VIDEO: BSA SAR Disclosure
In this Compliance Clip (video), Adam discusses a recent FinCEN memo warning media outlets to not publicly disclose SARs illegally leaked to them… and they did! Adam gives a background on this situation and quotes a recent article that should be intriguing for anyone in the BSA world. And you won’t believe how many SARs were publicly released!
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Video Transcript
The following is transcript of this video.
This Compliance Clip is going to talk about BSA SAR Disclosure. This is something that is kind of exciting for us, BSA Officer geeks. That’s me. You’re probably not a geek, I am but it's okay! It was kind of fun because this was something that was released and it's actually something that we covered and just recorded in our BSA Annual Update program. I wanted to share this with you. I remembered us at Compliance Cohort cause I thought this was fun and fun slides to go over.
On September 1, 2020, FinCEN issued a statement advising against SAR disclosure by various media outlets. What happened was this came out of nowhere. Just the FinCEN announcement said, “Hey, media personnel, media companies, we know you're planning to do this. We know you’re planning to disclose SARs that were leaked to you illegally. Don't do it.” That's basically what it said. I thought, oh no, some light bulbs went off and I remembered what this related to, at least I thought, and I think I figured it out.
If you recall, there were a number of media articles that dated back in 2017, about some of the President of the United States’ key team members and other people and possible involvement with election fraud and Russia, you probably remember hearing some of this, but there were some articles that referenced SARs, Suspicious Activity Reports. Well, of course, somebody from FinCEN ended up getting arrested. This was a former, now former senior official of FinCEN. Her name was Natalie Mayflower Sours Edwards. You probably remember this if you follow BSA stuff, but what happened was she got caught with a whole bunch of SARs on a thumb drive and was arrested for possible disclosure, alleged with this, alleged with that. She was claiming she was a whistleblower, it went to court, and in early 2020 she actually pled guilty to that. We connected the dots and you kind of figure out which media outlet is writing articles but they never ratted her out. She ended up pleading guilty so it’s all public information, but the media outlet, of course, was Buzzfeed. Buzzfeed had these articles.
What they did here recently, very recently, on September 20, 2020, so this guidance came out from FinCEN on September 1st, but on September 20, 2020, they released their article. They released what they called “FinCEN files”. Guess what it contains, at least what they claim in the article. It contains over 2,100 illegally disclosed SARs to them. They did redact some information and took certain identifying information out like EINs and tax ID numbers, but there are copies of files out there. I dug a little bit. I didn't spend too much time looking for these actual files and didn't read the article, but in looking at these files, I did find, clearly on their page, they had at least two Suspicious Activity Reports that were batch filings. One from the Bank of America and one from HSBC. They were out there and you can read the SAR narratives, pretty much they were there. There was a little bit of redacted information, but there was a lot of information there. So they did release this.
What's interesting here is this Buzzfeed article. You can look it up and you can read this, just do a Google search of Buzzfeed FinCEN file September 20, 2020, and you're going to find it. It's easy to find it and a lot of people who have written about it were trying to find the Buzzfeed version, not the versions talking about the Buzzfeed article. Anyway, what it specifically says in this article, at least the version that I read today at the time of this publishing, a couple of things that are interesting for BSA officers looking and a little thought-provoking if we want to go there.
The first thing it said was, “Suspicious Activity Reports are written by the bank’s financial crime watchdogs known as compliance officers.” Well, wait a second, Buzzfeed, it's technically BSA compliance officers because we have compliance officers designated for consumer protection but we also have BSA compliance officers. Sometimes, for the smaller institutions it is the same person, but it's definitely a different designation. So get your facts straight. Right? That's BSA nerds. Anyway, they say, “These compliance officers who are often parked in remote offices and left to make sense of a vast number of transactions with very few resources, writing SARs with little research for verification.” I don't know about you, but if you have ever written a SAR, I really doubt you did very little research or verification. I don’t know where they are getting this information. What their article is really getting at is they're saying that financial institutions are letting transactions happen.
Of course, the way SARs work is that our financial institution has a little piece of the puzzle. We're supposed to report that up to FinCEN that has this massive directory, so to speak, or repository that collects all the SARs from all financial institutions. They should be able to see the larger puzzle by looking and searching by EIN number. Of course, financial institutions have a small piece of the puzzle, especially smaller financial institutions. Where Buzzfeed had done the research and looked at these 2,100 SARs, multiple SARs from multiple financial institutions, because somebody in FinCEN curated that for them, right so they had all this information and they're basically saying the banks weren't doing their job. I don't know, thought-provoking, something to think about. An interesting statement by Buzzfeed.
Moving on, here's what they also said. They said, “Meanwhile, experts say some banks treat SARs as a kind of a get-out-of-jail-free card, filing alerts about a huge array of transactions without actually moving to halt them.” What they're talking about is they're saying all these SARS are being filed but banks don't do anything to stop the transactions from occurring. I know in smaller financial institutions, oftentimes if they have suspicious activity, they will close the account. They’ll say we don’t want to do business with you. That seems to me what this article is getting at, but I'll let you decide. It's an interesting read and I want to point this out for you to take a look at.
We had a pretty good conversation in our BSA Annual Update. This was one of the topics that was covered.