“Frankly, I’m worried that the customer is doing something illegal.”
As you hear your bank’s most seasoned teller utter these words, you know that you’re dealing with a very sensitive situation. On the one hand, you’re well aware of the Bank Secrecy Act and its anti-money laundering requirements. Your financial institution must take such allegations seriously and has an obligation to identify, evaluate, and report suspicious activity. On the other hand, your bank is in the business of serving its customers – not wrongly accusing them of illicit activity.
The good news is that your bank-wide BSA training program is working – employees feel empowered to speak up when they observe unusual activity, as evidenced by the teller’s feedback. The bad news is that evaluating and reporting suspicious activity creates significant paperwork and recordkeeping.
In this post, we’ll explore how an electronic document management system can assist your bank’s Suspicious Activity Report (SAR) management workflow.
Evaluating Your Relationship with the Customer
What processes and systems does your bank have in place to investigate suspicious activity referrals?
According to guidance on suspicious activity reporting from the Federal Financial Institutions Examination Council (FFIEC), assigned staff should be “…provided with sufficient internal and external tools to allow them to properly research activities and formulate conclusions.” The FFIEC goes on to say that “When multiple departments are responsible for researching unusual activities….the lines of communication between the departments must remain open. This allows banks with bifurcated processes to gain efficiencies by sharing information, reducing redundancies, and ensuring all suspicious activity is identified, evaluated, and reported.”
When it comes to sharing information and reducing redundancies, a system like AccuAccount can be an invaluable tool for evaluating the customer relationships that are in question. For starters, AccuAccount offers a 360-degree view of each customer and entity served by your bank.
AccuAccount pulls in key data from your core on a nightly basis, delivering one-stop access to relevant information, such as:
- Customer and credit information
- Related entities
- Active and inactive accounts (deposits, trusts, etc.)
- Loan balance and commitment
- Pending loan applications
- Credit classification
- …and much more
Since AccuAccount is a document management and tracking system, you’ll also have fingertip access to important documentation, such as CIPs, beneficial ownership forms, articles of incorporation, financials, and recent tax returns. And, unlike a paper-based system, AccuAccount facilitates the simultaneous viewing of customer and account information.
In short, AccuAccount gives you the high level information you need to understand your existing customer relationships. From there, you can dive deeper into other systems that may offer transaction-level data.
Managing SAR Documentation
If your internal decision maker and/or committee decide to move forward with an SAR filing, your bank will have additional documentation requirements to manage.
As pointed out by the FFIEC here, “Banks must retain copies of SARs and supporting documentation for five years from the date of filing the SAR. The bank can retain copies in paper or electronic format. Additionally, banks must provide all documentation supporting the filing of a SAR upon request by FinCEN or an appropriate law enforcement or federal banking agency. ‘Supporting documentation’ refers to all documents or records that assisted a bank in making the determination that certain activity required a SAR filing.”
It’s noteworthy that the FFIEC stipulates the permission of an “electronic format.” Electronic documents, if managed properly, can offer greater efficiency and control than paper documents. In addition, electronic documents can be backed up by your IT department, thereby reducing the risk of accidental deletion or loss.
An electronic document repository, such as our AccuDoc platform, can be particularly useful for managing SAR filings and due diligence. BSA modules can be created in AccuDoc and restricted to specific users (for example, your SAR committee).
AccuDoc also offers an electronic document retention feature, allowing you to purge SAR documents that you no longer need to keep.
Leverage Technology to Manage Suspicious Activity
With tools like AccuAccount and AccuDoc, your bank can take additional steps to streamline the management of suspicious activity. Click here to take a 5-minute overview of our document management solutions.