Money Laundering: Suspicious Activity Reports

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2 strategies from numbers Money Laundering: Suspicious Activity Reports What you Need to Know

3 & Florida Institute of Certified Public Accountants Presentation José I. Marrero, EA Luis O. Rivera, CPA, CFF, CFE (954) (954) Ronald E. Wise (954)

4 & INTRODUCTION BASICS RED FLAGS SUSPICIOUS ACTIVITY REPORTS (SARS) Requirements Writing a proper report LOOKBACKS and CEASE & DESIST ORDER CASE STUDIES QUESTIONS

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6 & Drug Trafficking Organized Criminal Activities Consumer Loan Fraud Suspicious Activity Reports Mortgage Loan Fraud Public Corruption Ponzi Scheme Crimes Against Financial System Illegal Acquisition of Wealth

7 & BASICS Bank Secrecy Act USA Patriot Act Anti Money Laundering Office of Foreign Assets Control Title 12 Letters Suspicious Activity Reports (SARS)

8 & BASICS Bank Secrecy Act (BSA) of 1970 (P.L ) Money Laundering Control Act of 1986 (P.L ) Anti-Drug Abuse Act of 1988 (P.L ) Annunzio-Wylie Anti-Money Laundering Act of 1992 (P.L ) Money Laundering Suppression Act (MLSA) of 1994 (P.L ) Money Laundering and Financial Crimes Strategy Act of 1998 (P.L ) Uniting and Strengthening America by Providing Appropriate Tools to Restrict, Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act - P.L ) Intelligence Reform & Terrorism Prevention Act of 2004 (P. L )

9 & Structured Transactions RED FLAGS Multiple Third Party Transactions Change in Business/Deposit Pattern Incoming/Outgoing Transactions in Same Amounts International/Bank Secrecy Haven Country Wires Inconsistent with Customer Business Numerous Deposits under $10K in Short Periods of Time Transfers within Multiple Accounts with Related Signatories

10 & RED FLAGS Refusing to Supply Information, Incomplete Information, or Providing False Information Discontinuing a Transaction Exchanging Monetary Instruments of One Kind for Another Extensive Use of Cash to Purchase Monetary Instruments Below $3K Threshold Non Account Owners Conducting Outgoing Wire Transfers Sudden and Unexplained Account Activity

11 & Writing Suspicious Activity Reports Follow the Instructions Limit Use of Acronyms and Internal Processes Narrative Should be Clear, Concise & Complete Answer the 5 Ws Who, What, When, Where, Why to Explain the How Include Actions Taken and to be Taken Summarize Findings and Conclusions

12 & Writing Suspicious Activity Reports (cont.) Provide details about suspect Detail Transaction(s) and what instruments used Timeframe covered single event or over time Scope of transactions local, domestic, international locations identified Describe why transaction(s) suspicious Put it all together

13 & Writing Suspicious Activity Reports (cont.) All Supporting Documents to be Retained at Financial Institution DO NOT FORWARD ANY DOCUMENTS WITH SAR Five (5) Year Retention Period, including: Copy of SAR filed; plus Original or business record with any supporting documentation; plus Must be able to provide all supporting documentation to FinCEN, appropriate law enforcement agencies or regulatory authorities Prohibited from notifying person(s) involved in reported transaction that SAR was prepared

14 & Lookbacks and Cease & Desist Orders Voluntary or Required Institution believes or found not to have reported suspicious activity as required SARs filed determined to be incomplete or inadequate in some form Compliance and tracking system does not properly monitor, trace, or associate transactions resulting in failure to detect suspicious activity Period of review determined by institution, court or regulatory agency

15 & CASE STUDIES Sample Cases* Criminal Exposure Economic Impact Cost of Compliance/Non Compliance Fines Lessons Learned An Once of Prevention *(Additional case and fines information obtained from BankerOnline.com website at

16 & Useful Web Sites FinCEN - OCC - IRS - MSB - FDIC - Federal Reserve - OFAC -

17 & QUESTIONS?

18 & THANK YOU FOR YOUR PARTICIPATION MRW Consulting Group 950 S. Pine Island Road Suite A-150 Plantation, FL Office Fax