CUNA Regulatory Comment Call
July 5, 2006
Suspicious Activity Report (SAR) Form Revisions
- In February, the Financial Crimes Enforcement Network (FinCEN) as well as NCUA and the federal bank and thrift regulators solicited comments regarding the Suspicious Activity Report (SAR), which is being revised and formatted to standardize that report with SARs being filed by other financial institutions. The report is also being revised to support joint filing by providing the necessary data blocks and instructions for completing a jointly filed SAR. The instructions limit joint filing to those suspicious activities that do not involve insider abuse. The agencies carefully considered the responses it received from CUNA and others with respect to the proposed revisions. Based on the suggestions received from CUNA and others, the agencies have made some changes in the form, which they believe will further improve the form. The agencies now have issued a second notice advising the public that they have submitted the revised SAR form to the Office of Management and Budget (OMB) for final approval and in the meantime are inviting the public to submit additional comments.
- Credit unions and other financial institutions are required to file a SAR upon discovery of insider abuse involving any amount, violations aggregating $5,000 or more where a suspect can be identified, violations aggregating $25,000 or more regardless of a potential suspect, or transactions aggregating $5,000 or more that involve potential money laundering or violations of the Bank Secrecy Act.
- The proposed effective date for the newly revised SAR form is January 1, 2007. Credit unions and other depository institutions would be able to use the current SAR form (dated July 2003) through June 30, 2007. According to the notice, those target effective dates will be adjusted as necessary to provide depository institutions with adequate planning lead-time.
- Comments are due to NCUA by July 19, 2006. Please send your comments to CUNA by July 13, 2006. Please feel free to fax your responses to CUNA at 202-638-7052; e-mail them to Deputy General Counsel Mary Dunn at firstname.lastname@example.org or to Senior Regulatory Counsel Catherine Orr at email@example.com; or mail them to Mary or Catherine in c/o CUNA's Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, 6th Floor - South Building, Washington, DC 20004. You may also contact us at 800-356-9655, ext. 6743, if you would like a copy of the draft SAR form, or you may access here.
DESCRIPTION OF THE PROPOSED SAR REVISIONS
- Two check boxes would be added at the top of the report to indicate whether the
institution is filing an updated report (proposed data item 1a) and whether the SAR is being
filed jointly with another financial institution (proposed data item 1b).
- Several commenters requested more guidance concerning joint filing and voiced concern regarding data sharing. The agencies note in the second notice that guidance has been drafted and is under review. The guidance is expected to be issued prior to the effective date of the new SAR form.
- CUNA had advocated that the agencies provide more guidance as to what the two boxes are intended to encompass. The agencies have decided to make box 1a clearer by amending the box to say recurring report instead of updated report. Further, the instructions now explain this box should be checked for a recurring report filed on continuing activity.
- Part I Subject Information
- Part I--Subject Information would be moved from Part II to Part I and would collect information on the subject of the SAR. The section title would be changed from Suspect Information'' to Subject Information''.
- Proposed data item 2a would be added to indicate whether multiple subjects are involved.
- Proposed data item 6 Also known as (AKA-individual) or doing business as (DBA-entity),'' would be added in order to standardize the Subject Information'' section among all SARs.
- In response to comments, proposed data item 18 has been added so the filer can provide the subjects e-mail address, if available.
- Part II--Suspicious Activity Information would be moved from Part III to Part
II and would describe activity being reported.
- Current data item 34, Total dollar amount involved in known or suspicious activity, would be increased to twelve digits from ten and would be renumbered as data item 22.
- Current data item 38, which collects information about the financial soundness of the respondent institution, would be moved to Part V, Suspicious Activity Information-Narrative, data item a.
- Current data item 39, regarding bonding company notification, would be deleted.
- Current data items 40-44, law enforcement contact information, would be moved to Part V, Suspicious Activity Information-Narrative,'' data item g.
- Part III--Reporting Financial Institution Information would be moved from Part
I to Part III and would collect information that identifies the respondent institution,
the branch where the activity took place, the affected account number(s), if any, and
whether such accounts have been closed as a result of the suspicious activity.
- Proposed check box 26b would be added to indicate whether two or more financial institutions are jointly filing a single Suspicious Activity Report by completing data items 26 through 35.
- Proposed data item 29 would collect the respondent institution's internal control or file number. Respondent institutions would be encouraged, but not required, to report an internal control or file number.
- Three check boxes would be added to proposed data item 33, Primary Federal Regulator,'' to identify the Internal Revenue Service, the Security and Exchange Commission, and Commodity Futures Trading Commission as regulators for purposes of a Suspicious Activity Report joint filing.
- Proposed data item 35, Relationship of subject (Part I) to the above listed financial institution,'' would be moved from Part II, current data item 30, to Part III. Based on comments that the placement in Part III would pose a problem with reporting multiple subjects, the instructions have been revised accordingly.
- Proposed data items 41-55 would provide space to collect information regarding other branch locations. If more than four branches are involved, the additional information would be provided in Part V Suspicious Activity Information-Narrative.''
- Current data item 13, If institution closed, date closed,'' would be deleted.
- Part IV--Contact for Assistance information is consolidated here.
- The proposed data item 56, Designated contact office,'' would replace current data items 45-48, contact name and title information.'' Although the name of the financial institution contact would be eliminated, this revised information, coupled with an internal control or file number, would still provide law enforcement with adequate contact information while protecting the name of the contact person.
- Part V--Suspicious Activity Information-Narrative requires the respondent
institution to provide a chronological and complete narrative account of the activity,
including what is unusual, irregular, or suspicious about the activity. The list of
information that should be included in the narrative would be expanded to aid the
institution in the completion of the Suspicious Activity Report:
- Description of the conduct that raised suspicion, why it was suspicious and the date discovered. Did the activity have a material impact or affect the financial institutions soundness? (Proposed item a)
- Explanation of whether the transaction(s) was completed or only attempted. (Proposed item b)
- The filer (and joint filer) must not only retain the supporting documentation for 5 years but also retain a copy of the SAR for 5 years. (Proposed item c)
- The institution must indicate if foreign currency is involved. (Proposed item c)
- Description of any funds transfers, including in or out identifier numbers. (Proposed item m)
- If a foreign national is involved, the institution should provide information from any available passport, via, etc. (Proposed item n)
- Description of the subject(s) position if employed by the credit union/institution. (Proposed item o)
- The filer should indicate the type of institution, if it is not clear. (Proposed item o)
- If a law enforcement agency has been contacted, the institution should list the agency and the name of the person contacted. (Proposed item q)
- If correcting or amending a prior report, the institution should complete the form in its entirety and note the changes in the narrative section (part V).
- The instructions for completing the SAR would be expanded to include specific
data item instructions for each item on the reporting form. Items considered critical
for law enforcement purposes have been marked with an asterisk. The new form would
clarify that if the information for an item marked with an asterisk is not known or not
applicable, the filer should enter special response XX to complete the item.
- The General Instructions state that all depository institutions must file a SAR to report any suspicious transaction related to a possible violation of law or regulation as required by the SAR Instructions. A depository institution may also file a SAR to report a suspicious transaction it believes is relevant to the possible violation of any law or regulation, even if the reporting is not required by the SAR instructions.
- The current SAR requires institutions for file a SAR in the event of a computer intrusion. The instructions indicate that [f]or purposes of this reporting requirement, computer intrusion does not mean attempted intrusions of websites or non-critical information systems of the institution . The draft SAR still contains the check box in the Summary of Characterization of Suspicious Activity section titled Computer Intrusion; however, it omits the explanation in the Instructions section.
- The regulators initially indicated that the SAR form requires about one hour to complete. As a result of several commenters challenging that figure, in the notice to OMB the agencies have adjusted that figure to 2 hours in order to take into account the routine recordkeeping requirement pertaining to SARs.
- CUNA as well as other commenters recommended increasing the reporting threshold as well as the time to file. The agencies determined that the reporting threshold limits and filing deadlines are appropriate and have made no changes.
QUESTIONS REGARDING THE PROPOSED SAR REVISIONS
- Do you agree with the proposed effective date of January 1, 2007?
Yes ______ No ______
If no, why not? What effective date would be more reasonable?
- Does the change to proposed check box 1a to indicate recurring report instead of
updated report and accompanying instructions explaining this box should be checked
for a recurring report filed on continuing activity make sufficiently clear what the
box is intended to encompass?
Yes ______ No ______
If no, what additional clarification is needed?
- One important change in the new form is removing the name of the financial institution
contact from the form. Do you agree with this change?
Yes ______ No ______
If no, why not?
- Do you think box 42 (Relationship of the subject (Part 1) to the above listed financial
institution) and corresponding instructions are sufficiently clear in the case of multiple
Yes ______ No ______
If no, how could those instructions be further clarified?
- Do you agree with the addition in Part I of a box for the filer to indicate the
subjects e-mail address?
Yes ______ No ______
- Are there other ways in which the SAR form could be simplified, shortened or
Yes ______ No ______
If yes, what are your suggestions?
- Other comments?
Eric Richard General Counsel (202) 508-6742 firstname.lastname@example.org |
Mary Mitchell Dunn SVP & Deputy General Counsel (202) 508-6736 email@example.com
Jeffrey Bloch Assistant General Counsel (202) 508-6732 firstname.lastname@example.org
Lilly Thomas Assistant General Counsel (202) 508-6733 email@example.com
Catherine Orr Senior Regulatory Counsel (202) 508-6743 firstname.lastname@example.org