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WASHINGTON-In a report last year, Credit Union Times uncovered that credit unions claiming NCUA as their primary regulatory agency had the lowest record among financial institutions for completing the narrative portion of the Suspicious Activity Report (SAR), which helps law enforcement track money laundering, identity theft, and other financial frauds. At the time, Financial Crime Enforcement Network (FinCEN) Assistant Director David Vogt emphasized that the narrative section is one of the most important parts of the SAR. Law enforcement officials suspect that many of the crimes the SAR is supposed to detect were perpetrated in the planning and execution of the terrorist attacks of September 11 on New York City and Arlington, Va. In fact, according to the June 2001 SAR Activity Review: Trends, Tips & Issues, under a section about the importance of the narrative, it reads, “The information obtained from the filing of SARs plays an important role in identifying potential illegal activities, such as money laundering, and it assists in the detection and prevention of the flow of illicit funds through our financial system. For these reasons, it is critical that the information conveyed in SAR filings be as accurate and complete as is possible.” The next report is due out the end of this month, but according to FinCEN Spokesperson Sheri James, the program, which singled out institutions by regulator, has not yet been run again and may not be. While Vogt was not available again at this time due to the increased diligence of the law enforcement agencies in the aftermath of the terrorist attacks, James said, “The narrative has always been emphasized as really critical, but of course, now more than ever.” She explained that the narrative portion is the institution’s chance to describe in its own words exactly what has been occurring. SARs should be filed with the Internal Revenue Service Detroit Computing Center as soon as possible, as well as with law enforcement agencies if immediate attention is deemed necessary. All SARs are also sent to FinCEN, where law enforcement agencies can all access the information. For its part, NCUA has posted on its Web site a compilation of recent efforts to combat laundering of terrorist money, including a Regulatory Alert (01-RA-10) describing the president’s executive order to freeze terrorist assets and how credit unions should respond and the Specially Designated Nationals list from Treasury’s Office of Foreign Asset Control (OFAC). “This order is the first in a series of anticipated OFAC actions regarding terrorists and terrorist organizations,” the alert, signed by NCUA Chairman Dennis Dollar, reads. “It is possible that additional sanctions may be issued by OFAC in the near future. Credit unions are advised to check OFAC’s Web site daily for updated notices.” NCUA also provides FinCEN’s hotline number (866) 556-3974 for reporting suspicious activity, as well as OFAC’s (800) 540-6322 for compliance questions. How to file In filing a SAR, FinCEN advises institutions to go back to elementary school current events projects to fill out the narratives with the essential five w’s: who, what, where, when, and why, in order to provide a “chronological and complete account of the possible violation of the law.” * First, the SAR narrative should address who is involved in the activity, including the suspect’s occupation or the nature of the suspect’s business. Identify all involved in the suspicious activity to the fullest extent possible. * Indicate what instruments or mechanisms are being used in the transactions, including wire transfers, casinos, shell companies, etc. * Next, explain exactly where the suspicious activity is taking place including all bank accounts, if multiple branches of the same institution were used, or if it involves a foreign jurisdiction. * Describe when the suspicious activity occurred, including when it was first noticed and the duration of the activity. Filers often include a tabular presentation of account activities, which while the information is helpful, on a practical level do not convert properly when input into the SAR database. Do not insert objects, tables, or pre-formatted spreadsheets. * Finally, tell why the activity was suspicious. Briefly describe your industry or business and then explain why the activity or transaction is unusual for that customer. For example, FinCEN provides some common patterns of suspicious activity including no evidence of legitimate business activity; unusually large numbers of wire transfers; unusually complex series of transactions; many transactions conducted in a short period of time; or beneficiaries maintaining accounts at foreign banks that have been subjects of previous SAR reporting due to suspicious wire transfer activity. Everyone doing their part While law enforcement has been urging financial institutions to report suspicious activity as quickly as possible, lawmakers are working to tighten laws to combat money laundering, which officials believe was used to fund the terrorist attacks on the World Trade Center and the Pentagon. The Senate Banking Committee planned to mark up The International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001 shortly after deadline. While Senate Banking Committee Chairman Paul Sarbanes (D-Md.) has supported efforts to crack down on money laundering for some time, Ranking Member Phil Gramm (R-Texas) has been an ardent opponent. However, in the wake of the attacks, he seems to have changed his tune. During a committee hearing on the subject, Gramm said that he was on board with money launder legislation, with some reservations. “Whatever approach the [Treasury] Secretary decides to take, it seems to me, he has to come forward with findings in taking that action, findings that are potentially rebuttable in court in a timely manner,” Gramm said. “And if there are security concerns in those findings, at least he ought to go before a circuit judge in private and present those findings. I can’t imagine that we would give anyone in a free society the unchecked authority to take actions that would destroy tens of millions of dollars of someone else’s property without requiring some system of checks and balances.” On the House side, Financial Services Committee Chairman Michael G. Oxley (R-Ohio) and Ranking Member John LaFalce (D-N.Y.) planned to introduce legislation targeting the financial networks of terrorist organizations at press time. The legislation was to include provisions bolstering law enforcement’s ability to detect and annihilate terrorist funds; establish a public and private sector partnership; and track terrorist money stowed away in offshore accounts and increase foreign cooperation. “While U.S. forces prepare to act against terrorists militarily, we are preparing to act against terrorists financially,” Oxley said. The legislation includes measures making it a crime to smuggle currency in excess of $10,000 and to knowingly falsify a customer’s identity when making a transaction with a financial institution. The bill directs the Treasury Secretary to create regulations that require financial institutions to verify a consumer’s identity before opening any accounts. Existing laws will be strengthened without significant additional regulatory burden, according to the chairman’s statement, and the legislation will streamline and strengthen the Financial Crimes Enforcement Network and develop a web site for e-filing of SARs. “Chairman Oxley and I have agreed to work on a bipartisan basis to give the U.S. the tools it needs to combat money laundering and terrorist funding,” LaFalce said. “I know working together in this fashion we will be able to ensure that our nation’s laws are up to the task at hand.” [email protected]

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