Reporting a SAR on a Director
This BSA video discusses what a BSA Officer should do when they have filed a SAR on a Director and then are supposed to report the SAR to the Board - but the Board requires the names of SARs to be included in the Board report. Plus, Adam gives a real life example of when this became an issue.
Be sure to become a free member to view all of our Compliance Clips just list this!
Video Transcript
The following is a transcript of this video.
Today's Compliance Clip is going to focus on reporting to the Board a SAR on a Director.
Under the Bank Secrecy Act, there is a rule that says that financial institutions must report SARs to the board and must do this at the next available opportunity, which is usually the next board meeting. Now, there are two options for SAR reporting. The first option is to provide the full copy of the SAR to the board of directors, and the second option, of course, is to provide an abbreviated SAR, some sort of summary. The question becomes what is the best practice? Well, the best practice is to provide an abbreviated SAR, and I will explain that in this clip.
So the question becomes, how do you report a SAR that is filed on a director of the board? Because you may have this dilemma. This question for me stems back to a time when I walked into a financial institution to do a BSA review, and as I walked in, the BSA officer pulled me aside and said, “Adam, get in here, I have to talk to you.” But, basically she pulled me in and said she had this exact situation where she was going to have to report to the Board a SAR that she had just filed on a Director and was wondering what she's supposed to do.
At that time, I wasn't sure of the best option, and I had to dig a little bit. What I found was in the BSA exam manual, we actually have some guidance. It is footnote 76. Footnote 76 provides us guidance on what to do in this situation. So, Footnote 76 of the 2014 BSA exam manual, which is the current version as of the time of this recording, though that version will be updated, and I doubt this will go away, though the Footnote 76 number may change. And this footnote specifically says, “In the rare instance, when suspicious activity is related to an individual in the organization, such as the president or one of the members of the board of directors and the established policy would require notification of SAR filings to such individuals, this policy should not be followed. It goes on to say, deviations to the established policies and procedures so as to avoid notification of a SAR filing to a suspect of a SAR should be documented and appropriate uninvolved senior organizational personnel like - the president or CFO, chief operating officer, somebody like that - should be advised. So you have to keep the individual who is in the SAR out of the loop, but notify somebody else in your organization and document - that is the key - your procedures.
That is our topic for today.