In the last three years, nearly 2,400,000 Suspicious Activity Reports (SARs) have been filed by depository institutions in the U.S. A question we are frequently asked by our clients is, “What happens to those SARs?” Or more specifically, “What happens to the SARs I file on behalf of my institution?” You may think that the reports you file to report criminal financial activity end up in a cyber cloud, never to be read or heard from again, but that is not the case. It may surprise you to know that every SAR you file, regardless of amount or activity, will be read by human eyes. That task may seem daunting to you, but it is not to the over one hundred SAR review teams across the country. Each federal judicial district is represented by at least one team. The teams consist of members from federal, state, and local levels of law enforcement. The review teams are diverse and may include members of homeland security and the FBI as well as representatives from states’ attorneys offices and high-ranking members of local law enforcement agencies who proactively review SARs for their respective geographic areas.
During a review team’s meeting, the investigators are given the narratives of SARs filed in their region for that month or quarter. If during the initial review of the SAR, the investigator feels the activity warrants further attention, the SAR goes to the next level where additional due diligence is performed. The name of the subject of the SAR is searched for in other financial reports such as SARs filed in a different judicial district or Currency Transaction Reports. A background check is conducted on the subject for evidence of criminal history and a search of public information (such as a Google search) is generally conducted to obtain additional information. It is also not unusual to research if the subject conducted any foreign travel, particularly to countries that are high risk for money laundering or terrorist activity. Then the SAR and all supporting documentation are reviewed again. At this stage, a determination may be made to contact the filing financial institution to obtain supporting information that led to the filing of the report. The review team may also contact FinCEN and initiate a 314(a) request to determine whether the subject has any accounts at other U.S. financial institutions. The SAR and all supporting documentation go through a final review, and a determination is made whether to proceed with a criminal investigation. A report with all the pertinent details is generated and presented to a law enforcement or regulatory agency for the criminal investigation. Because of the multiple levels in the investigatory process, it may take many years depending on the nature of the criminal activity to move from a SAR filing to its prosecutorial end. SARs filed for egregious activity, such as terrorist financing or human trafficking, obviously take priority over all others and are escalated at a much quicker pace. What can you do to assist these SAR review teams in determining whether your SAR should be escalated? The key is in the narrative. SAR investigators cannot stress enough how important a wellcomposed narrative is in aiding them with their review. While it is important to include the Who, What, When, Where, and Why of the subject and activity in the narrative, what it all boils down to is that the narrative tells a good story. It should start out with why you are filing the SAR because this is the key sentence that may pique the investigator’s interest. “We are filing this SAR because our customer has conducted transactions that we believe are related to terrorist financing,” or “We are filing this SAR because we believe our customer may be structuring transactions to avoid federal reporting requirements.” Both are very good openers, but you can bet which one will get the most attention. Also, it is important in the narrative to give as much relevant information about the subject to the investigator as possible. How long has the subject been your customer; what type of account relationships does the subject have with your institution; why is this activity unusual for your customer, but most importantly, why do you think this activity is unusual?
The FDIC Supervisory Insights report on SARs stated: “The significance of the SAR process in the fight against terrorism, drug trafficking, money laundering, bank fraud, and other financial crimes cannot be overstated.” While it is important to remember that law enforcement plays a critical role in the SAR investigation cycle, the most important role in this process is the person in the financial institution who takes the time and effort to prepare a concise and comprehensive SAR narrative that will aid law enforcement with its investigation.
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