Should you inform an employee they are being investigated?

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Question:

Regarding alerting employees to being suspects of investigations as a result of SAR filings, I know we cannot disclose the existence of the SAR, however, but do we have a duty to inform our employee that an investigation is now focused upon them which would activate the need for legal representation, or would the safe harbor also apply in this case?

Answer:

Answer by Andy Zavoina:

Telling someone they are being investigated could impede the investigation itself and any evidence pertaining to it. At some point you will likely interview the employee. They should figure it out at that point.

The safe harbor attained from the SAR filing does not effect your investigation per se, but the fact that a SAR was filed and you alerted law enforcement to the possibility of a crime.

Answer:

Answer by Ken Golliher:

You do not have a duty to notify an employee that he is being investigated; no jeopardy attaches when a bank considers someone as a suspect. The state's (law enforcement's) identification of someone as a suspect imposes greater responsibilities. In addition, if you tell an employee that you suspect him of abusing his position you simultaneously tell him you are going to file a SAR - the law requires you to file a SAR in that circumstance.

Although banks are prohibited from disclosing SAR filings, even in court, a good defense attorney can ask the bank employee/witness to review the SAR filing requirements. Then she can ask the bank employee to review the facts in the instant case, thus using the bank employee to make it plain the bank probably believed it was legally required to file a SAR. She doesn't really have to ask you if you filed a SAR to make it plain that you did.

First published on BankersOnline.com 9/2/03