TWO OFFICERS WALK INTO A CREDIT UNION WITHOUT LEGAL PROCESS
About a month ago, you filed a suspicious activity report on a member you suspect is funneling drug money through your credit union. This guy gives you the creeps and for good reason! He shows up to your branch every week to deposit tons of money and records show he is currently unemployed. On a scale from Ursula to Heath Ledger’s Joker, this member is a certified villain. Turns out, your crime fighting senses are spot on. The police show up to your main branch to retrieve the supporting documents of the suspicious activity report (SAR) without a search warrant or subpoena in hand. What should you do?
Law Enforcement
First, you may want to figure out if these law enforcement officers are legitimate and supposed to request this evidence of a crime. If a mall cop requests this information, he is likely not the type of law enforcement who should handle these documents. Asking for the officer’s credentials or badge is a great first step. Make sure the officer is legitimate.
The FFEIC Manual provides a non-exhaustive list of law enforcement that you may reference (footnote 79):
“Examples of agencies to which a SAR or the information contained therein could be provided include: the criminal investigative services of the armed forces; the Bureau of Alcohol, Tobacco, and Firearms; an attorney general, district attorney, or state's attorney at the state or local level; the Drug Enforcement Administration; the Federal Bureau of Investigation; the Internal Revenue Service or tax enforcement agencies at the state level; the Office of Foreign Assets Control; a state or local police department; a United States Attorney's Office; Immigration and Customs Enforcement; the U.S. Postal Inspection Service; and the U.S. Secret Service. For additional information, refer to Bank Secrecy Act Advisory Group, "Section 5—Issues and Guidance," The SAR Activity Review—Trends, Tips & Issues, Issue 9, October 2005, page 44 on the FinCEN Web site."
Again, if this guy walks into the credit union requesting SAR information, be aware he may not be appropriate law enforcement. Vet the credentials and don’t fall for the cop ‘stache!
Legal Process
SAR information is very important legal information. This may cause you to believe that law enforcement should always request this information through legal means. On the contrary, FinCEN dispels this narrative.
FinCEN provides:
“(3) No Legal Process is Required for Disclosure of Supporting Documentation
The Right to Financial Privacy Act (RFPA) generally prohibits financial institutions from disclosing a customer’s financial records to a Government agency without service of legal process, notice to the customer and an opportunity to challenge the disclosure.9 However, no such requirement applies when the financial institution provides the financial records or information to FinCEN or a supervisory agency in the exercise of its “supervisory, regulatory or monetary functions.”10 In addition, no such requirement applies when FinCEN or an appropriate law enforcement or supervisory agency requests either a copy of a SAR or supporting documentation underlying the SAR.
With respect to supporting documentation, rules under the BSA state explicitly that financial institutions must retain copies of supporting documentation, that supporting documentation is “deemed to have been filed with” the SAR, and that financial institutions must provide supporting documentation upon request.11 FinCEN has interpreted these regulations under the BSA as requiring a financial institution to provide supporting documentation even in the absence of legal process. FinCEN understands that this is in accord with the RFPA, which states that nothing in the act ‘authorize(s) the withholding of financial records or information required to be reported in accordance with any Federal statute or rule promulgated thereunder.’”
This also means that if these agencies request information beyond the supporting documentation, then law enforcement will likely have to serve legal process to access that information.
In conclusion, you may want to consult with local counsel to determine how best to process and verify these law enforcement requests for your credit union’s SAR information or supporting documentation.
See these NAFCU resources which may be helpful to you concerning BSA matters:
· FinCEN Guidance on SAR Supporting Documentation | NAFCU (member-only)
· Breaking Down the New Interagency SAR FAQ | NAFCU
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About the Author
JaMonika Williams, Regulatory Compliance Counsel, NAFCU
JaMonika Williams joined NAFCU as regulatory compliance counsel in July 2022. In this role, JaMonika assists credit unions with a variety of compliance issues.