CUNA Comment Letter
Proposed Changes to the Suspicious Activity Report (SAR) Form
January 3, 2003
Mr. Neil M. McNamara
National Credit Union Administration
1775 Duke Street
Alexandria, Virginia 22314-3428
Dear Mr. McNamara:
The Credit Union National Association appreciates this opportunity to comment on the changes to the Suspicious Activity Report (SAR) form proposed by the Financial Crimes Enforcement Network (FinCEN), NCUA, the Federal Reserve Board, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Federal Deposit Insurance Corporation. CUNA represents over 90% of our nations more than 10,100 state and federal credit unions.
CUNA supports the three minor proposed revisions to the SAR report. One proposed change is that the language in the Safe Harbor provision of the Instructions section would be updated to conform to the wording of Safe Harbor provision regarding suspicious activity reporting contained in the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act). Specifically, the Instructions section would be amended to add language clarifying that a financial institution and its directors, officers, employees and agents would not be liable for disclosure of information in a SAR under any contract or legally enforceable agreement (including any arbitration agreement).-- The aim of the PATRIOT Act is to prevent money laundering and terrorist financing; and the SAR is a crucial tool used by financial institutions to help protect the U.S. financial system from those types of crimes. The updated language in the Instructions section clearly stating that the law prohibits the imposition of liability for disclosures in a SAR even in contradiction of the terms of a particular contract or arbitration agreement will help ensure that SARs are filed when required by providing further reassurance to financial institution personnel who complete the form that they will not be subject to personal liability for such disclosure.
The other proposed changes involve the addition of two new check boxes in Part III Suspicious Activity Information (Box 35, Summary Characterization of Suspicious Activity): Terrorist Financing and Identity Theft. CUNA believes the proposed additional check boxes would enable financial institutions to more accurately categorize certain suspicious activities, which will make the reporting of suspicious activities in general more useful to law enforcement officials and the regulatory agencies. In particular, the Identity Theft check box would enable institutions to help protect members/customers from the growing incidence of that type of fraud. CUNA would, however, like to make a recommendation with regard to the 2 boxes. CUNA suggests that the SAR form provide more detailed guidance on when those boxes should be checked. With regard to the Terrorist Financing box, should the financial institution only check the box when there is a match (hit--) against one of the government lists covering known or suspected terrorists/terrorist organizations? And with respect to the Identity Theft box, in what precise circumstances should fraud be identified as identity theft -- for example, when should fraud involving a credit card be identified as identity theft as opposed to credit card fraud?
Finally, we commend FinCEN for creating the PATRIOT Act Communications System (PACS) to enable financial institutions to file SARs (and Currency Transaction Reports) electronically. Electronic filings will improve the quality and timeliness of SARs while significantly reducing the costs to financial institutions of providing that information to the appropriate authorities/agencies.
Thank you for the opportunity to share our comments. If you have any further questions, please contact Mary Dunn (firstname.lastname@example.org) or Catherine Orr (email@example.com) at our e-mail addresses or at (202) 638-5777.
Mary Mitchell Dunn
Associate General Counsel
Senior Regulatory Counsel