Minimum Security Devices and Procedures, Reports of Crimes and Suspected Crimes, and Bank Secrecy Act Compliance

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 21

[Docket No. 95-14]

RIN 1557-AB19

Minimum Security Devices and Procedures, Reports of Crimes and

Suspected Crimes, and Bank Secrecy Act Compliance

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Office of the Comptroller of the Currency (OCC), as part

of its Regulation Review Program, is proposing to revise its regulation

on minimum security devices and procedures for banks, reports of crimes

and suspected crimes, and Bank Secrecy Act (BSA) compliance. This

proposal implements a new interagency suspicious activity referral

process and updates and clarifies various portions of the underlying

reporting regulation. The proposal also reduces substantially the

burden on banks in reporting suspicious activities while enhancing

access to such information by the Federal law enforcement agencies, the

Federal financial institutions supervisory agencies, and Treasury.

DATES: Comments must be received by September 1, 1995.

ADDRESSES: Comments should be sent to: Communications Division, Office

of the Comptroller of the Currency, 250 E Street SW, Washington, DC

20219, Attention Docket No. 95-14; or FAX number 202-874-5274. Comments

will be available for public inspection and photocopying at the same

location.

FOR FURTHER INFORMATION CONTACT: Robert S. Pasley, Assistant Director,

or Neil M. Robinson, Senior Attorney, Enforcement and Compliance

Division, (202/874-4800), or Daniel Cooke, Attorney, Legislative and

Regulatory Activities Division (202/874-5090).

SUPPLEMENTARY INFORMATION:

Background

The Federal financial institutions supervisory agencies (the

Agencies) 1 and the Department of the Treasury 2 (Treasury)

are responsible for ensuring that financial institutions apprise

Federal law enforcement authorities of any known or suspected violation

of a Federal criminal statute and of any suspicious financial

transaction. Suspicious financial transactions, which will be the

subject of regulations and other guidance to be issued by Treasury, can

include transactions that the bank suspects involve funds derived from

illicit activities, were conducted for the purpose of hiding or

disguising funds from illicit activity, otherwise violated the money

laundering statutes (18 U.S.C. 1956 and 1957), were potentially

designed to evade the reporting or recordkeeping requirements of the

BSA (31 U.S.C. 5311 through 5330), and transactions that the bank

believes were suspicious for any other reason.

\1\ The Federal financial institutions supervisory agencies are

the OCC, the Office of Thrift Supervision, the Board of Governors of

the Federal Reserve System, the Federal Deposit Insurance

Corporation, and the National Credit Union Administration.

\2\ Through its Financial Crimes Enforcement Network (FinCEN).

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Fraud, abusive insider transactions, check kiting schemes, money

laundering, and other crimes can pose serious threats to a financial

institution's continued viability and, if unchecked, can undermine the

public confidence in the nation's financial industry. The Agencies and

Federal law enforcement agencies need to receive timely and detailed

information regarding suspected criminal activity to determine whether

investigations, administrative actions, or criminal prosecutions are

warranted.

An interagency Bank Fraud Working Group (BFWG), consisting of

representatives from many Federal agencies, including the Agencies and

law enforcement agencies, was formed in 1984. The BFWG addresses

substantive issues, promotes cooperation among the Agencies and Federal

and State law enforcement agencies, and improves the Federal

government's response to white collar crime in financial institutions.

It is under the auspices of the BFWG that the revisions to this

regulation and the reporting requirements are being made.

Suspicious Activity Report

The Agencies have been working on a project to improve the criminal

referral process, to reduce unnecessary reporting burdens on banks, and

to eliminate confusion associated with the current duplicative

reporting of suspicious financial transactions in criminal referral

forms and currency transaction reports (CTRs). Contemporaneously,

Treasury analyzed the need to implement the procedures for reporting

suspicious financial transactions by banks following the enactment of

the Annuzio-Wylie Anti-Money Laundering Act of 1992. As a result of

these reviews, the Agencies and Treasury approved the development of a

new referral process that includes suspicious financial transaction

reporting.

To implement the reporting process, and to reduce unnecessary

burdens associated with these various reporting requirements, the

Agencies and FinCEN developed a new report form for reporting known or

suspected Federal criminal law violations and suspicious financial

transactions. The new form is designated the Suspicious Activity Report

(SAR). The SAR is a simplified and shortened version of its

predecessors. The new referral process and the SAR reduce the burden on

national banks for reporting known or suspected violations and

suspicious financial transactions. The Agencies anticipate that the new

process will be operational by October 1995.

Proposal

The OCC proposes to revise 12 CFR part 21 as part of its Regulation

Review Program by updating and clarifying the current rule governing

the filing of criminal referral reports, expanding the rule to cover

suspicious financial transactions, implementing the new SAR, and

eliminating current confusing and overly burdensome reporting

requirements. This action should improve reporting of known or

suspected violations and suspicious financial transactions relating to

Federally insured financial institutions while providing uniform data

for entry into the new interagency computer database. The OCC expects

that each of the other Agencies will be making substantially similar

changes contemporaneously.

Subpart B--Suspicious Activity Reports

The principal proposed changes to the OCC's current criminal

referral reporting rules are discussed below in the summary of the

proposed rule's paragraphs. Of particular note are the following: (1)

Raising the mandatory reporting thresholds for criminal offenses,

thereby reducing unnecessary reporting burdens; (2) filing only one

form with a single repository, rather than submitting multiple copies

with several Federal law enforcement and the Agencies, thereby further

reducing reporting burdens; and (3) melding the criminal referral and

suspicious financial transactions reporting requirements of the

Agencies and Treasury into one uniform reporting system, thereby

eliminating duplicative referrals.

The subpart heading has been changed to conform to the name on the

SAR. The current subpart is titled ``Reports of Crimes and Suspected

Crimes.'' The proposed subpart heading, ``Suspicious Activity

Reports,'' conforms to the name of the report.

Section 21.11(a) Purpose and Scope

The proposal clarifies the scope of the current rule. Under the

proposal, the SAR replaces the various criminal referral forms that the

Agencies currently require banks to file; and a bank also will file a

SAR instead of a CTR to report a suspicious financial

transaction.3

\3\ The BSA requires all financial institutions to file CTRs in

accordance with the Department of the Treasury's implementing

regulations (31 CFR part 103). Part 103 requires a national bank to

file a CTR whenever a currency transaction exceeds $10,000. If a

currency transaction exceeds $10,000 and is suspicious, the bank,

under these new requirements, will file both a CTR (reporting the

currency transaction) and a SAR (reporting the suspicious criminal

aspect of the transaction). If a currency transaction equals or is

below $10,000 but is suspicious, the bank will only file a SAR.

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Combining suspicious financial transaction reporting and criminal

referral reporting should reduce confusion, increase the accuracy and

efficiency of reporting, and reduce the burden on banks in reporting

known or suspected violations, including suspicious financial

transactions.

Section 21.11(b) Definitions

Proposed Sec. 21.11(b) defines the following terms: ``FinCEN,''

``institution-affiliated party,'' ``instructions,'' ``known or

suspected violation,'' and ``SAR.'' The definitions should make the

rule easier to interpret and apply.

In particular, the definition of a ``known or suspected violation''

refers to any matter for which a national bank has a basis to believe

that a violation of any Federal criminal statute has occurred, has been

attempted, is occurring, or may occur, coupled with a basis to believe

that a national bank was an actual or potential victim of the criminal

violation, involved in, or used to facilitate the criminal violation.

The definition supplants current Sec. 21.11(i), which explains the term

``suspected.''

Section 21.11(c) Reports Required

Proposed Sec. 21.11(c), which replaces current Sec. 21.11(b),

clarifies and expands the provision that requires a bank to file a

completed SAR. This provision raises the dollar thresholds that trigger

a filing requirement. It also modifies the scope of events that a

national bank must report by using the new term ``known, or suspected

violation,'' which is defined at Sec. 21.11(b)(4), and by requiring

that a national bank file a SAR to report a suspicious financial

transaction.

Under the current rule, the OCC requires a bank to file a criminal

referral form with many different Federal agencies. The proposal, which

replaces all other requirements for filing criminal referrals and

suspicious financial transactions, requires a bank to file only a

single SAR at one location, rather than the multiple copies of the

criminal referral form that must now be filed with various Federal

agencies.

Under proposed Sec. 21.11(c), a national bank effectively files a

SAR with all appropriate Federal law enforcement agencies by sending a

single copy of the SAR to FinCEN, whose address will be printed on the

SAR.

FinCEN will input the information contained on the SARs into a

newly created database that FinCEN will maintain. This process meets

the regulatory requirement that a bank refer any known or suspected

criminal violation to the various Federal law enforcement agencies. The

database will enhance Federal law enforcement and supervisory agencies'

ability to track, investigate, and prosecute individuals suspected of

violating Federal criminal law.

This change ensures that all SARs are placed in the database at

FinCEN and that the information is made available on computer to the

appropriate law enforcement and supervisory agencies as quickly as

possible. This change will reduce the filing burdens of national banks.

The proposal removes Sec. 21.11(b)(1), which now requires national

banks to report any mysterious disappearance or unexplained shortage of

bank funds, because it would be redundant in light of proposed

Sec. 21.11(c)(3). In instances where criminal activity is suspected in

connection with any disappearance or shortage of bank funds,

Sec. 21.11(c)(3) requires a national bank to file a SAR.

The proposal modifies current Sec. 21.11(b)(2), which requires

reporting of known or suspected criminal activity involving bank

insiders. The proposal replaces current Sec. 21.11(b)(2) with

21.11(c)(1) and describes suspects who are bank personnel more

precisely. Specifically, the proposal replaces ``responsible bank

personnel'' with ``directors, officers, employees, agents, or other

institution-affiliated parties.'' The proposal, however, does not

change the requirement that a bank file a SAR, regardless of the dollar

amount involved, whenever it has a substantial basis for believing that

a bank insider has violated a Federal criminal statute.

The proposal modifies current Sec. 21.11(b)(3), which requires

reporting of known or suspected criminal activity when a bank has a

substantial basis for identifying a non-insider suspect where bank

funds or other assets involve or aggregate $1,000 or more. Proposed

Sec. 21.11(c)(2), which replaces current Sec. 21.11(b)(3), raises the

reporting threshold to $5,000.

The proposal also modifies current Sec. 21.11(b)(4), which requires

banks to report any known or suspected criminal violation involving

$5,000 or more where the bank has no substantial basis for identifying

a suspect. Specifically, proposed Sec. 21.11(c)(3), which replaces

current Sec. 21.11(b)(4), raises the dollar reporting threshold from

$5,000 to $25,000.

Proposed Sec. 21.11(c)(4) requires a national bank to report any

financial transaction, regardless of the dollar amount, that: (1) the

bank suspects involved funds derived from illicit activity, was

conducted for the purpose of hiding or disguising funds from illicit

activity, or in any way violated the money laundering statutes (18

U.S.C. 1956 and 1957); (2) the bank suspects was potentially designed

to evade the reporting or recordkeeping requirements of the BSA (31

U.S.C. 5311 through 5330); or (3) the bank believes to be suspicious

for any reason.

Section 21.11(d) Time for Reporting

Proposed Sec. 21.11(d), which replaces current Sec. 21.11(c), sets

forth the time requirements a bank must meet when filing a SAR. The

proposal does not substantively change the current requirements.

Under current Sec. 21.11(e), ``Manner of Reporting,'' a bank may

file the appropriate criminal referral form in several ways, including

submitting a photocopy or facsimile of the appropriate form. Under the

proposal, a bank may file a SAR by photocopy and also by magnetic

means, such as by a computer disk. However, FinCEN will not be able to

receive SARs by facsimile machine. In the future, the OCC anticipates

that a bank will be able to file a SAR electronically.

The Agencies, working with FinCEN, are developing computer software

to assist banks in preparing and filing SARs. The software will allow a

bank to complete a SAR, to save the SAR on its computers, and to print

a hard copy of the SAR for its own records. The computer software will

also enable a bank to file a SAR using various forms of magnetic media,

such as computer disk or magnetic tape. The OCC will make the software

available to all national banks. A bank, of course, may complete and

file a SAR using a printed form, without using this software, if it so

desires.

Because the permitted methods of filing the SAR may change, the OCC

has removed current Sec. 21.11(e). The permissible methods of filing

the SAR will be stated in the instructions to the SAR.

Section 21.11(e) Reports to State and Local Authorities

Proposed Sec. 21.11(e), which replaces current Sec. 21.11(d),

modifies the scope of this provision slightly. Proposed Sec. 21.11(e)

encourages national banks to file SARs with State and local law

enforcement agencies where appropriate. Proposed Sec. 21.11(e)

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removes the unnecessary reference to Federal law.

Section 21.11(f) Retention of Records

Proposed Sec. 21.11(f) requires a bank to retain a copy of the SAR

and the original of any related documentation relating to a SAR for a

period of ten years. The current rule is silent on this issue. However,

the current criminal referral forms require a bank to submit copies of

all related documentation when it files a criminal referral.

The new SAR reduces this burden by eliminating altogether the

requirement to submit underlying documentation in connection with a

criminal referral. Instead, the proposal requires that the

documentation be identified and treated as filed with the SAR and that

the bank maintain the documentation, along with a copy of the SAR, for

ten years from the submission date. This time frame corresponds with

the statutes of limitations for most Federal criminal statutes

involving financial institutions.

This approach ensures that Federal law enforcement agencies and the

Agencies, upon request, have access to any documentation necessary to

prosecute a violation or pursue an administrative action by requiring

banks to preserve underlying documentation for ten years.

Section 21.11(g) Exemptions

Proposed Sec. 21.11(g), which replaces current Sec. 21.11(f), does

not substantively revise this provision.

Section 21.11(h) Notification of the Board of Directors

Proposed Sec. 21.11(h), which replaces current Sec. 21.11(g),

reduces the burden the current rule places on boards of directors to

review criminal referrals. Under the current rule, each national bank

must have procedures that ensure that the bank's board of directors is

notified of each criminal referral before the next board meeting.

The proposal does not require a bank to have specific procedures

for notifying its board of directors of a SAR. In addition, the

proposal permits the management of the bank to notify either the board

of directors or a committee of directors or executive officers

designated by the board to receive notice of the filing of a SAR.

The OCC intends that each national bank maintain appropriate

mechanisms to ensure that its board of directors can be informed

promptly of SARs when appropriate. However, the OCC recognizes that

board review of all SAR filings is impracticable in some cases.

Therefore, under the proposal, the OCC gives each bank discretion to

establish reporting systems appropriate for the particular institution.

The proposal also ensures, however, that if the bank elects to

provide notice to a committee rather than the entire board, the bank

may not give notice of a SAR filing to any director or officer who is a

suspect in the known or suspected violation. The proposal also requires

management to notify the entire board of directors, except the suspect,

when an executive officer or director is a suspect.

Section 21.11(i) Compliance

The proposal changes the heading of the paragraph from

``Penalties'' to ``Compliance'' to reflect better the range of informal

and formal supervisory actions available to the Agencies. The proposal

clarifies that the OCC treats a national bank's failure to comply with

reporting requirements like any other violation of law or regulation,

which may result in supervisory actions, including enforcement actions.

The current rule, at Sec. 21.11(h) (Penalties), appears to set a

standard for penalties (willful failure to file or careless disregard

in filing reports), that is inconsistent with the applicable statutory

standard for violation of an agency regulation. This proposed change

conforms the OCC's rules with the rules of the Board of Governors of

the Federal Reserve System and the Federal Deposit Insurance

Corporation.

Section 21.11(j) Obtaining the SAR

Proposed Sec. 21.11(j) states that SARs may be obtained from the

appropriate OCC District Office at the address listed in 12 CFR part 4.

The current rule does not contain a comparable instruction.

Section 21.11(k) Confidentiality of SARs

The proposal preserves the confidential nature of criminal referral

reports by stating that a SAR and the information contained in a SAR

are confidential.

Comments

The OCC invites public comment on all aspects of this proposal.

DERIVATION TABLE FOR 12 CFR PART 21

This table directs readers to the provisions of the current 12 CFR

part 21.11 on which the revised 12 CFR part 21.11 is based.

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Revised provision Current provision Comments

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Sec. 21.11(a)............. Sec. 21.11(a)............ Modified.

Sec. 21.11(b)(1).......... - - -..................... Added.

Sec. 21.11(b)(2).......... - - -..................... Added.

Sec. 21.11(b)(3).......... - - -..................... Added.

Sec. 21.11(b)(4).......... Derived in part from Sec. Added.

21.11(i).

Sec. 21.11(b)(5).......... - - -..................... Added.

Sec. 21.11(c)(1).......... Sec. 21.11(b)(2)......... Modified.

Sec. 21.11(c)(2).......... Sec. 21.11(b)(3)......... Modified.

Sec. 21.11(c)(3).......... Sec. 21.11(b)(1) & (4)... Modified.

Sec. 21.11(c)(4).......... Derived in part from the Added.

OCC's current criminal

referral forms.

Sec. 21.11(d)(1).......... Sec. 21.11(c)(1) & (3)... Modified.

Sec. 21.11(d)(2).......... Sec. 21.11(c)(2)......... Modified.

Sec. 21.11(e)............. Sec. 21.11(d)............ Modified.

Sec. 21.11(f)............. - - -..................... Added.

Sec. 21.11(g)(1).......... Sec. 21.11(f)(1)......... Modified.

Sec. 21.11(g)(2).......... Sec. 21.11(f)(2)......... Modified.

Sec. 21.11(h)(1).......... Sec. 21.11(g)............ Modified.

Sec. 21.11(h)(2).......... - - -..................... Added.

Sec. 21.11(i)............. Sec. 21.11(h)............ Modified.

Sec. 21.11(j)............. - - -..................... Added.

Sec. 21.11(k)............. - - -..................... Added.

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Regulatory Flexibility Act

Pursuant to section 605(b) of the Regulatory Flexibility Act, the

OCC hereby certifies that this proposed rule will not have a

significant economic impact on a substantial number of small entities.

This proposal primarily reorganizes the process for making criminal

referrals and has no material impact on national banks, regardless of

size. Accordingly, a regulatory flexibility analysis is not required.

Paperwork Reduction Act

The collection of information contained in this notice of proposed

rulemaking have been submitted to the Office of Management and Budget

for review in accordance with the Paperwork Reduction Act of 1980 (PRA)

(44 U.S.C. 3504(h)). Comments on the collection of information should

be sent to the Office of Management and Budget (OMB), Paperwork

Reduction Project (1557-0180), Washington, DC 20503, with copies to the

Legislative and Regulatory Activities Division (1557-0180), Office of

the Comptroller of the Currency, 250 E Street, SW, Washington, DC

20219.

The collection of information in this proposed rule is limited to

the retention of records and is found in 12 CFR 21.11(f), which

requires national banks to retain copies of all documentation

supporting a SAR for ten years. The SAR will be submitted to OMB

separately for PRA review. The OCC requires banks to retain this

information to ensure that law enforcement and supervisory agencies

have access to the documentation necessary to prosecute a violation or

pursue an administrative action. The likely respondents are banks.

Estimated total annual recordkeeping burden: 5,400 hours.

The estimated annual burden per recordkeeper varies from less than

one hour to 1,300 burden hours, depending on individual circumstances,

with an average of 1.8 hours.

Estimated number of recordkeepers: 3,000.

Executive Order 12866

The OCC has determined that this document is not a significant

regulatory action under Executive Order 12866.

Unfunded Mandates Act of 1995 Statement

Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law

104-4 (Unfunded Mandates Act) (signed into law on March 22, 1995)

requires that an agency prepare a budgetary impact statement before

promulgating a rule that includes a Federal mandate that may result in

expenditure by State, local, and tribal governments, in the aggregate,

or by the private sector, of $100 million or more in any one year. If a

budgetary impact statement is required, section 202 of the Unfunded

Mandates Act also requires an agency to identify and consider a

reasonable number of regulatory alternatives before promulgating a

rule. The OCC has determined that it is not required to prepare a

written statement under section 202 and has concluded that, on balance,

this proposal provides the most cost-effective and least burdensome

alternative to achieve the objectives of the rule.

List of Subjects in 12 CFR Part 21

Bank Secrecy Act, Check kiting, Criminal referrals, Criminal

transactions, Currency, Defalcations, Embezzlement, Insider abuse,

Money laundering, National banks, Reporting and recordkeeping

requirements, Security measures, Theft.

Authority and Issuance

For the reasons set out in the preamble, part 21 of chapter I of

title 12 of the Code of Federal Regulations is proposed to be amended

to read as follows:

PART 21--MINIMUM SECURITY DEVICES AND PROCEDURES, REPORTS OF

SUSPICIOUS ACTIVITIES, AND BANK SECRECY ACT COMPLIANCE PROGRAM

1. The heading for part 21 is revised as set forth above.

2. The authority citation for part 21 continues to read as follows:

Authority: 12 U.S.C. 93a, 1818, 1881-1884, and 3401-3422.

3. Subpart B of part 21 is revised to read as follows:

Subpart B--Reports of Suspicious Activities

Sec. 21.11 Suspicious Activity Report.

(a) Purpose and scope. This section ensures that national banks

file a Suspicious Activity Report when they detect a known or suspected

violation of Federal law or a suspicious financial transaction. This

section applies to all national banks as well as any Federal branches

and agencies of foreign banks licensed or chartered by the OCC.

(b) Definitions. For the purposes of this section:

(1) FinCEN means the Financial Crimes Enforcement Network of the

Department of the Treasury.

(2) Institution-affiliated party means any institution-affiliated

party as that term is defined in sections 3(u) and 8(b)(5) of the

Federal Deposit Insurance Act (12 U.S.C. 1813(u) and 1818(b)(5)).

(3) Instructions means the instructions on the SAR.

(4) Known or suspected violation means any matter for which there

is a basis to believe that a violation of a Federal criminal statute

(including a pattern of criminal violations) has occurred or has been

attempted, is occurring, or may occur, and there is a basis to believe

that a national bank was an actual or potential victim of the criminal

violation, involved in, or used to facilitate the criminal violation.

(5) SAR means a Suspicious Activity Report.

(c) SARs required. A national bank shall file a SAR with the

appropriate Federal law enforcement agencies and Treasury and in

accordance with the Instructions, by sending a completed SAR to FinCEN

in the following circumstances:

(1) Whenever the national bank detects a known or suspected

violation of Federal criminal law and has a substantial basis to

believe that one of its directors, officers, employees, agents, or

other institution-affiliated parties committed or aided in the

commission of the violation;

(2) Whenever the national bank detects a known or suspected

violation of Federal criminal law, there is an actual or potential loss

to the national bank (before reimbursement or recovery) aggregating

$5,000 or more, and the bank has a substantial basis for identifying a

possible suspect or group of suspects, where none of the suspects are

included in paragraph (c)(1) of this section;

(3) Whenever the national bank detects a known or suspected

violation of Federal criminal law, there is an actual or potential loss

to the national bank (before reimbursement or recovery) aggregating

$25,000 or more, and the bank has no substantial basis for identifying

a possible suspect or group of suspects; or

(4) Whenever a financial transaction is conducted, or attempted, at

the national bank and:

(i) The bank suspects that the transaction involved funds derived

from illicit activity, was conducted for the purpose of hiding or

disguising funds from illicit activity, or in any way violated the

money laundering statutes (18 U.S.C. 1956 and 1957);

(ii) The bank suspects that the transaction was potentially

designed to evade the reporting or recordkeeping requirements of the

Bank Secrecy Act (31 U.S.C. 5311 through 5330) or regulations issued

thereunder; or

[[Page 34481]]

(iii) The bank believes that the transaction was suspicious for any

reason.

(d) Time for reporting.--(1) Generally. A national bank shall file

the SAR required by paragraph (c) of this section within 30 calendar

days after the date of initial detection of an act described in

paragraph (c) of this section, and, in situations involving violations

requiring immediate attention, such as when a reportable violation is

on-going, the financial institution shall immediately notify, by

telephone, the appropriate law enforcement authority in addition to

filing a timely SAR.

(2) No suspect identified. If no suspect was identified on the date

of detection of an act described in paragraph (c) of this section, the

national bank may delay filing a SAR for an additional 30 calendar days

after identification of a suspect, but in no case may a national bank

delay filing a SAR more than 60 calendar days after the date of

detecting an act described in paragraph (c) of this section.

(e) Reports to State and local authorities. A national bank is

encouraged to file a copy of the SAR with State and local law

enforcement agencies where appropriate.

(f) Retention of records. A national bank shall maintain a copy of

any SAR filed and the original of any related documentation for a

period of ten years from the date of filing the SAR, unless the OCC

informs the bank in writing that the bank may discard the materials

sooner. A national bank shall make all supporting documentation

available to appropriate law enforcement agencies upon request.

Supporting documentation shall be identified and treated as filed with

the SAR.

(g) Exemptions. (1) A bank need not file a SAR for a robbery or

burglary committed or attempted that is reported to appropriate law

enforcement authorities.

(2) A bank need not file a SAR for lost, missing, counterfeit, or

stolen securities if it files a report pursuant to the reporting

requirements of 17 CFR 240.17f-1.

(h) Notification to board of directors--(1) Generally. Whenever a

national bank files a SAR pursuant to this section, the management of

the bank shall promptly notify its board of directors, or a committee

of directors or executive officers designated by the board of directors

to receive notice.

(2) Suspect is a director or executive officer. If the bank files

the SAR pursuant to paragraph (c) of this section and the suspect is a

director or executive officer, the bank may not notify the suspect,

pursuant to 31 U.S.C. 5318(g)(2), but shall notify all directors who

are not suspects.

(i) Compliance. Failure to file a SAR in accordance with this

section and the Instructions may subject the national bank, its

directors, officers, employees, agents, or other institution-affiliated

parties to supervisory actions including enforcement actions.

(j) Obtaining SARs. A national bank may obtain SARs and the

Instructions from the appropriate OCC District Office listed in 12 CFR

part 4.

(k) Confidentiality of SARs. SARs are confidential. Any person

subpoenaed or otherwise requested to disclose a SAR or the information

contained in a SAR shall decline to produce the information citing this

section, applicable law (e.g., 31 U.S.C. 5318(g)), or both.

Dated: June 27, 1995.

Eugene A. Ludwig,

Comptroller of the Currency .

[FR Doc. 95-16240 Filed 6-30-95; 8:45 am]

BILLING CODE 4810-33-P