|Suspicious Activity Reports: Terrorism
|By Laura Bruce
A government program designed to track down terrorists
and money launderers is frightening bank customers, frustrating
financial institutions and inundating federal agencies with secret reports
of dubious value.
It's called the Suspicious Activity Report, or SAR,
and critics say it victimizes honest citizens who are conducting legitimate financial
activities through legitimate banking channels, while generating a flood of useless
paperwork and burdening financial institutions with billions of dollars in costs.
Experts predict nearly 1 million will be filed in
2006, a bit more than half by depository institutions, the rest
by money-services businesses, casinos, card clubs and the securities
and futures industries. Insurance companies had to begin filing
in spring 2006, and mutual fund companies will have to establish
anti-money-laundering programs and file SARs in fall 2006.
In total, 919,230 SARs
were filed in 2005. You cannot find out if one has been filed on you; anyone revealing that information is breaking the law.
trigger a SAR? Almost anything out of the ordinary that rouses
the suspicion of the personnel where the transaction took place.
According to their rules, any group of transactions totaling $5,000
or more that "is not the sort in which the particular customer
would normally be expected to engage" can cause enough suspicion
to create a SAR. The reports are filed with The Financial Crimes
Enforcement Network, or FinCEN, a division of the Department of
the Treasury, and shared with law enforcement.
To be sure, the reports have led to criminal investigations
and prosecutions. But it also has mushroomed into a paper-generating
monster that threatens to create Suspicious Activities Reports in
government files on an increasing number of ordinary citizens.
Unlike other government spying programs, this one is out in the
open -- and it's creating fear among people doing ordinary banking
activities. Take a recent college graduate from Columbus, Ohio,
whose parents offered an interest-free loan to pay off his high-interest
credit card debt. While surfing online, a message board post caught
"A guy said he paid off
his credit card and got a call from the bank," says the graduate, who asked
not to be identified. "They held his funds for three weeks because his payment
deviated from his normal payment. I did my own research and found it was realistic.
"They could report you to Homeland Security if payments
deviate from the norm. It sounded scary and made me nervous. I think it's ludicrous
that anyone should be afraid of paying off their debt."
The SAR was developed in 1996 as a way for banking
organizations to report "suspected criminal violations of federal
law or a suspicious transaction related to money laundering activity,
or a violation of the BSA (Bank Secrecy Act)," according to
Federal Financial Institutions Examination Council, or FFIEC, documents.
Bank Secrecy Act, according to the FFIEC, was "designed to help identify
the source, volume and movement of currency and other monetary instruments transported
into or out of the U.S., or deposited in financial institutions."
the Sept. 11 terrorist attacks and the subsequent revelation that the terrorists
freely lived here and opened bank accounts at will frightened American citizens
and the government. Congress responded with the Patriot Act, aimed at giving government
agencies more power to find and clamp down on money laundering and terrorist financing.