FinCEN SAR Activity Review, Trends, Tips & Issues, Issue 10

transaction or transactions; is derived from illegal activity or intended to hide
or disguise funds or assets derived from illegal activity; is designed to evade
the requirements of the BSA, whether through structuring or other means;
serves no business or apparent lawful purpose and the MSB knows of no
reasonable explanation for the transaction after examining all available facts;
or involves use of the MSB to facilitate criminal activity. 4
Given the growth in number of MSBs, including the ancillary provision of
such services, we are working to ensure that these businesses comply with
federal registration, anti-money laundering program, and recordkeeping and
reporting requirements. To that end, we have begun to study relevant SARs
so that we may understand how, and the extent to which, banks and other
financial institutions identify potentially unregistered MSBs. The first phase
of this study examined depository institution SARs filed between January 1,
2002 and April 30, 2005. The findings from that study, involving 1,214 SARs,
are presented herein.
On April 26, 2005, FinCEN, along with the federal banking agencies, issued
interagency interpretive guidance to depository institutions on providing
banking services to MSBs operating in the United States 5 (Interagency
Guidance). In that guidance, we specifically directed depository institutions
to file SARs on businesses that are unregistered or unlicensed MSBs. We
also stated that the guidance was not “a directive to banking organizations
to conduct immediately a review of existing accounts for known MSBs for the
sole purpose of determining licensing or registration status.” FinCEN and
the federal banking agencies’ expectations have not changed in this regard.
The Interagency Guidance has been incorporated into the Federal Financial
Institutions Examination Council’s (FFIEC’s) 2005 BSA/Anti-Money
Laundering Examination Manual. 6
Preliminary research reveals that between May 1, 2005 and February
28, 2006, depository institutions filed an additional 2,934 SARs related
to suspected unregistered MSB activities. The filing volume during this
ten-month period reflects a 142 percent increase over the more than three-
4 See, generally 31 C.F.R. § 103.20. Special note concerning issuers of money orders and traveler’s
checks: issuers are only required to report transactions or patterns of transactions that are suspicious
and involve or aggregate funds or other assets of at least $5,000 if identification of those transactions
is derived from a review of clearance records or other similar records in connection with items sold or
processed. 31 C.F.R. § 103.20(a)(3).
5 See “Interagency Interpretive Guidance on Providing Banking Services to Money Services Businesses
Operating in the United States,” (April 26, 2005) available at
http://www.fincen.gov/guidance04262005.pdf.
6 An electronic version of the FFIEC BSA/AML Examination Manual may be found at http://www.ffiec.
gov/bsa_aml_infobase/pages_manual/manual_online.htm.