Credit Union Regulatory Guidance Including: NCUA, CFPB, FDIC, OCC, FFIEC

Samantha: Hello, this is Samantha Shares.

This episode covers
Frequently Asked Questions.

The following is an audio
version of that document.

This podcast is educational
and is not legal advice.

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And now the Frequently Asked
Questions Regarding Suspicious

Activity Reporting Requirements.

October 3, 2005.

The Financial Crimes Enforcement Network,
jointly with the Board of Governors of

the Federal Reserve System, the Federal
Deposit Insurance Corporation, the

National Credit Union Administration, the
Office of the Comptroller of the Currency,

and the Office of Thrift Supervision, is
issuing interpretive guidance in response

to questions received regarding the
filing of Suspicious Activity Reports.

The purpose of this guidance is to
clarify the regulatory expectations

and requirements for financial
institutions with respect to the

reporting of suspicious activity.

Financial institutions are reminded
that Suspicious Activity Reports are

one of the most important sources
of information available to law

enforcement and regulatory agencies
for detecting financial crime,

and are used in a wide range of
investigations and enforcement actions.

Below are answers to frequently
asked questions regarding suspicious

activity reporting requirements.

Question 1: S A R Filings for
Potential Structuring related Activity.

Is a financial institution required to
file a S A R for transactions or a series

of transactions in which a person or
persons are structuring transactions to

avoid the C T R threshold, even though
the total amount of currency involved

does not exceed ten thousand dollars?

Yes.

The mere purpose of structuring
is evidence of suspicious

activity regardless of the amount.

If one person or two or more persons
act together to break up currency

transactions to avoid the ten thousand
dollar C T R threshold, then information

sufficient to identify the activity
should be reported on a S A R.

For example, if an individual
conducts multiple cash deposits of

nine thousand five hundred dollars
or less into different accounts

to evade a C T R, the financial
institution is required to file a S A R.

A financial institution is required
to file a S A R for a transaction

conducted or attempted by, at, or
through the institution if it involves

or aggregates at least five thousand
dollars in funds or other assets, and

the institution knows, suspects, or has
reason to suspect that the transaction:

One, involves funds derived from illegal
activities or is intended to hide or

disguise funds from illegal activities.

Two, is designed to evade Bank
Secrecy Act requirements, such

as structuring to avoid a C T R.

Three, has no business or
apparent lawful purpose.

FinCEN has consistently advised
that financial institutions must

file S A R s for structuring even
when the total amount of currency

is less than ten thousand dollars.

Under FinCEN guidance, structuring
transactions to evade reporting

requirements is suspicious in and
of itself and must be reported.

Financial institutions should not ignore
structuring simply because the total

amount falls below the C T R threshold.

The fact that the amount is below ten
thousand dollars does not eliminate

the obligation to file a S A R.

Question 2: Continuing Activity Reviews.

Is a financial institution required
to conduct a review of a customer

or account following the filing
of a S A R to determine whether

suspicious activity has continued?

Yes.

Recognizing that suspicious conduct
does not end once an initial S A R

is filed, FinCEN guidance issued in
October two thousand advised that

institutions must review their S
A R filings to determine whether

additional S A R s should be filed.

The continuing review should determine
whether suspicious activity has persisted

and whether further S A R s are warranted.

Institutions are required to file
continuing activity S A R s no later

than ninety days after the date of
the previously related S A R filing,

if suspicious activity continues.

Financial institutions must establish
policies and procedures to identify

and report ongoing suspicious activity.

Institutions are expected to
document reviews conducted and

provide the rationale for whether
a subsequent S A R is necessary.

Question 3: Continuing
Activity Reviews – Timeline.

What is the timeline for a financial
institution that elects to file S

A R s in accordance with FinCEN’s
continuing suspicious activity guidance?

As noted in prior F A Qs, FinCEN
previously recommended that financial

institutions report continuing
suspicious activity with a new S A

R filing at least every ninety days.

Subsequent S A R s must be filed no later
than one hundred and twenty calendar

days after the date of the initial S A R.

The standard timeline is: Day
one: Date of suspicious activity

detection, begin review.

Day thirty: File initial S A R.

Day ninety: Review whether
suspicious activity continues.

Day one hundred and twenty: File
continuing S A R if necessary.

This timeline ensures that law
enforcement is kept informed of

continued suspicious activity.

Institutions must maintain procedures that
identify and escalate potential continuing

suspicious conduct to compliance officers
responsible for S A R decision-making.

Question 4: No S A R Documentation.

Is a financial institution required to
document the decision not to file a S A R?

Yes.

There is no requirement or regulation
that requires an institution to document

its reasons for not filing a S A R.

However, FinCEN has stated that
financial institutions should maintain

sufficient documentation to support the
rationale for their decision not to file.

This documentation should be
retained in accordance with the

institution’s internal policies
and record retention requirements,

and must be available to examiners
and law enforcement upon request.

This concludes the questions.

If your Credit Union could use assistance
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This is Samantha Shares and
we thank you for listening.