and film thoughts, not on any personal experience, of course!!!!!!!

Opium...yes, that was it. Sorry, I couldn't remember. The coffee hasn't kicked in yet...it was the coolest pipe i'd ever seen...it was ivory and carved into a monkey. She used to cook for the branch too...hhhmmm, maybe I should have been suspicious!!!! (sorry, a little friday humor)

Mmmmmm, Thai cooking. I really like Thai. We may have to get takeout for dinner tonight. There's a place here that does killer Pad Thai to go.

Imagine the discussion over dinner..."what made you decide on Thai food tonight, honey? Oh, we were talking about opium at work today..."

Given some of the topics that come up at work, I suspect DH would not find that all that unusual! (My BF also works here, so lots of odd topics come up.)

At least it's not Chinese takeout

JacFSB--that was great! Just what I needed to get rolling this wonderful Friday morning.

OK that was hilarious.

"The transaction involves funds derived from illegal activities or is intended or conducted in order to hide or disguise funds, etc."

"The transaction is designed to evade any requirements, etc."

"The transaction has no business or apparent lawful purpose, etc.

Telling someone that you are going to put cash into a safe deposit box does not appear to be covered within your post, correct? The "act" of putting cash into a safe deposit box is legal, correct? In my opinion, you are added something to the regulation that just doesn't fit.

Grant you that your liberal interpretation is correct in your mind, but that does not make it correct.

I realize that you did not state that all cash transactions are suspicious, I was just testing your logic.

What if the filing of an SAR became known to the customer and the customer told the story to your local newspaper? Yes, we have an obligation to strictly follow regulations, but customer idiosyncrasy’s are not generally reportable.