With SARs on the rise, financial institutions demand more information-sharing from regulators

agosto 30, 2017

In May 2013 FinCEN issued its final publication of the SAR Activity Review, a bi-annual report that provided information about the preparation, use and value of Suspicious Activity Reports (SARs) and other reports filed by financial institutions under FinCEN’s regulations. When FinCEN discontinued the publication, a wealth of insight and regulatory feedback on suspicious activity reporting was lost. The absence of the SAR Activity Review has hindered the opportunity to empower financial institutions to be a more effective AML/CTF partner with law enforcement.

Integro Advisers reached out to FinCEN for a comment. FinCEN’s public affairs chief commented that their previous Director thought that the agency’s “limited resources (roughly 325 people) should be better used elsewhere” and that a “future FinCEN Director may advocate returning the SAR Activity Review.”

A review of FinCEN’s budget since 2010 shows funding levels of $131 million (MM) from 2010 to 2011, with a drop to $110MM and $113MM in 2012 and 2013, respectively. In 2014 when the SAR Activity Review was discontinued, FinCEN’s budget dipped to $106MM in funding, but since 2015 to the present, levels have hovered between $112 – $115MM. The question remains: Why hasn’t FinCEN resumed publication of one of their most important resources to the financial compliance sector when they’ve seen an increase in their budget since 2014? The numbers seem to conflict with the official response provided by FinCEN.

It should be noted that FinCEN’s SAR Stats online tool publishes data on reporting but it only dates to 2012. A cursory review of SARs filed by U.S. depository institutions relating to funds transfers in New York, Miami, and Los Angeles revealed a 22% average increase per year since 2013 which may suggest that the financial industry is trying to be proactive in the fight against money laundering and terrorist financing. Still, the SAR Stats online tool lacks any additional insight or contextual analysis that would provide compliance departments an edge up on how to better carry out their fiduciary and regulatory requirements, and at a minimum, trends in suspicious activity reported.

Last month the American Bankers Association (ABA), in an open letter to Treasury Secretary Mnuchin, referenced the absence of the SAR Activity Review in addition to existing barriers to communication and information sharing, including SARs, which they argued hinder AML/CTF efforts. The Trump administration’s view on deregulation begs the question: how committed will the Treasury Department be under Secretary Mnuchin’s leadership for investing in the resources and communication the banking industry has demanded. It remains to be seen. What is clear is that the AML compliance community can do with more transparency and information sharing, not less.