Mortgages Analyzed
Mortgages Analyzed
Mortgages Analyzed
 
Suspicious Activity Report (SAR)

What is a Suspicious Activity Report (SAR)?

Suspicious Activity Report (SAR)

Suspicious Activity Report (SAR) is a report to the Financial Crimes Enforcement Network (FinCEN) to report any suspicious transaction that indicates money laundering, terrorist financing, fraud, or relates to a possible violation of law or regulation.

SARs are an important tool in the hands of federal and State law enforcement agencies in identifying, investigating, and prosecuting criminals by uncovering the financial connections to the crime. FinCEN, bank supervisory agencies, and various law enforcement agencies use SARs to investigate and analyze criminal activities. SAR information is used on a case-by-case basis and by identifying and analyzing existing and emerging trends and patterns in financial crime.

Source :www.MortgagesAnalyzed.com

Contents of Suspicious Activity Report

A SAR form is filed electronically and contains the following information:

  1. Part I - Subject Information: Information about the subjects involved in the suspicious activities. The victims are not considered the subjects. This section is completed for each subject. If subjects are unknown then this section is completed only once to show that all subject information is unknown. Subject information includes name, address, gender, identification information, phone numbers, etc.
  2. Part II - Suspicious Activity Information: Information related to the suspicious activity such as amount involved, date or date range of suspicious activity, types of suspicious activity, product types involved, etc.
  3. Part III - Information about Financial Institution Where Activity Occurred: This section contains information about the financial institutions where the suspicious activity occurred. This section is completed for each financial institution involved with the suspicious activity occurred. Financial institution information includes name of financial institution, type of financial institution, address of financial institution, name of primary federal regulator, identification numbers, branch information, etc.
  4. Part IV Filing Institution Contact Information: The information about the financial institution that is filing the SAR. This section includes information such as filer name, TIN, of primary federal regulator, type of financial institution, details of law enforcement agency to which the suspicious activity was reported, contact information of the filing institution, etc.
  5. Part V Suspicious Activity Information – Narrative: This section contains a narrative of the suspicious activity. The expectation is that the narrative is clear, complete, and concise description of the suspicious activity, and includes any information that the filer believes will help an investigator to have develop a clear understanding of the suspicious activity. The narrative must be in English. This section may include attachments that provide transactional and other details in a tabular data.

Review FinCEN SAR Electronic Filing Instructions for more details on the contents of SAR and the instructions for filing a SAR.

Source :www.MortgagesAnalyzed.com

Who Needs to File a Suspicious Activity Report?

Various financial institutions are required to file SAR, which includes banks, loan or finance companies, broker or dealer in securities, money services business, casinos, and other institutions.

Are Mortgage Lenders or Originators Required to File SARs?

Yes. Mortgage lenders and mortgage originators are required to comply with the FinCEN's Bank Secrecy Act regulations and file a SAR when the transaction meets SAR reporting requirements. This requirement applies to mortgage lenders or originators that are part of a Bank, independent mortgage lenders, mortgage loan originators/brokers, and housing government sponsored enterprises. Independent mortgage lenders and mortgage brokers are considered a loan or finance company (31 CFR 1010.100(lll)). Housing government sponsored enterprises includes The Federal National Mortgage Association, The Federal Home Loan Mortgage Corporation, and each Federal Home Loan Bank (31 CFR 1010.100(mmm)).

As a result of SAR filing requirements, the mortgage lenders, mortgage originators, and housing government sponsored enterprises must have a program to monitor and detect suspicious transactions.

Source :www.MortgagesAnalyzed.com
 

SARs for Mortgages

Mortgage Products

SARs are filed for mortgage products under the following categories:

  1. Commercial Mortgage
  2. Home Equity Line of Credit
  3. Home Equity Loan
  4. Residential Mortgage

Mortgage Fraud

SARs are filed for mortgage fraud under the following categories:

  1. Appraisal Fraud
  2. Foreclosure Fraud
  3. Loan Modification Fraud
  4. Reverse Mortgage Fraud
  5. Other Mortgage Fraud

Visit Suspicious Activity Report (SAR) Trends page for the trends in SAR filing.

Source :www.MortgagesAnalyzed.com

SAR Filing

When to File a SAR?

As per FFIEC Bank Secrecy Act Anti-Money Laundering Examination Manual, a SAR is required to be filed with respect to:

  1. Criminal violations involving insider abuse in any amount.
  2. Criminal violations aggregating $5,000 or more when a suspect can be identified.
  3. Criminal violations aggregating $25,000 or more regardless of a potential suspect.
  4. Transactions conducted or attempted by, at, or through the bank (or an affiliate) and aggregating $5,000 or more, if the bank or affiliate knows, suspects, or has reason to suspect that the transaction:
    1. May involve potential money laundering or other illegal activity (e.g., terrorism financing).
    2. Is designed to evade the BSA or its implementing regulations.
    3. Has no business or apparent lawful purpose or is not the type of transaction that the particular customer would normally be expected to engage in, and the bank knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction.

These requirements are based on the regulations specified in FinCEN regulations - Chapter X (31 CFR 1000 to 31 CFR 1099).

Source :www.MortgagesAnalyzed.com

Due Dates for Filing SAR

A reporting entity is any bank, mortgage lender, mortgage originator, or any other entity that is required to file a SAR. The timing for SAR filing starts after the date of the initial detection by the reporting entity of facts that may constitute a basis for filing a SAR. In other words, the timing for SAR filing is counted from the date the reporting entity detects suspicious activity. The due date for SAR filing is based on the following:

  1. If a suspect is identified, then a SAR must be filed no later than 30 calendar days after the date when the suspicious activity was detected.
  2. If a suspect is not identified, then a SAR must be filed no later than 60 calendar days after the date when the suspicious activity was detected.

How to file a SAR?

SARs are filed electronically with FinCEN using their BSA E-Filing System. From April 1, 2013, FinCEN only accepts electronic filing through BSA E-Filing System and no longer accepts paper forms or other legacy forms. Visit FinCEN's Filing Information webpage for details for BSA forms and filing requirements.

SAR Quality

FinCEN and other regulatory agencies expect a SAR to be complete, accurate, and timely. SARs must be supported by adequate documentation to show how details of the transaction. It is essential that a reporting agency files ensures that its staff is reviewing the SAR quality before it is filed.

Source :www.MortgagesAnalyzed.com

Prohibition on Disclosure of SAR

Federal regulations prohibit disclosure of a SAR or any information that would reveal the existence of a SAR. This prohibition applies to any entity reporting the SAR, which includes bank, mortgage lender, loan or finance company. The prohibition also applies to the directors, officers, employees, or agents of the reporting entity. Therefore, it is essential that the confidentiality of the SAR is maintained at all times.

Source :www.MortgagesAnalyzed.com

Record Retention

The FinCEN regulations requires the bank, lender, or reporting entity who filed the SAR or on whose behalf the SAR is filed to maintain a copy of SAR and the originals of all supporting documentation for a period of five years from the date of filing the SAR. The entity must be able to provide the documentation to a federal or state examining authority to demonstrate that the SAR filing requirements have been met.

Source :www.MortgagesAnalyzed.com
 

Applicable Regulations

  1. FinCEN Regulations: The regulations that require SAR filing are codified in Chapter X - FinCEN Regulations. The specific regulations are:
    1. For mortgage lenders that are part of Banks, the regulations governing SAR filing requirements are codified in 31 CR 1020.320.
    2. For independent mortgage lenders, the regulations governing SAR filing requirements are codified in 31 CFR 1029.320.
    3. For housing government sponsored enterprises (Fannie Mae, Freddie Mac, Federal Home Loan Banks), the regulations governing SAR filing requirements are codified in 31 CFR 1030.320.
    4. Additionally, all filers should review 31 CFR 1010 for general provisions.
  2. Banking Agencies Regulations: The applicable regulations for each various banking agencies are:
    1. Federal Reserve Board
      1. FRB Regulation H, 12 CFR 208.62
      2. FRB Regulation K, 12 CFR 211.5(k) and 12 CFR 211.24(f)
      3. FRB Regulation Y, 12 CFR 225.4(f)
    2. Federal Deposit Insurance Corporation (FDIC)
      1. 12 CFR 353
    3. National Credit Union Administration (NCUA)
      1. 12 CFR 748
    4. Office of the Comptroller of the Currency (OCC)
      1. 12 CFR 21.11
      2. 12 CFR 163.180
  3. FFIEC BSA/AML Exam Manual: The Suspicious Activity Reporting - Overview section of the 2014 FFIEC Bank Secrecy Act/Anti Money Laundering Examination Manual provides guidance on SAR filing.
Source :www.MortgagesAnalyzed.com
 

Document Summary

 
Suspicious Activity Report (SAR)
Purpose
The purpose of SAR is to report suspicious activities to FinCEN.
Use in Mortgages
Lenders use this form to comply with BSA/AML regulations to report suspicious activities.
Common Names
Suspicious Activity Report
Type
Form
Provided By
Banks, Loan or Finance Company that includes mortgage originator and mortgage lender, and other financial institutions
Provided To
FinCEN
Notarization Required
No
Signed By
No
Life Cycle Stage
SAR may be filed during loan origination or servicing.
Recordkeeping
SAR and its supporting documents must be retained for a period of five years from the date of filing the SAR.
Model Form
N.A. Filed electronically.
Applicable Laws
BSA/AML regulations (FinCEN Chapter X, 31 CR 1020.320, 31 CR 1029.320, 31 CR 1030.320) and various federal banking regulations.
Source :www.MortgagesAnalyzed.com
 

Updated: May 20, 2017

Comments

comments powered by Disqus
SAR is used to report suspicious activities and financial crimes.
Finance
Know all there is to know about the US Mortgage Industry. We help you to make a well informed decision.
Finance
Loan Products
Confused about the choosing right loan product for you? We help you decide the loan product that suits your needs best.
Loan Products
Documents
Here you will find all there is to know about the forms, papers & documents required for Home Loan Mortgage and much more.
Documents
Regulation
List of all the Regulations related to US Mortgage Industry.
Regulations