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BSA/AML Hot Topics: Tips on writing stellar SARs

If you are interested in learning how to write stellar SARs directly from members of law enforcement, please consider attending the next meeting of the Central Ohio ACAMS Chapter in November. Virtual attendance for members AND non-members is free for this event.

Register for the November ACAMS Chapter event

By Jennifer Morrison, VP, Senior Risk Manager

The culmination of the hard work of managing referrals and alerts in the BSA/AML world is the writing of the Suspicious Activity Report (SAR). But what makes a SAR that is actionable by law enforcement? In other words, what makes a SAR truly stellar? While you cannot necessarily control the scope of the alleged crime or identify the alleged criminal, writing the best possible SAR is one area you can control.

Law enforcement literally gets millions of SARs from all sorts of reporting agencies – casinos, insurance, real estate, and financial institutions. Some of us have personally filed thousands of SARs, but often, they seem to go into a black hole, and you and your staff never get that telephone call or subpoena to provide documentation. On the occasion when you do get a request from law enforcement for documentation, while providing that information can be a lot of work, it’s a relief to know that someone in authority is working on the suspicious activity you and your staff found so compelling (so much so that you filed a SAR on it).

So, what makes a stellar SAR? Several components are key.

First, the type of alleged crime or suspicious behavior can set your SAR apart. The federal, state and local law enforcement agencies have task forces and often accompanying grants of funds focused on certain crimes. These crimes include:

  • Those that target senior citizens, citizens with disabilities, and human trafficking
  • Those in a High Intensity Drug Trafficking Area (HIDTA) or High Intensity Financial Crime Area (HIFCA).
  • Paycheck Protection Program (PPP) loan fraud
  • Cyber intrusion and cyber threats
  • Mortgage fraud

In addition, on September 16, the Financial Crimes Enforcement Network (FinCEN) released a Notice to call attention to an increase in online child sexual exploitation crimes. Anytime FinCEN issues a Notice or guidance, you should pay attention, read the material, and follow instructions that might include certain verbiage. Note that law enforcement uses word searches on SAR narratives to locate certain criminal activities of particular interest.

Second, there is no doubt that the dollar amount of your SAR matters. While it’s sad to say this because the dollars lost in any amount by one of your members can be very important to him or her, law enforcement departments are understaffed and often overworked, which means the manpower to pursue $10,000 versus $100,000 of criminal activity can be similar. Prosecutors are often more interested in the bigger drug bust; this kind of news gets headlines.

Third, and this is where you and your top-notch staff can make a difference, the quality of your SAR really matters. This is what you and your staff can control. Here are a few specific tips on writing a quality SAR:

  • First, your SAR must be accurate and timely. Remember your deadlines that are based on the presence or absence of a suspect and the dollar thresholds. File early, even! If your investigation is complete, why wait to file the SAR? You also can file a SAR for activities that fall short of the threshold. And attempted cyber-crimes may not have dollars associated with the activity, but you should file and follow instructions provided by FinCEN in 2016 and newer COVID-19 related guidance issued in 2020.
  • Second, the quality of your SAR narrative is crucial. Numerous law enforcement officials that have been guests at the Central Ohio ACAMS Chapter meetings have told the assembled group that the narrative is the MOST important part of the SAR.

Because it’s so important, let’s focus for a moment on four keys to a strong narrative:

  • One thing law-enforcement officials have said over and over is to grab their attention with the first sentence. If the SAR is being filed for alleged tax fraud, your first sentence should state something like the following: This SAR is being filed on an alleged Tax Fraud Scheme totaling $XXX. Time and time again, law-enforcement officials have asked that you DO NOT start your SAR with an introductory paragraph about the credit union, its regulation, and where it is located. They do not have time to read about your credit union. If you feel that you need to describe your relationship to the suspect or your regulator, do so at the end of the narrative. Law enforcement has all the information they need on how to contact you from the SAR form itself.
  • Also, do not reiterate the data from the SAR itself other than to summarize one or two key points. Do not take up space in the narrative to recreate a data table. Attach a data file if you want to describe a series of dates, dollar amounts, and locations. It is also very useful for law enforcement if you give details of any personal interaction and let them know if there is a video available.
  • Next, do not forget the five “Ws” and one “H” of the narrative: Who, What, Where, When, Why, and How. One of the most important questions to answer in your narrative is Why. Why did you and your credit union feel it was important to file this SAR?
  • Finally, when it comes to writing a Stellar SAR, consider using a “narrative reviewer.” This is someone within your BSA/AML or compliance department that is assigned to conduct quality control (sworn to secrecy, of course) before you submit the SAR. If he or she can read your narrative and have the gist of the story you are telling using the five “Ws” and one “H,” it is a good narrative.

When to contact law enforcement directly

If you believe your SAR is especially urgent or important, you should contact law enforcement directly. Here are a few examples:

  • If you believe you have a member who is being exploited by a caregiver, call your local police or sheriff.
  • If you have a local business who has been attacked by Business Email Compromise (BEC), the FBI asks that you file an additional report of such activity.
  • If you believe you have a drug-related activity, you may want to start locally, and they may escalate your call. Your state attorney general’s office may also have task forces when it comes to opioids, cannabis business and licensing issues, and other drug crimes. Check their websites for contact information and direction.
  • Do not hesitate to call federal authorities any time you believe you have potential terrorist activities, cross-border criminal activities (like drugs or weapons), and any cyber intrusion of your credit union (also call your regulator in the case of the latter).
  • If your member is potentially involved in one of the romance scams, do not call unless you have actionable information on the suspect. The crime is likely more of a federal matter, and, unfortunately, it is much harder to convince a federal official to handle, especially if the suspect is overseas. There are sadly too many such incidents.

If you have not already done so, I encourage you to immediately create a list with names, telephone numbers, and emails for contacts at your local, state, and federal law enforcement offices. Then you won’t have to scramble at the last minute to find the information you need.

In conclusion, writing a stellar SAR is one of the best ways to help get your SARs read and acted upon by law enforcement. This is the one area you and your staff can control when it comes to filing SARs. I hope you find these in-depth tips helpful not only right now but also for the future.