SUSPICIOUS ACTIVITY REPORTS

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Text

The

SAR

Activity

Review

Trends

Tips &

Issues

Published under the auspices of the Bank Secrecy Act Advisory Group

October 2000

Table of Contents

Introduction ......................................................................1

Section 1 –SAR Statistics ...................................................2

Section 2 –National Trends and Analyses .........................11

1. Highlighted Trend .............................11

2. Other Notable Trends ........................12

3. Other SAR Analysis Issues ................14

Section 3 –Law Enforcement Cases..................................16

Section 4 –Tips on SAR Form Preparation and Filing ......24

Section 5 –Issues and Guidance........................................27

Section 6 –Industry Forum ..............................................29

Feedback Form ................................................................30

Introduction

The SAR Activity Review—Trends, Tips and Issues is the product of a continuing

collaboration among the nation’s financial institutions, federal law enforcement,

and regulatory agencies to provide meaningful information about the preparation,

use, and utility of Suspicious Activity Reports (SARs) filed by financial

institutions.

This publication reflects the recognition of both the relevant government agencies

and the nation’s financial institutions of the desirability of a continuing public

exchange of information about the SAR System and its results. These include,

among others, the American Bankers Association; Independent Bankers Associa-

tion; Independent Community Bankers of America; American Institute of Certi-

fied Public Accountants; Securities Industry Association; Non-Bank Funds

Transmitters Group; Federal Reserve Board; Office of the Comptroller of the

Currency; Federal Deposit Insurance Corporation; Office of Thrift Supervision;

National Credit Union Administration; Federal Bureau of Investigation; U.S

ent Bankers Associa-

tion; Independent Community Bankers of America; American Institute of Certi-

fied Public Accountants; Securities Industry Association; Non-Bank Funds

Transmitters Group; Federal Reserve Board; Office of the Comptroller of the

Currency; Federal Deposit Insurance Corporation; Office of Thrift Supervision;

National Credit Union Administration; Federal Bureau of Investigation; U.S.

Department of Justice’s Asset Forfeiture and Money Laundering Section; U.S.

Department of Justice’s Criminal Division; U.S. Department of Treasury’s Office

of Enforcement; U.S. Customs Service; U.S. Secret Service; Internal Revenue

Service; and Financial Crimes Enforcement Network.

The SAR Activity Review will be published semiannually in October and April,

beginning in October 2000. Analytic reports, issue papers, and other publica-

tions related to or resulting from information contained in the Review may be

published separately.

Questions, comments or other feedback concerning the SAR Activity Review

will be most welcome. Where possible, Email contact points are provided for

each section of the Review. A feedback sheet is included as the last page.

Comments may also be addressed to either or both of the SAR Activity Review

project co-chairpersons:

John J. Byrne

David M. Vogt

Senior Counsel & Compliance Mgr. Assistant Director

American Bankers Assoc.

Financial Crimes Enforcement Network

(ABA)

(FinCEN)

1120 Connecticut Ave. NW

2070 Chain Bridge Road, Suite 200

Washington, DC 20036

Vienna, VA 22182

(202) 663-5029 (phone)

(703) 905-3525 (phone)

(202) 828-5052 (fax)

addressed to either or both of the SAR Activity Review

project co-chairpersons:

John J. Byrne

David M. Vogt

Senior Counsel & Compliance Mgr. Assistant Director

American Bankers Assoc.

Financial Crimes Enforcement Network

(ABA)

(FinCEN)

1120 Connecticut Ave. NW

2070 Chain Bridge Road, Suite 200

Washington, DC 20036

Vienna, VA 22182

(202) 663-5029 (phone)

(703) 905-3525 (phone)

(202) 828-5052 (fax)

(703) 905-3698 (fax)

jbyrne@aba.com

vogtd@fincen.treas.gov

Section 1

Suspicious Activity Report Statistics1

1 April 1996 - 31 August 2000

The statistics on the following pages relate to SARs filed since April 1996 by

depository institutions (i.e., banks, thrifts, and credit unions). A small part of the

total volume relates to reports filed by affiliates of depository institutions or, in

some cases, filed voluntarily by brokers and dealers in securities, money services

businesses, or gaming businesses.

Note: SAR data is continuously updated as additional forms are filed and processed.

For this reason, there may be minor discrepancies between the statistical figures

contained in various portions of this report.

Chart 1

SAR Filings by Year2 and Month

Month

Number of Filings

1996

1997

1998

1999

2000

January

261

5794

7600

8621

10789

February

5522

7107

9950

9910

March

6967

8718

10986

14923

April

2022

7628

8293

9759

11928

May

3315

6814

7646

10625

13364

June

5756

6414

8163

10715

13908

July

6882

6844

9061

8759

12031

August

6785

6930

7696

10014

13500

September

6139

7221

8625

8735

October

7269

7486

8223

10049

November

5060

6384

7577

10540

December

6297

7593

8223

11753

49,786

81,597

96,932 120,506 100,3533

Total Filings 449,177

1 Statistics generated for this study were based on the Record Control Number of each record within the SAR

system. Numeric discrepancies between total number of filings and the combined number of filings of States

and/or territories is a result of multiple filers listed on one or more SARs

6297

7593

8223

11753

49,786

81,597

96,932 120,506 100,3533

Total Filings 449,177

1 Statistics generated for this study were based on the Record Control Number of each record within the SAR

system. Numeric discrepancies between total number of filings and the combined number of filings of States

and/or territories is a result of multiple filers listed on one or more SARs.

2 SARs were erroneously filed for the years 1937 (1); 1988 (1); and 1994 (1).

3 Represents those SARs currently in the system as of 31 August 2000.

Subtotal

State/Territory

Total Filings

1996 1997 1998 1999 20005

Alabama

352

451

407

528

407

Alaska

132

157

240

American Samoa

Arizona

1817

3100

2428

2505

2494

Arkansas

197

335

298

430

325

California

12217 18151 23370 25042 27354

Colorado

844

1081

1480

1702

1155

Connecticut

398

785

950

4449

3228

Delaware

1097

1426

1664

2006

1888

District of Columbia

166

234

281

285

292

Fed. States Micronesia

Florida

3971

6637

7131

7969

6642

Georgia

869

1504

1688

2205

1799

Guam

Hawaii

390

535

553

575

475

Idaho

106

155

124

186

262

Illinois

1471

2768

2899

3866

3112

Indiana

556

769

969

1186

881

Iowa

251

363

326

427

288

Kansas

254

284

363

555

305

Kentucky

262

388

426

754

516

Louisiana

480

594

714

926

1311

Maine

115

186

194

213

147

Marshall Islands

Maryland

615

937

1201

1537

1371

Massachusetts

857

1402

1848

213

1929

Michigan

1119

1717

1858

2753

2377

Minnesota

950

2263

2212

2513

1866

Mississippi

152

251

222

283

343

Missouri

604

960

1153

1215

922

Montana

107

101

156

130

Nebraska

178

248

316

371

391

Nevada

662

1488

2009

2062

2135

New Hampshire

244

503

419

573

255

New Jersey

888

1536

2437

3450

2536

Chart 2

SAR Filings4 by States & Territories

(Matrix)

4 SARs were erroneously filed for the years 1937 (1-GA); 1988 (1); and 1994 (1-CA).

5 Represents those SARs currently in the system as of 31 August 2000.

343

Missouri

604

960

1153

1215

922

Montana

107

101

156

130

Nebraska

178

248

316

371

391

Nevada

662

1488

2009

2062

2135

New Hampshire

244

503

419

573

255

New Jersey

888

1536

2437

3450

2536

Chart 2

SAR Filings4 by States & Territories

(Matrix)

4 SARs were erroneously filed for the years 1937 (1-GA); 1988 (1); and 1994 (1-CA).

5 Represents those SARs currently in the system as of 31 August 2000.

New Mexico

220

237

286

314

247

New York

5259

9679 13441 17931 11710

North Carolina

893

1625

2119

2392

2042

North Dakota

215

213

122

148

Northern Mariana Islands

Ohio

903

1721

2230

2297

1897

Oklahoma

379

497

506

698

525

Oregon

555

1129

1201

1807

1699

Overseas

Pennsylvania

1452

2482

2544

3571

2244

Puerto Rico

146

562

456

316

714

Rhode Island

155

290

285

503

314

South Carolina

279

563

640

669

473

South Dakota

316

430

574

675

163

Tennessee

525

802

922

998

973

Texas

3805

4906

6231

7606

6286

U.S. Virgin Islands

Unknown/Blank

318

205

Utah

374

882

1114

1384

1476

Vermont

Virginia

598

1206

1564

1537

1221

Washington

753

1766

2192

3147

2334

West Virginia

109

151

680

737

137

Wisconsin

360

552

677

755

614

Wyoming

State/Territory

Total Filings

Chart 2 (cont.)

Rank State/Territory

Filings Percentage6

(Overall)

California

106134

23.5%

New York

58020

13%

Florida

32350

7.2%

Texas

28834

6.5%

Illinois

14116

3.15%

Arizona

12344

2.75%

Pennsylvania

12293

2.75%

New Jersey

10847

2.4%

Washington

10192

2.25%

Michigan

9824

2.2%

Connecticut

9810

2.2%

Minnesota

9804

2.2%

North Carolina

9071

Ohio

9048

Nevada

8356

1.85%

Delaware

8081

1.8%

Georgia

8065

1.8%

Oregon

6391

1.4%

Colorado

6262

1.4%

Massachusetts

6249

1.4%

Virginia

6126

1.35%

Maryland

5661

1.25%

Utah

5230

1.15%

Missouri

4854

Indiana

4361

Less than 1%

Tennessee

4220

Less than 1%

Louisiana

4025

Less than 1%

Wisconsin

2958

Less than 1%

South Carolina

2624

Less than 1%

Oklahoma

2605

Nevada

8356

1.85%

Delaware

8081

1.8%

Georgia

8065

1.8%

Oregon

6391

1.4%

Colorado

6262

1.4%

Massachusetts

6249

1.4%

Virginia

6126

1.35%

Maryland

5661

1.25%

Utah

5230

1.15%

Missouri

4854

Indiana

4361

Less than 1%

Tennessee

4220

Less than 1%

Louisiana

4025

Less than 1%

Wisconsin

2958

Less than 1%

South Carolina

2624

Less than 1%

Oklahoma

2605

Less than 1%

Hawaii

2528

Less than 1%

Kentucky

2346

Less than 1%

Puerto Rico

2194

Less than 1%

South Dakota

2158

Less than 1%

Alabama

2145

Less than 1%

New Hampshire

1994

Less than 1%

Chart 3

SAR Filings Since 1996 Ranked by States & Territories

6 All percentages are approximate.

West Virginia

1814

Less than 1%

Kansas

1761

Less than 1%

Iowa

1655

Less than 1%

Arkansas

1585

Less than 1%

Rhode Island

1547

Less than 1%

Nebraska

1504

Less than 1%

New Mexico

1304

Less than 1%

District of Columbia

1258

Less than 1%

Mississippi

1251

Less than 1%

Maine

855

Less than 1%

Idaho

833

Less than 1%

North Dakota

740

Less than 1%

Alaska

651

Less than 1%

Unknown/Blank

594

Less than 1%

Montana

565

Less than 1%

Vermont

316

Less than 1%

Guam

300

Less than 1%

Wyoming

200

Less than 1%

Northern Mariana

Islands

115

Less than 1%

Overseas

Less than 1%

U.S. Virgin Islands

Less than 1%

American Samoa

Less than 1%

Fed. States of

Micronesia

Less than 1%

Marshall Islands

Less than 1%

Chart 3 (cont.)

Rank State/Territory

Filings Percentage

(Overall)

Less than 1%

Guam

300

Less than 1%

Wyoming

200

Less than 1%

Northern Mariana

Islands

115

Less than 1%

Overseas

Less than 1%

U.S. Virgin Islands

Less than 1%

American Samoa

Less than 1%

Fed. States of

Micronesia

Less than 1%

Marshall Islands

Less than 1%

Chart 3 (cont.)

Rank State/Territory

Filings Percentage

(Overall)

Rank

Violation

Filings

Percentage7

(Overall)

BSA/Structuring/Money Laundering 221402

45.3%

Check Fraud

64237

13.15%

Other

35646

7.3%

Counterfeit Check

25670

5.25%

Defalcation/Embezzlement

22700

4.65%

Credit Card Fraud

21856

4.5%

Unknown/Blank8

18561

3.8%

Check Kiting

18392

3.75%

False Statement

10441

2.15%

Consumer Loan Fraud

10347

2.1%

Mortgage Loan Fraud

10276

2.1%

Mysterious Disappearance

8097

1.65%

Misuse of Position or Self Dealing

7455

1.5%

Commercial Loan Fraud

4301

Less than 1%

Debit Card Fraud

3021

Less than 1%

Wire Transfer Fraud

2737

Less than 1%

Counterfeit Credit/Debit Card

1746

Less than 1%

Counterfeit Instrument (Other)

1326

Less than 1%

Bribery/Gratuity

473

Less than 1%

Computer Intrusion9

Less than 1%

Chart 4

SAR Filings Since 1996 Ranked

by Characterization of Suspicious Activity

7 All percentages are approximate.

8 The Unknown/Blank classification encompasses those alpha and/or numeric characters which

do not correspond to an established violation, fields containing unrelated symbols or nothing

more than carriage returns, or instances where the field is null (void of any data or action).

9 Violation did not appear until Revised June 2000 TD F 90-22.47

cious Activity

7 All percentages are approximate.

8 The Unknown/Blank classification encompasses those alpha and/or numeric characters which

do not correspond to an established violation, fields containing unrelated symbols or nothing

more than carriage returns, or instances where the field is null (void of any data or action).

9 Violation did not appear until Revised June 2000 TD F 90-22.47

Violation 1996 1997 1998 1999 200010

BSA/Structuring/

Money Laundering

20565

35949

47509

61007

56371

Bribery/Gratuity

109

101

Check Fraud

8639

13274

13832

16239

12253

Check Kiting

2747

4298

4037

4061

3249

Commercial Loan Fraud

554

960

905

1080

802

Computer Intrusion

Consumer Loan Fraud

1148

2048

2185

2549

2417

Counterfeit Check

2317

4244

5918

7396

5795

Counterfeit Credit/Debit Card

385

387

182

351

441

Counterfeit Instrument (Other)

212

292

265

321

236

Credit Card Fraud

3375

5083

4383

4938

4077

Debit Card Fraud

245

610

566

721

879

Defalcation/Embezzlement

3136

5306

5260

5179

3819

False Statement

1807

2204

1978

2376

2076

Misuse of Position or Self Dealing

914

1537

1645

2063

1296

Mortgage Loan Fraud

1265

1719

2268

2936

2088

Mysterious Disappearance

1168

1767

1855

1857

1450

Wire Transfer Fraud

284

499

594

772

588

Other

4600

6777

8696

8755

6817

Unknown/Blank

1652

2317

2728

7295

4569

10 Represents those SARs currently in the system as of 31 August 2000.

Chart 5

SAR Filings by Characterization

of Suspicious Activity

(Matrix)

f Position or Self Dealing

914

1537

1645

2063

1296

Mortgage Loan Fraud

1265

1719

2268

2936

2088

Mysterious Disappearance

1168

1767

1855

1857

1450

Wire Transfer Fraud

284

499

594

772

588

Other

4600

6777

8696

8755

6817

Unknown/Blank

1652

2317

2728

7295

4569

10 Represents those SARs currently in the system as of 31 August 2000.

Chart 5

SAR Filings by Characterization

of Suspicious Activity

(Matrix)

Regulator Total Filings by Year

1996

1997 1998 1999 200011

Federal Reserve Board

5486

9676

10798

14656

11790

Federal Deposit

Insurance Corporation

9839

14908

14735

15883

12818

Office of the Comptroller

of the Currency

25072

41722

51879

64946

59299

Office of Thrift Supervision

2071

2624

2846

3041

2159

National Credit Union Association

5760

9133

11463

12316

9798

Unspecified12

1558

3534

5211

9664

6031

11 Represents those SARs currently in the system as of 31 August 2000.

12 Unspecified regulator may include those financial and/or non-bank financial institutions not

regulated by one of the five agencies listed above. Such entities include, but are not limited to

Money Services Businesses, Insurance Companies and Securities Brokers/Dealers.

Chart 6

SAR Filings by Primary Federal Regulator

Agency Referrals

Federal Law Enforcement

Federal Bureau of Investigation

10849

Internal Revenue Service

6937

United States Secret Service

3522

United States Postal Inspection Service

1396

United States Attorney’s Office

167

Department of the Treasury

117

United States Customs Service

Department of State

Naval Criminal Investigative Service

Drug Enforcement Administration

Detroit Computing Center

Department of Justice

Total Federal Law Enforcement

23,189

Federal Regulatory Agencies

Federal Deposit Insurance Corporation

Federal Reserve Board

Office of the Comptroller of the Currency

ted States Customs Service

Department of State

Naval Criminal Investigative Service

Drug Enforcement Administration

Detroit Computing Center

Department of Justice

Total Federal Law Enforcement

23,189

Federal Regulatory Agencies

Federal Deposit Insurance Corporation

Federal Reserve Board

Office of the Comptroller of the Currency

Total Regulatory Agencies

106

State and Local Law Enforcement

City Police Department

9424

County/Parish

1391

State Police

598

State/District Attorney’s Office

207

State (Other)

Total State and Local Law Enforcement

11,661

Other

594

Unspecified

486

Chart 7

Direct Referrals of SARs by Financial Institutions

to Law Enforcement13 & Regulatory Agencies

13 Figures reflect those entities receiving ten (10) or more SAR referrals. Some SARs may

reference making referrals to multiple law enforcement agencies.

Section 2

National Trends and Analyses

This section of the SAR Activity Review outlines examples and patterns of suspi-

cious activity reported in the national database. Some of the information has been

published previously, but it is included here for ease of reference.

1. Highlighted Trend

Shell Company Activity

SARs filed during the first half of 2000 reflect several complexes of activity

involving suspicious wire transfer patterns. As reported in the SAR narratives,

many of these suspicious wire transfer patterns involve shell companies—i.e.,

corporations that engage in no apparent business activity and that only serve as a

conduit for funds or securities. Often the activities also involve foreign transac-

tors located in jurisdictions considered non-compliant or problematic, as reported

in FinCEN Advisories

sfer patterns. As reported in the SAR narratives,

many of these suspicious wire transfer patterns involve shell companies—i.e.,

corporations that engage in no apparent business activity and that only serve as a

conduit for funds or securities. Often the activities also involve foreign transac-

tors located in jurisdictions considered non-compliant or problematic, as reported

in FinCEN Advisories.

Several complexes of suspicious wire transfer transactions have been observed,

each involving geographically complicated wire transfer routing (originator,

beneficiary, or transit/intermediary banks) and/or geographically complex origina-

tor and beneficiary activity. More than $500 million in suspicious wire transfers

have been reported in connection with this type of activity.

These complexes display common patterns of underlying suspicious activity:

A lack of evidence of legitimate business activity, or any business operations

at all, undertaken by many of the companies;

Unusually large numbers of wire transfers (several thousand wires totaling

more than $500 million);

Transactions conducted in bursts of activities within a short period of time;

Beneficiaries maintaining accounts at foreign banks that have been the subject

of previous SAR reporting due to suspicious wire transfer activity;

Reappearing beneficiary banks based in offshore locations, the account of at

least one of which has been closed by the reporting financial institution due to

overall suspect activity.

Financial institutions should carefully review transactions involving companies

registered in the United States when those companies are unknown to the finan-

cial institution, and:

cious wire transfer activity;

Reappearing beneficiary banks based in offshore locations, the account of at

least one of which has been closed by the reporting financial institution due to

overall suspect activity.

Financial institutions should carefully review transactions involving companies

registered in the United States when those companies are unknown to the finan-

cial institution, and:

represent themselves as financial institutions, or

appear as groupings of companies tied to the same set of transactors, or

are co-located at the same address or have a common resident agent, or

are involved in unduly complex patterns of transactions, especially multiple

transactors and large volume wire transfers, or

are involved in patterns of circular transactions, or

are involved in transactions originating in or destined for non-compliant or

other problematic jurisdictions identified in FinCEN Advisories, or

appear in association with transactions conducted in bursts and even currency

amounts, or

engage in transactions inconsistent with the stated business purpose, or

are bearer share corporations, or

cannot be identified as legitimate companies through normal business verifi-

cation checks, or

cannot or will not provide adequate information about business activities

when asked.

2. Other Notable Trends

Possible Reflections of Russian Criminal Activity

Law enforcement information indicates a steady increase in Russian organized

criminal activity in the U.S. since the early 1990s. Senior law enforcement

officials requested assistance in understanding the scope of financial activity that

may be linked to Russian Organized Crime groups in the U.S. An analysis of

Bank Secrecy Act (BSA) data indicates that SARs filed by U.S. financial institu-

tions for suspected structuring/money laundering activity involving Russian

transactors, owners or citizenship averages approximately $200 million per year

officials requested assistance in understanding the scope of financial activity that

may be linked to Russian Organized Crime groups in the U.S. An analysis of

Bank Secrecy Act (BSA) data indicates that SARs filed by U.S. financial institu-

tions for suspected structuring/money laundering activity involving Russian

transactors, owners or citizenship averages approximately $200 million per year.

A correlation of SARs, Currency Transaction Reports (CTRs) and Currency and

Monetary Instrument Reports (CMIRs) for Russian transactions indicates some

level of financial activity in 45 states, with heavier concentrations in the metro-

politan areas of New York, Boston, Washington D.C., Chicago, Miami, Los

Angeles, San Francisco, and Seattle. There are also indications of unusual pat-

terns of suspicious financial activity in Texas (i.e., San Antonio, Houston, Dallas/

Ft. Worth, El Paso, and along the U.S.-Mexico border).

Increased SAR Reporting Involving Mexico

Law enforcement information and SARs filed by U.S. financial institutions

confirm a shift in suspected money laundering activity involving Mexico. Rather

than transiting through Mexico en route to Colombia or other Central and

South American destinations, a shift has been made toward using techniques and

schemes in which drug proceeds are cycled through Mexico directly back into

the U.S. As reported in SARs, for example, patterns of large wire transactions

($1.5 million or more per transaction) moving funds to U.S. payees from Mexi-

can money exchange houses and other financial institutions have been observed

that may at least, in part, be attributable to changes in the laundering cycle.

Generally speaking, such changes in patterns are believed to stem from the

heightened profile of Mexico-based criminal groups in drug trafficking in the

U.S. which, in turn, creates a corresponding increased threat of money launder-

ing activity linked to Mexico

ouses and other financial institutions have been observed

that may at least, in part, be attributable to changes in the laundering cycle.

Generally speaking, such changes in patterns are believed to stem from the

heightened profile of Mexico-based criminal groups in drug trafficking in the

U.S. which, in turn, creates a corresponding increased threat of money launder-

ing activity linked to Mexico.

Suspicious Activity Reported by Casinos

A review of SARs filed voluntarily with FinCEN by gaming establishments reveals

patterns of suspicious activity in which casino accounts are used to transfer sig-

nificant amounts of funds through non-bank financial transaction channels. The

funds are cashed out by the client or moved to other accounts with minimal or no

gaming activity. SAR filings by casinos located in Connecticut, Illinois, Missis-

sippi, Nevada, and New Jersey during 1998-1999 indicate that wire transfers and

cashiers checks are used to put funds on deposit as credits, or “front money,” for

use by the client for subsequent gambling activity at the casino. All of the SARs

indicate that the client gambles minimally or not at all, and in the majority of the

cases, takes the balance out in cash on the same day or within a matter of days.

(Refer to FinCEN SAR Bulletin Vol. 2, No. 1, August 2000, for additional infor-

mation).

Regional Money Remitter Activity

An analysis of SARs reflects suspicious activity involving money remitters

strongly reminiscent of the money laundering activity that resulted in the issuance

of a Geographic Targeting Order (GTO) for the New York metropolitan area during

the 1990s. The activity reported in the SARs includes structuring, unusually large

and frequent deposits (i.e., cash, checks, third party checks, or money orders) and

unusual wire transfer activity which is atypical for the businesses involved.

Update on Suspicious Automated Teller Machine (ATM) Activity

Follow-up analysis of SAR reporting on ATM transactions (see FinCEN SAR

Bulletin Vol

a during

the 1990s. The activity reported in the SARs includes structuring, unusually large

and frequent deposits (i.e., cash, checks, third party checks, or money orders) and

unusual wire transfer activity which is atypical for the businesses involved.

Update on Suspicious Automated Teller Machine (ATM) Activity

Follow-up analysis of SAR reporting on ATM transactions (see FinCEN SAR

Bulletin Vol. 1, No.1, June 1999) confirms a continuing trend in suspicious trans-

actions in which funds are wired to/through a U.S. financial institution from a

foreign source and then withdrawn in cash in a third country using ATMs. SARs

indicate such ATM withdrawals in at least 57 nations, with the highest incidence

in Colombia (408 occurrences), followed by Venezuela (145), Mexico (119), and

Argentina (31). The wire transfers that start the cycle originate primarily in

Switzerland, Italy, Germany, and England. Amounts up to several hundred thou-

sand dollars have been withdrawn over several months using this method.

3. Other SAR Analysis Issues

Role of SARS in High-Risk Money Laundering & Related

Financial Crime Areas

The National Money Laundering Strategy for 200014 established a requirement to

focus anti-money laundering law enforcement resources in “High-Risk Money

Laundering and Related Financial Crime Areas,” or HIFCAs. A HIFCA should be

understood as a geographic area, industry, sector or institution, or group of finan-

cial institutions which is being victimized by, or is particularly vulnerable to,

money laundering and related financial crimes and, therefore, warrants concen-

trated law enforcement efforts at the federal, state and local levels. During 2000,

three metropolitan HIFCAs have been designated: Los Angeles, New York/New

Jersey, and San Juan, Puerto Rico. A fourth HIFCA, reflecting the systemic

problem of cross-border currency movements, was created for the southwest

border areas of Arizona and Texas. Additional designations are expected.

SARs are important to the HIFCA process in two key ways

ederal, state and local levels. During 2000,

three metropolitan HIFCAs have been designated: Los Angeles, New York/New

Jersey, and San Juan, Puerto Rico. A fourth HIFCA, reflecting the systemic

problem of cross-border currency movements, was created for the southwest

border areas of Arizona and Texas. Additional designations are expected.

SARs are important to the HIFCA process in two key ways. First, the number of

SARs filed in a geographic area is used as a factor in identifying the overall scope

of potential financial crime in the area, and in ranking the area for possible

HIFCA designation in comparison to other geographic areas. Second, and even

more importantly, the number of SARs filed provides HIFCA action teams with a

road map to assist in identifying potential criminal financial activity for the

coordinated federal, state and local law enforcement initiatives envisioned by The

National Money Laundering Strategy for 2000.

Real advancements have been made over the past year in building the tools

needed to create such SAR “road maps.” Each HIFCA will have access, through

an on-site FinCEN analyst, to a prototype SAR data-mining capability that

significantly enhances law enforcement’s ability to identify organized criminal

14 The National Money Laundering Strategies of 1999 and 2000 were jointly developed by the

Departments of Justice and Treasury to describe detailed plans to combat money laundering as

required by The Money Laundering and Financial Crimes Strategy Act of 1998, P.L. 105-310

(October 30, 1998). See 31 U.S. Code 5341(b) and 5342(b).

enforcement’s ability to identify organized criminal

14 The National Money Laundering Strategies of 1999 and 2000 were jointly developed by the

Departments of Justice and Treasury to describe detailed plans to combat money laundering as

required by The Money Laundering and Financial Crimes Strategy Act of 1998, P.L. 105-310

(October 30, 1998). See 31 U.S. Code 5341(b) and 5342(b).

financial activity over large geographic areas. HIFCAs will use this new tool to

help guide their anti-money laundering initiatives and to beta test it for wider

distribution to law enforcement.

Non-Compliant Countries—Post Advisory SAR Analysis

In July 2000, FinCEN issued 15 Advisories concerning deficiencies in the anti-

money laundering controls of the following nations—Bahamas, Cayman Islands,

Cook Islands, Dominica, Israel, Lebanon, Liechtenstein, Marshall Islands, Nauru,

Niue, Panama, Philippines, Russian Federation, St. Kitts & Nevis, and St. Vincent

& the Grenadines. Financial institutions were instructed to consider such defi-

ciencies in determining whether transactions involving each of the 15 nations

required the filing of a SAR.

FinCEN is in the process of analyzing SAR filings for each of the designated

nations to determine if the overall volume of SARs and the nature of the suspi-

cious activity have changed as a result of the Advisory process. Feedback on the

results of the post-Advisory analysis will be provided at a subsequent date once

sufficient data has been accumulated to allow a meaningful comparison with the

pre-Advisory baseline information for each of the affected nations.

For questions or comments on Section 2, National Trends and Analyses, please

contact the Office of Strategic Analysis at FinCEN by Email: ora@fincen.treas.gov.

k on the

results of the post-Advisory analysis will be provided at a subsequent date once

sufficient data has been accumulated to allow a meaningful comparison with the

pre-Advisory baseline information for each of the affected nations.

For questions or comments on Section 2, National Trends and Analyses, please

contact the Office of Strategic Analysis at FinCEN by Email: ora@fincen.treas.gov.

Section 3

Law Enforcement Cases

This section of the SAR Activity Review provides law enforcement agencies the

opportunity to summarize investigative activity in which SARs and other BSA

information played an important role in a successful investigation and/or prosecu-

tion of criminal financial activity. Each subsequent issue of the SAR Activity

Review will include new examples based on information received from law

enforcement during the preceding six months.

SAR Filing Uncovers Investment Fraud Scheme

The submission of a SAR filing led to the uncovering of a $28 million invest-

ment fraud scheme in which approximately 140 individuals were victimized. The

subject convinced the victims/investors that he was a successful businessman

who operated many highly profitable business ventures. The subject would make

periodic payments to some investors using monies paid to him by other investors.

He also provided false and misleading reports to the victims/investors about the

performance of their investments. In fact, the subject used the monies paid to

him by the investors to support his lavish lifestyle, gambling, and speculative

stock trades. The subject pled guilty to mail fraud and engaging in monetary

transactions in property derived from specified unlawful activity. He is awaiting

sentencing. (Source: U.S

isleading reports to the victims/investors about the

performance of their investments. In fact, the subject used the monies paid to

him by the investors to support his lavish lifestyle, gambling, and speculative

stock trades. The subject pled guilty to mail fraud and engaging in monetary

transactions in property derived from specified unlawful activity. He is awaiting

sentencing. (Source: U.S. Attorney’s Office, Northern District of California)

SAR Filing Leads to 125-Count Indictment in $2.7 Million

Embezzlement Case

A SAR filing by a credit union in Rapid City, South Dakota was instrumental

in uncovering a massive scheme by individuals to embezzle approximately

$2.7 million from a South Dakota College. The investigation was conducted by

IRS-CID, FBI, the Department of the Interior, and the Department of Education

and it produced a 125-count indictment of seven individuals charged with money

laundering, structuring, conspiracy, obstruction of justice, and tax evasion. The

SAR filing indicated that the defendants were structuring currency deposits in

amounts under $10,000. The primary defendant in the case received a sentence

of 10 years in custody and was ordered to pay restitution in the amount of

$2.6 million. The co-defendants received sentences ranging from 24 months to

97 months in custody. (Source: IRS-Criminal Investigation Division)

SAR Filing Unveils Customs Fraud

A U.S. Customs Service investigation in the Washington, D.C. area was

initiated after a Virginia-based bank reported suspicious currency activity on a

suspected money launderer. The information indicated possible structuring of

financial transactions. The suspect had no visible means of support yet more than

$4 million was deposited in his account and a comparable amount was withdrawn

over a one-year period. A subsequent investigation revealed that the defendants

were engaged in Customs fraud through the overvaluation of Generalized System

of Preferences (GSP) merchandise

e information indicated possible structuring of

financial transactions. The suspect had no visible means of support yet more than

$4 million was deposited in his account and a comparable amount was withdrawn

over a one-year period. A subsequent investigation revealed that the defendants

were engaged in Customs fraud through the overvaluation of Generalized System

of Preferences (GSP) merchandise. Based upon the suspicious referral provided

by the bank, six people were ultimately indicted, arrested, and convicted on

money laundering charges. (Source: U.S. Customs Service)

SAR Filing Uncovers Additional Counterfeit Check Fraud

In a Florida case, a SAR filing led to the identification of additional fraud

perpetrated by a subject already under investigation by special agents within the

U.S. Secret Service’s (USSS) Tampa Field Office. From December 1996 through

May 1997, investigators identified an individual who deposited counterfeit

commercial checks into various bank accounts opened under aliases and then

almost immediately wired the funds from the accounts to Nigeria. Since these

checks were drawn against true bank accounts, several days would pass before the

counterfeit checks were detected. In some cases, the counterfeit checks actually

cleared the bank that the checks were drawn upon. In total, the subject had

deposited and collected on $400,000 in counterfeit commercial checks.

In June of 1997, a financial institution filed a SAR form stating in part that the

subject (using an alias) had opened an account at the bank using a small amount

of money. Just a few days later, $85,000 in commercial checks was deposited

into the account. A short time later, the subject attempted to wire a large portion

of the $85,000 to Nigeria via a bank in New York City. Personnel within the

original bank inquired about the sporadic account activity and the wire transfer,

and as a result, did not wire the funds and identified the commercial checks as

counterfeit

ust a few days later, $85,000 in commercial checks was deposited

into the account. A short time later, the subject attempted to wire a large portion

of the $85,000 to Nigeria via a bank in New York City. Personnel within the

original bank inquired about the sporadic account activity and the wire transfer,

and as a result, did not wire the funds and identified the commercial checks as

counterfeit. This information was included on the SAR form filed by the finan-

cial institution. The USSS investigators then learned that the subject used the

name identified by the bank as an alias. As a result of this SAR filing, investiga-

tors were able to make the necessary link and attribute additional fraud losses to

the defendant. The defendant was arrested, convicted and sentenced to

48 months in prison. (Source: U.S. Secret Service)

Organized Crime Network Attacked with the Help of SARs

The U.S. Customs Service in Chicago conducted an investigation of a Russian

and Lithuanian organized crime group that was heavily involved in the smuggling

of stolen luxury vehicles out of the U.S. into Europe. Independent analysis of a

SAR filing showed suspicious behavior that related to the Russian organized

crime network that was under investigation. The SAR filing was later brought to

the attention of the Customs case agent who used the filing to identify additional

associates and bank accounts. The information contained in the SAR filing

contributed to the successful prosecution of the suspects and the seizure and

forfeiture of assets. (Source: U.S. Customs Service)

Analysis of SAR Filings and CTRs Leads to Indictments

of Criminal Organization

A U.S. Customs Service investigation in Houston of a criminal organization

involved in the repackaging and exportation of stolen commercial baby formula

was aided by an analysis of SAR filings and CTRs. The criminal network, which

operated in several states, laundered their illicit profits through financial institu-

tions to the Middle East

CTRs Leads to Indictments

of Criminal Organization

A U.S. Customs Service investigation in Houston of a criminal organization

involved in the repackaging and exportation of stolen commercial baby formula

was aided by an analysis of SAR filings and CTRs. The criminal network, which

operated in several states, laundered their illicit profits through financial institu-

tions to the Middle East. An analysis of CTRs monitored the movement of these

funds. Subsequently, SAR filings were discovered which highlighted the sus-

pected transactions. An analysis of the SAR filings and CTRs, coupled with a

combination of various investigative techniques, led to multiple indictments on

numerous federal offenses, including money laundering, and the identification

and seizure of several bank accounts. (Source: U.S. Customs Service)

Operation Mule Train

On July 1, 1998, the Chief Financial Officer, President, and Vice-President of

a check cashing company were arrested on money laundering charges stemming

from a two-year investigation conducted by the Los Angeles office of the FBI and

the Los Angeles Police Department. According to corporate filings, the company

was one of the largest check cashing enterprises operating in the western U.S.,

and purported to be one of the leading U.S. money transfer agents providing

services to Mexico and Latin America. It was considered a significant and grow-

ing company among the increasing number of independent non-bank financial

institutions operating in many inner-city neighborhoods where banks have re-

duced their presence.

he largest check cashing enterprises operating in the western U.S.,

and purported to be one of the leading U.S. money transfer agents providing

services to Mexico and Latin America. It was considered a significant and grow-

ing company among the increasing number of independent non-bank financial

institutions operating in many inner-city neighborhoods where banks have re-

duced their presence.

The three executives, along with six other employees and associates, were

arrested after a federal grand jury returned a 67-count indictment against

11 defendants, charging multiple conspiracies, money laundering, evading cur-

rency reporting requirements, aiding and abetting, and criminal forfeiture.

The initial target of the investigation was a company store in Reseda, Califor-

nia. Investigators, working in an undercover capacity, approached the manager,

who agreed to launder “drug” money in exchange for a cash fee. Specifically, the

manager converted large amounts of cash into money orders issued by the com-

pany. As larger sums were laundered, the manager sought the assistance of his

associates working at other store locations. When a new manager took over

operations at the Reseda store in April 1997, he brought in the company’s corpo-

rate officers, including the CEO, the President, and the Senior Vice-President.

Pocketing the cash fee, the corporate officers authorized the issuance of money

orders and the wire transfers of large sums of “drug” money to a secret bank

account in Miami, Florida while the cash was used to maintain operations at the

company stores.

To avoid detection by law enforcement, no SAR forms or CTRs were filed by

the company for any of these transactions; however, SAR forms and CTRs were

filed by the banks into which the cash deposits were made, and these filings

significantly enhanced the value of other information received. In total, the

defendants laundered over $3.2 million dollars of “drug” money

ons at the

company stores.

To avoid detection by law enforcement, no SAR forms or CTRs were filed by

the company for any of these transactions; however, SAR forms and CTRs were

filed by the banks into which the cash deposits were made, and these filings

significantly enhanced the value of other information received. In total, the

defendants laundered over $3.2 million dollars of “drug” money. The investiga-

tion is believed to be one of the largest money laundering “sting” operations

targeting a check cashing business in U.S. history. (Source: DOJ)

Six People Arrested for Allegedly Bilking Millions of Dollars

of Goods from Food Bank

On October 7, 1999, a man and woman, their lawyer and three private investi-

gators in their employ were arrested for alleged involvement in an elaborate

conspiracy. The conspiracy included bilking millions of dollars worth of goods

from a food bank, burning buildings for insurance, stalking, and trying to corrupt

the judicial system. Another lawyer is being sought. The 266-count criminal

complaint stemmed from a 29-month investigation conducted by the San Bernar-

dino County District Attorney’s Office. The couple was charged with a total of

107 counts including conspiracy to commit grand theft, insurance fraud, money

laundering, obstruction of justice, arson, and assault with a deadly weapon.

The couple was accused of selling nearly 3 million pounds of food and other

merchandise they obtained for free from the Second Harvest Food Bank in River-

side, CA, beginning in 1991. The food was obtained using the tax-exempt status

107 counts including conspiracy to commit grand theft, insurance fraud, money

laundering, obstruction of justice, arson, and assault with a deadly weapon.

The couple was accused of selling nearly 3 million pounds of food and other

merchandise they obtained for free from the Second Harvest Food Bank in River-

side, CA, beginning in 1991. The food was obtained using the tax-exempt status

of a nonprofit group without the group’s knowledge. In addition, the couple

allegedly used private investigators to stalk and harass the husband’s ex-wife, her

boyfriend and others; filed false lawsuits to force judges off court cases in which

he was involved; set fire to their Rancho Cucamonga home and collected

$600,000 in insurance; and conspired to set fire to a warehouse.

The California Department of Justice, Bureau of Narcotics Enforcement,

assisted investigators from the San Bernardino County District Attorney’s Office

by conducting a review of the Currency and Banking Retrieval System (CBRS)

database for BSA reports relating to the subjects. The review was accomplished

through FinCEN’s Gateway System. Three Suspicious Activity Reports, nine

CTRs, and two Currency Transaction Reports by Casino (CTRCs) were filed.

The lead investigator said the BSA documents provided to him assisted in justify-

ing probable cause to obtain several signed search warrants. He further stated

that it gave him a much better sense of the way cash was used by the husband, his

primary subject. The documents also helped him to locate a bank that the hus-

band was using to withdraw large amounts of cash. A total of 45 search warrants

were served in this case.

All remain jailed, with bail ranging from $500,000 to $7.5 million each

tain several signed search warrants. He further stated

that it gave him a much better sense of the way cash was used by the husband, his

primary subject. The documents also helped him to locate a bank that the hus-

band was using to withdraw large amounts of cash. A total of 45 search warrants

were served in this case.

All remain jailed, with bail ranging from $500,000 to $7.5 million each.

(Source: Lead Investigator, San Bernardino County District Attorney’s Office)

Biggest Worker’s Compensation Scam in Southern California

Totaling more than $3 Million Dollars

On June 25, 1999, a doctor from southern California, was ordered to pay

$250,000 in fines and was sentenced to five years’ probation after his conviction

in Los Angeles County Superior Court on three money laundering charges. The

doctor is awaiting trial on securities and insurance fraud charges. Both cases

were brought by the Los Angeles District Attorney’s Office in connection with the

doctor’s role as the alleged mastermind of what authorities call one of the biggest

worker’s compensation scams in southern California during the late 1980s and

early 1990s.

The California Department of Justice, Bureau of Narcotics Enforcement,

assisted the Los Angeles District Attorney’s Office by conducting a review of the

Currency and Banking Retrieval System (CBRS) database for BSA reports relat-

ing to the doctor. The review was accomplished through FinCEN’s Gateway

System. Four Suspicious Activity Reports, 33 CTRs, eight Currency Transaction

Report by Casino (CTRCs), 16 Foreign Bank Account Reports (FBARs), and one

Currency or Monetary Instrument Report (CMIR) were filed. The Deputy District

Attorney (DDA) handling the prosecution said the documents revealed that no

reports relat-

ing to the doctor. The review was accomplished through FinCEN’s Gateway

System. Four Suspicious Activity Reports, 33 CTRs, eight Currency Transaction

Report by Casino (CTRCs), 16 Foreign Bank Account Reports (FBARs), and one

Currency or Monetary Instrument Report (CMIR) were filed. The Deputy District

Attorney (DDA) handling the prosecution said the documents revealed that no

CTRs had been filed for 1989-1992. A certified document stating that no CTRs

were filed during this time was introduced into evidence. This was very impor-

tant to forestall the defense claim that CTRs in fact were filed. The DDA further

said the one-month trial has ended with a conviction on three counts of violating

the State of California’s money laundering law, with the intent to commit Califor-

nia tax fraud.

The DDA indicated, in preparing documents for sentencing, that because the

case involved the laundering of $3 million, it is the state’s largest money launder-

ing case to date. (Source: Deputy District Attorney, Los Angeles District

Attorney’s Office)

Stock Fraud Cheats Elderly Out of $100 Million

Indictments announced on July 8, 1999, in Manhattan, New York allege that a

stock broker from Naples, Florida and other defendants bilked investors by lying

to them, performing unauthorized trades, ignoring sell orders, engaging in forg-

ery, and committing outright theft. Some investors, mostly elderly, were per-

suaded to get as much cash as possible from their credit cards, or withdraw

money from retirement accounts, to invest with the stock broker. Virtually all of

that money was lost.

The brokerage firm, which was started in 1994, was created to steal money

from investors. At its peak, it had more than 300 brokers and 50,000 customer

accounts at offices in Iselin, New Jersey and Naples, Florida

suaded to get as much cash as possible from their credit cards, or withdraw

money from retirement accounts, to invest with the stock broker. Virtually all of

that money was lost.

The brokerage firm, which was started in 1994, was created to steal money

from investors. At its peak, it had more than 300 brokers and 50,000 customer

accounts at offices in Iselin, New Jersey and Naples, Florida. The defendants, all

from New York, New Jersey, Connecticut, and Florida, were charged variously

with enterprise corruption, grand larceny, scheme to defraud, falsification of

business records, money laundering, and related crimes.

The District Attorney’s Office of New York County, Manhattan Office, con-

ducted a review of the Currency and Banking Retrieval System (CBRS) database

for BSA reports relating to the stock broker and members of his brokerage firm

they identified in their investigation. The review was accomplished through the

use of FinCEN’s Gateway System. The reports included two Suspicious Activity

Reports, 97 CTRs, and nine Currency Transaction Reports by Casino (CTRCs).

Investigators reported that BSA data obtained provided information about the

individuals and the entities and their inter-relationship. It helped identify and/or

confirm identities of those under investigation and provided some specific infor-

mation regarding bank transactions and account information. Investigators noted

that BSA data identified over 12 bank accounts for the subjects that were not

previously known. Of those account holders, about five were eventually charged

in felony indictments. The BSA data also identified important financial transac-

rm identities of those under investigation and provided some specific infor-

mation regarding bank transactions and account information. Investigators noted

that BSA data identified over 12 bank accounts for the subjects that were not

previously known. Of those account holders, about five were eventually charged

in felony indictments. The BSA data also identified important financial transac-

tions in Atlantic City, New Jersey. Overall, Gateway saved the investigators time

and effort, and helped focus investigative resources more efficiently.

The Manhattan District Attorney’s Office has begun a civil court proceeding to

recover $99,269,688 as the proceeds of the defendants’ criminal acts. (Source:

Investigators, District Attorney’s Office of New York County, Manhattan Office)

Man Pleads Guilty to Laundering $5.9 Million in Drug Proceeds

An individual from Catlettsbury, Kentucky pleaded guilty in U.S. District

Court on May 19, 1999, to laundering $5.9 million in drug proceeds from the sale

of marijuana in West Virginia and Kentucky. The indictment alleged that the

individual, his brothers, his stepbrother, and three other suspects, conspired to sell

marijuana and transfer the profits between bank accounts in West Virginia,

Kentucky, Ohio, and Florida in an effort to make the money appear legitimate.

The Cabell County Federal Drug Task Force, which consists of FBI, IRS

Criminal Investigation Division (CID) agents, West Virginia State Police, Cabell

County Sheriff’s Office, and Huntington City Police Department officers, con-

ducted an investigation which targeted the individual. The task force requested

the West Virginia Intelligence Exchange to conduct a review of the Currency and

Banking Retrieval System (CBRS) database for BSA reports relating to members

of this drug trafficking organization. This review was accomplished through

FinCEN’s Gateway System. The reports included one Suspicious Activity Report

and 17 CTRs

d an investigation which targeted the individual. The task force requested

the West Virginia Intelligence Exchange to conduct a review of the Currency and

Banking Retrieval System (CBRS) database for BSA reports relating to members

of this drug trafficking organization. This review was accomplished through

FinCEN’s Gateway System. The reports included one Suspicious Activity Report

and 17 CTRs. The analyst said information obtained from BSA data helped them

to identify assets, and to locate bank accounts used by this drug trafficking

organization.

As part of a plea agreement, the individual admitted to laundering money from

1992 to 1996, and to selling marijuana during that period. He also agreed to

cooperate in forfeiting money and other property, including three luxury cars, six

homes, and a warehouse. (Source: Analyst, West Virginia State Police)

Reports Filed under the BSA Critical to Largest Medicaid Fraud

Case in the Nation

The Newark U.S. Attorney’s Office and the IRS utilized reports filed under the

BSA to help build the largest Medicaid fraud case in the nation to date. This

multi-agency investigation, also involving the FBI and the FDA, uncovered a

New Jersey pharmacist who defrauded the Medicaid program by fraudulently

obtaining Medicaid numbers and prescription slips and then falsely billing federal

and state medical assistance programs for prescription items that were never

dispensed. Reports filed under the BSA helped investigators piece together their

case. Once the primary target of the investigation became a cooperative defen-

dant, investigators were also able to bring to culmination three other associated

cases. Using the forfeiture procedures available in money laundering cases, the

government has recovered a total of $5.5 million in fraud proceeds that the

subjects laundered through various bank and investment accounts. (Source: U.S.

Attorney’s Office, New Jersey and IRS)

estigation became a cooperative defen-

dant, investigators were also able to bring to culmination three other associated

cases. Using the forfeiture procedures available in money laundering cases, the

government has recovered a total of $5.5 million in fraud proceeds that the

subjects laundered through various bank and investment accounts. (Source: U.S.

Attorney’s Office, New Jersey and IRS)

Section 4

Tips on SAR Form Preparation & Filing

The information obtained from the filing of SARs plays an important role in

identifying potential and actual illegal activities, such as money laundering, fraud

and abuse, and it assists in the detection and prevention of the flow of illicit funds

through our financial system. For these reasons, it is critical that the information

being conveyed in SAR filings be as accurate and complete as is possible. The

following tips will assist in ensuring the accuracy and completeness of SAR

filings:

The narrative section of the SAR should provide a detailed description of the

known or suspected violation of law or suspicious activity. While detailed

suspect information may not always be available (e.g., in situations involving

non-account holders), such information should be included to the maximum

extent possible.

Supporting documents should never be attached to a SAR form. If a filer has

documentation relating to the suspicious activity being reported, reference

should be made to the existence of the documentation in the narrative section

of the SAR form. However, the actual documentation should be maintained

on file at the organization for a minimum period of five years.

Filers are encouraged to adopt and utilize a standardized format for identify-

ing the reporting organization on the SAR form (e.g., Community Bank of the

U.S.A., or Community Bank of the United States of America). Along with the

organization name and EIN, a complete address, including city, state, and zip

code, should always be included on the SAR form

ation for a minimum period of five years.

Filers are encouraged to adopt and utilize a standardized format for identify-

ing the reporting organization on the SAR form (e.g., Community Bank of the

U.S.A., or Community Bank of the United States of America). Along with the

organization name and EIN, a complete address, including city, state, and zip

code, should always be included on the SAR form.

A SAR should always identify the organization’s primary Federal regulator.

When reporting the “total dollar amount involved in known or suspicious

activity,” only whole dollar amounts should be listed, no cents (e.g., indicate

$10,000, not $10,000.74). If there is no actual dollar amount connected to

the suspicious activity, “0” should be entered on the form. Monetary values

reflected on the SAR form should always be entered as U.S. dollars. If a

suspicious transaction involves a foreign currency, indicate this fact in the

narrative section of the SAR form--also provide the type/name of the foreign

currency, the amount of the transaction, and the conversion rate used to reach

the U.S. dollar figure.

SARs are properly filed with the IRS’ Detroit Computing Center (DCC).

Magnetically filed (disk) and paper SARs should be addressed to “FinCEN,

Detroit Computing Center, P.O. Box 33980, Detroit, MI 48232-0908.”

SAR Form Completion—National Overview

The following chart provides a statistical breakout of the percentage completion

rate for each field on the SAR form for all SARs in the national database (ap-

proximately 400,000 records at time of this report). Each row of the chart is

keyed to successive fields on the SAR form. Additional columns represent all

financial institutions, grouped under the appropriate regulator as reported by the

institution

ng chart provides a statistical breakout of the percentage completion

rate for each field on the SAR form for all SARs in the national database (ap-

proximately 400,000 records at time of this report). Each row of the chart is

keyed to successive fields on the SAR form. Additional columns represent all

financial institutions, grouped under the appropriate regulator as reported by the

institution. Intersection of a row and column shows the percentage completion

rate for the specific field for all financial institutions for each regulator, and

indicates if the percentage completion rate varies statistically above (A) or below

(B) the national average for that field. (The “Other” column represents SARs

filed either by non-bank financial institutions or by banks that did not identify

their regulator.)

SAR Form Completion Rate—National Database

FRB

FDIC

NCUA

OCC

OTS

OTHER

Field

Number of Filings

18,064

21,352

3,948

78,108

16,363 258,582

Report Type

93.62A

93.11A

96.22A

92.41A

91.70A 7.00B

Name of Financial Institution

98.64

98.45

97.24

99.49A

99.29

98.17B

Primary Federal Regulator

100.00A 100.00A 100.00A 100.00A 100.00A .00B

Address of Financial Institution

99.96

99.98

99.86

99.98

99.99

99.86

City

99.97

99.99

99.92

99.99

99.87

State

99.88

99.95

99.86

99.99

99.97

99.76

Zip Code

99.81

99.86

99.76

99.97

99.96

99.72

EIN or TIN

94.62

95.81

80.50B

98.02A

98.15A 92.89B

Address of Branch Office(s)

100

15a

Account Number(s) Affected

76.26B

81.51A

81.97A

83.19A

86.74A 72.24B

15b

Account Number(s) Affected

9.26B

13.70A

11.65

11.2

12.39A 10.00B

Related Accounts Closed?

17,18,19 Suspect Name

98.74

99.37

98.74

99.59

99.7

99.33

Address

86.43B

93.32A

95.24A

89.07B

97.04A 91.18

SSN, EIN, or TIN

65.76B

79.71A

85.99A

71.35A

78.04A 67.39B

City

88.10B

93.46A

95.09A

89.29B

97.05A 91.26

State

84.88B

91.31A

94.37A

86.92B

92.94A 88.32

Zip Code

80.06B

89.24A

93.50A

84.63B

92.16A 85.82

13.70A

11.65

11.2

12.39A 10.00B

Related Accounts Closed?

17,18,19 Suspect Name

98.74

99.37

98.74

99.59

99.7

99.33

Address

86.43B

93.32A

95.24A

89.07B

97.04A 91.18

SSN, EIN, or TIN

65.76B

79.71A

85.99A

71.35A

78.04A 67.39B

City

88.10B

93.46A

95.09A

89.29B

97.05A 91.26

State

84.88B

91.31A

94.37A

86.92B

92.94A 88.32

Zip Code

80.06B

89.24A

93.50A

84.63B

92.16A 85.82

Country

63.68A

46.85B

28.03B

60.20A

62.72A 42.14B

Date of Birth

55.81

62.42A

88.29A

52.20B

71.13A 55.11B

Phone Number - Residence

53.34B

62.43A

85.45A

46.79B

73.11A 56.75A

Phone Number - Work

33.08B

43.82A

42.80A

39.06A

46.93A 35.07B

Occupation

49.77A

66.00A

59.64A

41.79B

46.25

44.97B

30a-d

Forms of Identification

42.20B

58.47A

71.61A

39.18B

66.31A 47.54A

30e

IDN Number

34.47B

49.86A

52.84A

34.06B

61.23A 39.25B

30f

Issuing Authority

31.23B

44.81A

41.79A

31.10B

57.77A 34.89B

Relationship to Fin Inst

Insider Suspect Still Affiliated?

Date: Susp/Term/Resign

Admission/Confession

Suspicious Activity Date

90.96B

90.54B

87.74B

96.84A

97.81A 93.34B

Violation Dollar Amount

100

37a-r

Violation

83.12B

98.10A

95.98

97.96A

96.95

96.09

37r-desc Violation (Other)

97.37A

98.23A

97.39A

95.78A

97.33A 5.37B

Loss Prior to Recovery

100

Amount of Recovery

100

Soundness Affected?

100.00A 100.00A 100.00A 100.00A 100.00A 7.51B

Bonding Co

Date

90.96B

90.54B

87.74B

96.84A

97.81A 93.34B

Violation Dollar Amount

100

37a-r

Violation

83.12B

98.10A

95.98

97.96A

96.95

96.09

37r-desc Violation (Other)

97.37A

98.23A

97.39A

95.78A

97.33A 5.37B

Loss Prior to Recovery

100

Amount of Recovery

100

Soundness Affected?

100.00A 100.00A 100.00A 100.00A 100.00A 7.51B

Bonding Co. Notified?

Law Enforce Referral

17.78

23.59A

33.40A

13.95B

15.43B 20.54A

Address

13.59

17.85A

25.80A

10.46B

12.97B 15.96A

City

15.5

19.81A

28.43A

12.12B

13.87B 17.74A

State

15.44

19.81A

28.03A

12.13B

13.94B 17.61A

Zip Code

13.76B

18.53A

25.61A

10.81B

13.16B 16.79A

47,48,49 Witness Name

98.64

99.22

98.56

99.13

98.72

Address

80.35B

88.6

92.56A

88.58

96.29A 89.68A

SSN

39.48B

58.89A

75.00A

36.84B

51.93A 47.60A

City

85.74

90.41A

91.72A

78.81B

94.81A 87.83A

State

89.69A

91.31A

91.30A

76.99B

94.74A 87.25A

Zip Code

76.26B

85.82A

90.19A

73.01B

93.24A 84.09A

Date of Birth

29.18A

39.08A

55.73A

23.80A

34.84A 10.76B

Title

Phone Number

69.43B

86.57B

89.35

91.94A

90.97A 89.55A

Interviewed?

59,60,61 Preparer Information

98.26A

97.20A

95.90A

98.83A

98.87A 7.20B

Title

97.68A

96.89A

93.91A

98.65A

98.53A 6.97B

Phone Number

Date

0.02

65,66,67 Contact for Assistance

67.04A

60.45A

42.92A

43.89A

58.60A 3.81B

Title

66.40A

59.13A

40.14A

43.45A

58.30A 3.75B

Part VII

Narrative

97.60A

94.69

76.33B

98.23A

99.05A 93.08B

A = Statistically above the national average

B = Statistically below the national average

90A

98.83A

98.87A 7.20B

Title

97.68A

96.89A

93.91A

98.65A

98.53A 6.97B

Phone Number

Date

0.02

65,66,67 Contact for Assistance

67.04A

60.45A

42.92A

43.89A

58.60A 3.81B

Title

66.40A

59.13A

40.14A

43.45A

58.30A 3.75B

Part VII

Narrative

97.60A

94.69

76.33B

98.23A

99.05A 93.08B

A = Statistically above the national average

B = Statistically below the national average

Section 5

Issues & Guidance

This section of the SAR Activity Review discusses current issues of common

interest raised with regard to the preparation and filing of SARs. The discussion

is intended to identify SAR-related issues and then provide explanations so that

filing organizations can reasonably address these issues. This section represents

the collective opinions of the government agencies that require organizations to

file SARs.

Repeated SAR Filings on the Same Activity

One of the purposes of filing SARs is to identify violations or potential violations

of law to the appropriate law enforcement authorities for criminal investigation.

This is accomplished by the filing of a SAR that identifies the activity of concern.

Should this activity continue over a period of time, it is useful for such informa-

tion to be made known to law enforcement (and the bank supervisors). As a

general rule of thumb, organizations should report continuing suspicious activity

with a report being filed at least every 90 days. This will serve the purposes of

notifying law enforcement of the continuing nature of the activity, as well as

provide a reminder to the organization that it must continue to review the suspi-

cious activity to determine if other actions may be appropriate, such as terminat-

ing its relationship with the customer or employee that is the subject of the filing.

Cessation of Relationship/Closure of Account

The closure of a customer account as the result of the identification of suspicious

activity is a determination for an organization to make in light of the information

available to the organization

ity to determine if other actions may be appropriate, such as terminat-

ing its relationship with the customer or employee that is the subject of the filing.

Cessation of Relationship/Closure of Account

The closure of a customer account as the result of the identification of suspicious

activity is a determination for an organization to make in light of the information

available to the organization. A filing of a SAR, on its own, should not be the

basis for terminating a customer relationship. Rather, a determination should be

made with the knowledge of the facts and circumstances giving rise to the SAR

filing, as well as other available information that could tend to impact on such a

decision. It may be advisable to include the organization’s counsel, as well as

other senior staff, in such determinations.

Timing for SAR filings

The SAR rules require that a SAR be filed no later than 30 calendar days from the

date of the initial detection of the suspicious activity, unless no suspect can be

identified, in which case, the time period for filing a SAR is extended to 60 days.

It may be appropriate for organizations to conduct a review of the activity to

determine whether a need exists to file a SAR. The fact that a review of customer

activity or transactions is determined to be necessary is not necessarily indicative

of the need to file a SAR, even if a reasonable review of the activity or transac-

tions might take an extended period of time. The time to file a SAR starts when

the organization, in the course of its review or on account of other factors, reaches

the position in which it knows, or has reason to suspect, that the activity or

transactions under review meets one or more of the definitions of suspicious

activity.

Of course, an expeditious review, wherever possible, is recommended and can be

of significant assistance to law enforcement

o file a SAR starts when

the organization, in the course of its review or on account of other factors, reaches

the position in which it knows, or has reason to suspect, that the activity or

transactions under review meets one or more of the definitions of suspicious

activity.

Of course, an expeditious review, wherever possible, is recommended and can be

of significant assistance to law enforcement. In situations involving violations of

law requiring immediate attention, the organization should immediately notify

appropriate law enforcement and supervisory authorities, in addition to filing a

SAR.

Disclosure of SARs and Underlying Suspicious Activity

Federal law (31 U.S.C. 5318(g)(2)) prohibits the notification of any person that is

involved in the activity being reported on a SAR that the activity has been re-

ported. This prohibition effectively precludes the disclosure of a SAR or the fact

that a SAR has been filed. However, this prohibition does not preclude, under

federal law, a disclosure in an appropriate manner of the facts that are the basis of

the SAR, so long as the disclosure is not made in a way that indicates or implies

that a SAR has been filed or that the information is included on a filed SAR.

The prohibition against disclosure can raise special issues when SAR records are

sought by subpoena or court order. The SAR regulations direct organizations

facing those issues to contact their primary supervisor, as well as FinCEN, to

obtain guidance and direction on how to proceed. In several matters to date,

government agencies have intervened to ensure that the protection for filing

organizations and the integrity of the data contained within the SAR database

remain intact.

by subpoena or court order. The SAR regulations direct organizations

facing those issues to contact their primary supervisor, as well as FinCEN, to

obtain guidance and direction on how to proceed. In several matters to date,

government agencies have intervened to ensure that the protection for filing

organizations and the integrity of the data contained within the SAR database

remain intact.

Section 6

Industry Forum

In each issue of the SAR Activity Review, representatives from the financial

services industry will offer insight into some aspect of fraud prevention. In this

issue, the American Bankers Association (ABA) offers their “Check Fraud Loss

Report” from the first quarter of 2000. One interesting statistic is the relatively

high percentage of losses due to new account fraud in the western part of the

U.S. For more information, please contact John Byrne, ABA Senior Counsel and

Compliance Manager, at jbyrne@aba.com.

CHECK FRAUD LOSS REPORT

First Quarter 2000

National Summary

TOP FIVE LOSS CATEGORIES (by Number of Accounts)

Return losses excluding closed accounts, NSFs, and stop payment

(other return loss reasons) (1)*

Forged maker’s signature (3)

Counterfeit (2)

NSFs (4)

Closed accounts (6)

Last quarter’s rank in parentheses.

• Check-related losses decreased from $1.12 per transaction account to $0.94 in the first quarter. A

year ago, check-related losses totaled $1.26 per transaction account.

• Compared with the same period a year ago, losses were lower in the Northeast, Southeast, and

West, but were higher in the Central and Southwest regions. By type of fraud, lower losses were

reported for most categories. The most significant improvement appears to be losses associated

with return items.

• The Central region had the highest losses (at $1.41 per transaction account), followed by the

Southwest ($1.18), West ($1.02), Southeast ($0.90), and Northeast ($0.65) regions.

• “Other return loss reasons” was the leading loss category in the Central, Southwest, and West

regions

reported for most categories. The most significant improvement appears to be losses associated

with return items.

• The Central region had the highest losses (at $1.41 per transaction account), followed by the

Southwest ($1.18), West ($1.02), Southeast ($0.90), and Northeast ($0.65) regions.

• “Other return loss reasons” was the leading loss category in the Central, Southwest, and West

regions. In the Northeast and Southeast, the top loss category was counterfeit. A year ago, the

leading loss categories included counterfeit (the Northeast) and “other return loss reasons” (all

other regions).

• Combining all classifications, losses per case averaged $1,838, down from $2,007 in the fourth

quarter and $1,972 a year ago. Losses per case averaged $1,307 in the West, $1,649 in the

Southwest, $2,425 in the Southeast, $3,028 in the Northeast, and $3,185 in the Central region.

• New account losses amounted to $0.19 per transaction account or $6.04 per new account opened,

compared with $0.31 and $8.01, respectively in the fourth quarter, and $0.38 and $8.70, respec-

tively, a year ago. Except for the West, all regions reported a decrease in new account losses in the

first quarter. The West experienced an increase in new account losses per new account opened.

• Nationally, 20 percent of fraud losses were associated with new accounts, a substantial improve-

ment from the 30 percent in the first quarter 1999. By region, losses attributed to new accounts

ranged from 7 percent in the Central region to 25 percent in the West.

Survey results reveal that losses associated with true name fraud appear to be rising, particularly

in the Northeast.

Feedback Form

Department of the Treasury . Financial Crimes Enforcement Network

To:

Subject:

FinCEN Office of Strategic Analysis

Fax 703-905-3698

ora@fincen.treas.gov

American Bankers Association

FAX 202-828-5052

jbyrne@aba.com

The SAR Activity Review--October 2000

From:

Title:

Office/Agency:

Telephone: (include area code)

Email Address:

Comments:

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.