Brandi B. Reynolds, CAMS-Audit
In Part 1, we discussed overarching issues involved in writing SARs. In Part 2, we discuss some special considerations when writing SARs about Structuring, Elder Abuse, and Human Trafficking, We will discuss Cyber Events in the Part 3 discussion of Cyber SARs and other fraud SARs.
Structuring has a broad definition under the BSA and related regulatory literature. Briefly described, Structuring is a transaction or series of transactions designed to evade CTR filing requirements. There is no limitation on the number of people, accounts or geographies that may be involved. Structuring may happen even if the transactions do not exceed the $10,000 CTR filing threshold at any one bank on any single day.
Many SAR writers will claim that SARs about Structuring activity are the most difficult to investigate and write because of the judgment involved, but that need not be the case. Because Structuring is considered suspicious even if the underlying funds aren’t, writing about the activity should be straightforward. Include in Structuring SARs:
- Why you feel the activity is meant to circumvent the filing of a CTR.
- The pattern of the cash activity. The narrative isn’t meant to be a transcript of every cash deposit and withdrawal, but a summary of the activity.
- Whether multiple people or multiple branches were involved.
- Whether CTRs are ever filed. The fact that CTRs are sometimes filed on the account, or by the subjects, doesn’t negate Structuring, it just makes it a bit less likely that there’s intent to circumvent the reporting of a CTR.
- The source of cash if you know it. If you don’t know it, include the fact that you don’t know the source of cash.
There are many scenarios whereby Human Trafficking can show up in transaction activity. Alerts may be revealing the victim or the perpetrators. Management needs to decide whether they’ll file on Human Trafficking activity that’s below the filing threshold. Some feel the topic of human trafficking is so vile, that filing on any amount is warranted. Some AML software systems have distinct alert types designed to alert on human trafficking activity, and some even trigger on phone numbers, using sex services publications and websites to compare customers’ phone numbers against published phone numbers.
Be sure your procedures include what will prompt your filing so you don’t have one investigator filing on just a phone number match, while another investigator won’t. When writing the SAR, be sure to specify whether you believe your customer is the victim or the perpetrator. This is one SAR where you might include more detail than usual. Describe the multiple ride-share transactions, many at the same time. Describe the multiple fast-food transactions… in numbers and amounts that suggest no one person could have eaten that much food. Describe the multiple hotel transactions.
There are other avenues where potential human trafficking activity could come to your attention outside of a specific Human Trafficking alert. Consider a regular alert on business activity – perhaps a janitorial service or a real estate management firm. As you’re investigating the activity you realize there are a lot of personal expenses showing up in the activity. Initially, you might assume the business owner is using the business account for personal expenses like food, health and beauty aids, or doctor appointments. But you later realize there’s a lot of that activity. You then realize there isn’t a lot of activity that you’d normally find with a janitorial service or property management firm. There would be enough suspicion in this activity to file on potential Human Trafficking, even if you don’t see fast food, rideshare, and hotel activity. Remember that it could be multiple pimps acting together and the other activity could be on the other pimp’s debit card. When writing this SAR, be sure to describe the absence of normal expected business activity in addition to describing the suspicious transactions.
With Human Trafficking, you simply have to pull all evidence into the picture and tell the story for the Law Enforcement Officer. Remember that your role isn’t to be judge and jury, but to present the facts surrounding “suspicious.”
Elder Financial Abuse
Elder Financial Abuse represents another vile topic and many institutions will file on any dollar amount. Practically all AML systems have specific alerts that trigger on certain activity for an account-holder over a certain age. As noted in an earlier article, the SAR is a story and its first paragraph must entice the reader to learn more about the story. Thus, when writing the SAR on Elder Financial Abuse be sure to include the victim’s age in the first paragraph and add “potential elder financial abuse” in the first paragraph as well.
Elder Financial Abuse situations frequently come to the attention of the BSA department via an internal referral of potentially suspicious activity from the branch network. Work with the individual who did the referral to get as many details as possible about the encounter in the branch. Use this information to help analyze the transactions you are seeing. These stories require interpreting the behavior to explain the transactions. Be clever with your internet searches in terms of what information about the victim and potential perpetrator you can uncover. Did the victim recently sell a property? Was the victim disabled in a recent accident? Did the victim receive a recent and substantial legal settlement? Search obituaries to determine if the victim’s own elderly parents recently passed away. All scenarios could point to the victim recently coming into a large sum of money. Do you see this large deposit? Was the perpetrator recently arrested on drug charges?
Make your case in the SAR to the best of your ability, file the SAR, and then follow your procedure for alerting the authorities. Be sure you know your state’s laws about reporting. Financial Institutions have a SAR Safe Harbor when reporting to law enforcement, but the state’s Elder Affairs department doesn’t usually qualify as law enforcement. Because of this, almost every state has addressed the role of a financial institution with reporting potential Elder Abuse. Some states have even designated financial institutions as Mandatory Reporters.
Stay tuned for Tackling SAR Weaknesses, Part 3!
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