Introductory BSA/AML Examiner School, Atlanta, CA

Bank of Smithville USA

Page 10

SAR #4 – An internal alert was received due to potential structured cash withdrawals. On July 28, 20XX and August 1, 20XX, the customer withdrew $9,900. Two additional cash withdrawals of $10,000 each occurred on January 20 and 23, 20XX. A case was opened on January 23, 20XX, but a SAR wasn’t filed until June 27, 20XX. This account was closed on April 6, 20XX. SAR #5 – An alert was generated due to potential suspicious activity involving a retired customer. On August 1, 20XX the customer withdrew $10,000 and on October 13, 20XX, the customer withdrew $9,000. A case was opened on December 30, 20XX. An additional cash withdrawal of $9,000 was conducted on March 21, 20XX. A SAR wasn’t filed until June 27, 20XX. SAR #6 – An internal alert was received due to a possible structuring of cash withdrawals. The customer made two individual $10,000 cash withdrawals on January 3 and 27, 20XX. A case was opened on February 8, 20XX, but a SAR wasn’t filed until June 27, 20XX. SAR #7 – The institution’s BSA monitoring software generated an alert due to potential structured cash withdrawals. Between December 30, 2015 and October 27, 20XX, seven suspicious cash withdrawals were conducted totaling $58,900. The individual transactions ranged from $5,000 to $9,500. A case was opened on January 4, 20XX, but a SAR wasn’t filed until June 27, 20XX. SAR #8 – The institution’s BSA monitoring software generated an alert due to potential structured cash withdrawals for withdrawals dated September 19, 20XX ($10,000) and January 30, 20XX ($9,500). A case was opened on February 9, 20XX, but a SAR wasn’t filed until June 27, 20XX. CFO Wills stated that management initially utilized very conservative system settings in the conversion to the Verafin automated system in order to ensure that all potentially suspicious activity was identified; however, this resulted in a significant volume of alerts. The volume of alerts produced a significant backlog, resulting in the delay in the review of cases and ultimately the generation of untimely SAR submissions. Failure to file SAR for transactions with no business or apparent lawful purpose Section 353.3(a)(4)(iii) of the FDIC Rules and Regulations requires, in part, that a covered financial institution must file a Suspicious Activity Report (Form FDIC 6710/06) for transactions aggregating $5,000 or more if the covered financial institution knows, suspects, or has reason to suspect that the transaction has no business or apparent lawful purpose, or is not the sort of transaction in which the customer would normally be expected to engage. Transaction testing during the review identified a systemic pattern of failing to file SARs, primarily related to outstanding monetary instruments from acquired institutions. Six examples have been provided, including three related to transactions from the acquired institutions.