MoneyLaundering.com: FinCEN, Federal Agencies Clarify SAR Expectations

O’Melveny counsel Braddock Stevenson discussed the Office of the Comptroller of the Currency, Financial Crimes Enforcement Network, and other regulatory agencies’ latest guidance on suspicious activity reports (SARs) in this MoneyLaundering.com article.

The federal regulators’ latest FAQ guidelines permit banks and other institutions to continue servicing clients on whom they have filed multiple SARs, provided they have procedures in place to manage the risk of financial crime. Additionally, the guidance provides that, “Institutions can also refrain from filing a SAR on a customer or account that is the subject of a grand jury subpoena, but should consider that data and review all relevant transactions when assessing the relationship.”

Stevenson, former deputy associate director of FinCEN’s enforcement division, told MoneyLaundering.com the guidance addresses the long-running concern that examiners sometimes take a check-the-box—rather than risk-based—approach to evaluating institutions’ compliance with the Bank Secrecy Act and penalize them because of a “formulaic” understanding of their duties.

“I think this is for both examiners and institutions to have a better conversation about SAR filings,” Stevenson said. “The FAQs clarify that there are no hard-and-fast rules in making a determination of whether something is suspicious.”

The FAQs also mark the first time regulators have recognized the lack of a clear-cut rule that would steer a financial institution’s decision to reassess or even terminate relationships with clients based exclusively on the number of SARs they have prompted.

“This is the most direct the banking agencies have been on that point,” Stevenson noted.

MoneyLaundering.com subscribers can read the full article here.