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BSA/AML Hot topics: FinCEN providing more feedback about SAR filings

By Naomi Glass, BSA/AML Compliance Manager

As the end of the year draws near and annual performance reviews approach, I invite you to imagine the following workplace scenario: Your manager meets with you to discuss your 2019 job performance. You worked hard all year and performed your duties thoroughly, so you are certain you’ve met your goals and objectives (and that you will be rewarded with a sizable merit increase and bonus). Suddenly, your manager says your performance this year was not up to par. And that means no raise, no bonus. Stunned and disappointed, you wonder how this could be. Your manager never offered negative feedback about your performance during the year. In fact, you were never provided with any feedback about your performance.

2019 SAR stats at-a-glance:

  • Over 1 million SARs were filed by depository financial institutions.
  • Approximately 12% of these SARs were filed by NCUA-regulated credit unions.

This unfortunate scenario represents an issue that BSA/AML compliance professionals have grappled with for a long time, metaphorically speaking. The difference between the fictitious scenario just mentioned and the real one BSA/AML compliance professionals face relates to the lack of feedback received regarding the quality of the suspicious activity reports (SARs) they file each year with the Financial Crimes Enforcement Network (FinCEN). Fortunately, FinCEN is taking steps to start providing this crucial feedback to those of us in the industry.

As you may recall, one of the critical functions of FinCEN under the Bank Secrecy Act (BSA) is the collection, maintenance, and dissemination of data on suspicious activities included in SARs. FinCEN and the law enforcement community use SAR data to identify trends and develop intelligence information on money laundering and terrorist financing activities. Understandably, it is vital that SAR data be accurate and complete. Unfortunately, an audit report released in March 2018 by the Department of the Treasury’s Office of Inspector General revealed data-quality errors in fields deemed critical by FinCEN in over 33% of SAR filings. A recommendation was made that FinCEN address areas for which additional filer education is needed for specific instances or systemic errors identified with specific filers or the filer community.

As a result, FinCEN began posting a new guide this past October called the “BSA Filer Data Issues report” (BFDI report). The BDFI report summarizes a systemic SAR data issue or trend identified by FinCEN analysis that affects many filers and seriously impacts BSA data users. The reports request the identified issue(s) be corrected going forward; however, the reports do not create any new regulatory obligations or expectations for SAR filers. These reports will be posted periodically in two locations:

FinCEN encourages users with access to these sites to share the BFDI reports with all staff members that are responsible for writing and filing SARs.

Clearly, FinCEN is making a concerted effort to provide more feedback to BSA/AML compliance professionals about their SAR filings and how to improve the data included within them. This is welcome news. Hopefully, your manager makes the same effort so that there are no surprises come performance-review time.