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You Never Know When You'll Need a SAR
Monday, June 9, 2014 7:00 AM

Several credit unions have recently commented on growing examiner “write-ups” regarding the need to file more Suspicious Activity Reports (SARs). It’s understood that some institutions are in very stable, closed communities that have little traffic or transience.  According to Steve Gibbs, assistant vice president of Shared Compliance Resources, it’s important to remember that we live in “world community” now and that things happening on the other side of the globe can affect even the smallest credit union. 

According to Gibbs, about a year ago a credit union reported that it was receiving large sums of money in the account of a missionary from an African nation. Oddly, money wasn’t being sent back to the country of this person’s missionary work, but was being sent in to the credit union and soon disappearing from the account. After speaking with the compliance officer, both Gibbs and the compliance officer decided to do some in- depth investigation on the account holder and found out some interesting facts. 

The country from which this person originated, and the location of their missionary work, was in the middle of a major civil war. Gibbs added that he and the compliance officer also found out that there was a significant amount of arms sales to both sides of combatants in the civil war through private sources in numerous countries (including the U.S.).  Plenty of information was available through U.S. government web sites. Given the already questionable circumstances, the compliance officer contacted this account holder (missionary) and asked some additional questions about large amounts of funds entering and leaving the account.  Answers received were vague and left many open issues as to the origin or eventual destination of the funds. Within 24 hours, the account was closed and upon checking the address given, found that the account holder no longer occupied the address provided.  Was this a case of gun-running or purchasing arms for soldiers?  It was never determined.  The credit union did file a SAR, presenting all of the information gathered by the alert compliance officer.

Gibbs reminds all credit unions that It’s important to remember that SARs don’t just cover drug running and terrorism.

“There are many situations that compliance and security officers must consider in the realm of suspicious activity (Ponzi schemes, dealing in arms/guns, political corruption). Compliance officers, as well as all credit union staff, should maintain knowledge and resources to stay informed of developments and changes that might bring about new areas of concern or suspicion,” Gibbs says. “Compliance officers have a responsibility to report all activity that is questionable or suspicious and should allow appropriate due diligence before making the call to file a SAR.” 

Additionally, Gibbs recommended (If possible) forming a small “SAR Committee” of senior management to review circumstances and weed out events that might be easily explained through someone else’s experience. 

“We have a responsibility to protect our members, and on a larger scale, as citizens to assist in keeping our country safe,” he adds.