Suspicious Activity Report (SAR) Busts Fraud Scheme Posted by AVCU on 12:02 PM

The Financial Crimes Enforcement Network (FinCEN) website reports the story of a fraud case that supports how important it is for financial institutions to know their customers/members, have appropriate staff training and to submit suspicious activity reports (SARs) whenever necessary. The case highlights a scheme targeting the elderly by offering non-existent certificates of deposit. “As part of the scheme, one of defendants rented office space in one state and hired workers to handle investor inquiries. He also established a mail drop in a distant city to receive investor payments. The bank SAR that initiated the case noted that one of the defendants opened accounts for several businesses that ultimately turned out to be fronts for the fraud scheme. The bank noticed that checks made out to one business were deposited into the account of another business. In addition, the bank believed the transactions in the account were indicative of fraud because there appeared to be no discernable legitimate business activity, only small monthly payments to individuals that appeared to be interest payments. The SAR narrative described critical elements of the crime in detail.”

Law enforcement and prosecutors stated that “the SAR proved instrumental in ending the scheme and the funds in the frozen account provided restitution for some victims. The two defendants were sentenced for their roles in the scheme.” FinCen is working to make it easier for financial institution staff to file currency transaction reports (CTRs) and SARs by continuing to enhance its newly developed BSA E-Filing System website. The full story of the fraud case is on FinCen’s website for viewing.

On a related note, AVCU’s 2009 BSA/Anit-Money Laundering Training Seminar is being held for affiliated credit union employees on 10/20/09. Follow the link for details. The seminar fulfills the required financial institution training obligations of the BSA and Patriot Act.