In a case initiated from a Suspicious Activity Report review team, a Federal government accountant pleaded guilty to theft of public money and money laundering. The case began when an alert bank noticed several unusual transactions, including large cash payments to credit card accounts. Activity in one account at the bank, ostensibly a business account, appeared suspicious, because the only deposits were U. S. Treasury checks, most of the debits were for currency, and there was no apparent business activity.
A bank filed a SAR on the defendant indicating structuring and unusual transactions involving the subject’s business. The SAR narrative revealed cash payments made to two credit card accounts of approximately $8,000 each, but the balances on the cards were less than $200. The bank reported several check deposits into the business account, with almost all of the withdrawals consisting of currency. In addition, the bank found no signs of checks drawn on the business account for business expenses.
The bank also noted that some of the cash withdrawals appeared to occur at casinos. The defendant received cash advances at casinos and sent some of those payments back to credit card accounts. Casinos filed more than 80 Currency Transaction Reports on the defendant beginning around the time the defendant began his embezzlement. In addition, a casino filed a SAR on the defendant for cashing nearly $6,000 worth of checks in a month with no subsequent buy-ins or rated play.
The defendant confessed and was sentenced to more than 3 years in Federal prison without parole. The Court also ordered the defendant to pay approximately $600,000 in restitution.
SARs help the government identify potential and actual illegal activity such as money laundering, terrorist financing, and other financial fraud and abuse. These reports help the government detect and prevent flows of illicit funds and establish emerging threats through analysis of patterns and trends. The report, and the subsequent analyses associated with the report, helps the government target, arrest, and convict all sorts of criminals.
Many financial institutions are required by law to file SARs when someone conducts a transaction that seems suspicious. Financial institutions that are currently required to file SARs include depository institutions, money services businesses (MSBs), currency dealers, casinos, and securities and futures dealers. It has recently been proposed to include both insurance companies and mutual fund operators in the list of institutions required to file SARs.
SARs are to be filed no later 30 days after the date of initial detection of facts that may constitute a basis for the filing and no later than 60 days if no suspect was identified on the date of the incident requiring the filing.
SARs must be filed by the institution if that institution knows of or suspects violations of federal criminal laws or regulations committed or attempted against or through the institution and involves or aggregates at least $5000 (or $2000 for MSBs) in funds or other assets. Thus, the institution usually files SARs when it knows or suspects that the funds passing through its institution are (1) obtained from illegal activity, (2) intended or conducted to hide or disguise funds or assets derived from illegal activity, or (3) designed to evade any reporting requirements of the Bank Secrecy Act (BSA). Also, if the transaction is undertaken without any apparent reason or if the client does not normally undertake such transactions certain financial institutions will be required to file SARs.
People undertaking unusual transactions with financial institutions should know that U.S. law prohibits the institution from notifying any person involved in the transaction that the transaction has been reported. So the institution will likely process the transaction and then confidentially report the transaction to the Department of the Treasury via an SAR. The subject of the SAR will not know that his or her transaction has been reported until Federal, State, and local law enforcement have analyzed the facts and initiated an investigation into the individual.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or firstname.lastname@example.org.