Would Customer’s Regularity Warrant a SAR?

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Question:

I have been newly appointed to a bank Board of Directors and have little banking knowledge. I have been approached by one of our tellers with a concern about CTRs. It seems that on a regular basis (couple times a month) a customer comes into the bank with two checks around $6500.00 each and has them cashed. One is in his name the other is in his father’s name. Each time he is alone and walks out of the bank with around $13,500.00 cash. My teller is afraid that this is a BSA violation. Is this a violation? Would this at least warrant a Suspicious Activity Report?

Answer:

It is good that you are taking an interest in the bank's BSA/AML compliance, because banks need concerned directors to insist on appropriate policies and procedures designed to ensure compliance. I am going to assume that the teller is, in fact, filing a CTR for each time this occurs, because these checks are being cashed by a single individual, regardless of how they are made out. Failure to file the CTR in such a case would definitely be a violation. Cashing the checks would not, in itself, be a violation, but the pattern does seem suspect, and the teller has already alerted you to that fact. Your bank should have a procedure for bringing questionable customer activity to the attention of whoever in the organization has the responsibility for reviewing suspicious activity for the filing of Suspicious Activity Reports (SARs). One element of suspicious activity is that it consists of transactions that: "[have] no business or apparent lawful purpose or [are] 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[s] after examining the available facts, including the background and possible purpose of the transaction[s]." -- 31 CFR 103.18(a)(2)(iii)

The teller (it is more appropriate for this to be reported "up") should follow the bank's procedure for referring the matter. If the designated individual (or committee) agrees after researching the nature of the checks you've described and other information that the actions are suspicious, they should cause a SAR to be filed. The board (or a designated committee) should be informed after a SAR is filed. It is strictly forbidden to reveal the fact that a SAR was filed to the suspect or to any other third party, with the exception of law enforcement, bank examiners and auditors.

First published on BankersOnline.com 5/21/07