Reporting SARs to the Board of Directors

Each federal regulator has its own specific rule on reporting SAR filings to a financial institution's board (or designated committee). You should review the regulatory provision that applies to your institution. The citations are:

• OCC: 12 CFR 21.11(h) and 163.180(d)
• FRB: 12 CFR 208.62(h)
• FDIC: 12 CFR 353.3(f) and 390.355(d)
• NCUA: 12 CFR 748.1(c)(4)

Perhaps of more value is this excerpt from page 68 of the 2007 FFIEC BSA/AML Examination Manual:

Notifying Board of Directors of SAR Filings
Banks are required by the SAR regulations of their federal banking agency to notify the board of directors or an appropriate board committee that SARs have been filed. However, the regulations do not mandate a particular notification format and banks should have flexibility in structuring their format. Therefore, banks may, but are not required to, provide actual copies of SARs to the board of directors or a board committee. Alternatively, banks may opt to provide summaries, tables of SARs filed for specific violation types, or other forms of notification. Regardless of the notification format used by the bank, management should provide sufficient information on its SAR filings to the board of directors or an appropriate committee in order to fulfill its fiduciary duties.

The footnote to that paragraph qualifies it somewhat:

As noted in the Bank Secrecy Act Advisory Group's The SAR Activity Review-Trends, Tips & Issues, Issue 2, June 2001, "In the rare instance when suspicious activity is related to an individual in the organization, such as the president or one of the members of the board of directors, the established policy that would require notification of a SAR filing to such an individual should not be followed. Deviations to established policies and procedures so as to avoid notification of a SAR filing to a subject of the SAR should be documented and appropriate uninvolved senior organizational personnel should be so advised."

To all of that, I would add this caveat: minutes of board and other meetings are subject to the discovery process, can be subpoenaed. It's therefore not a good idea to include any suspects' names in the minutes. Many institutions that discuss individual filings at such meetings use file number references to tie board minutes to confidential SAR files, and any mention of names is kept strictly "off the record."

First published on BankersOnline.com 10/01/07
Updated 8/23/13 to remove OTS citation and add citations for OCC and FDIC regulations for former OTS-supervised institutions.