314(b) and SARs Part II: Amendments vs. Continuations
In our last article, we discussed pausing an investigation on activity that was deemed to be odd, but didn’t rise to the level of suspicious or reportable, and sending out 314(b) requests to gain additional insights that could explain the activity. That’s a reasonable procedure that could help prevent defensive SARs that add no value to law enforcement.
This article will continue to discuss 314(b) requests and SARs, but will focus on what AML Officers can do when a SAR is filed on activity while the 314(b) request responses are still pending, and then responses are received that add significant insight and value to the case.
The best approach in this situation is to file a SAR amendment and not wait for the next 90-day review, as there are differences between a SAR amendment and a continuation SAR.
To illustrate the above scenario, an AML Officer files a SAR on deposit activity that appears to be both structured and lacking a valid business purpose. That’s a bona-fide reason to file. But what the AML Officer cannot determine is what the customer’s ultimate source of the funds is. The AML Officer sends two separate 314(b) requests to other banks noted in some of the customer’s transactions. Approximately five days after filing the SAR, both 314(b) request responses are received, and the responses indicate the ultimate source of funds involved hundreds of small-dollar international wire receipts per week from hundreds of originators, making the customer’s accounts at the two other banks appear to be funnel accounts. This is very important information for law enforcement to have.
The best course of action for the AML Officer to take would be to update the case investigation and file a SAR amendment to note the receipt of the 314(b) information and the source of the funds discussed in the prior SAR. Waiting 90 days to send a SAR continuation to note the 314(b) information would not only involve a significant delay in getting the information to law enforcement, but it would also show a misunderstanding between the purpose of a SAR amendment and a SAR continuation.
A SAR amendment provides additional information on the very activity that was just filed on. A SAR continuation is used to file on ongoing activity subsequent to the activity filed on the in prior SAR.
Note, though, that if the activity did continue, the AML Officer would also file a SAR continuation after the 90-day review period.
The 314(b) process is instrumental in helping AML Officers file complete, timely, and accurate SARs, whether the process provides information that helps an AML Officer decide to file, or helps an AML Officer provide additional information on a prior filing.
If you’re an AML Officer at a bank that does not participate in 314(b), it might be a good time to revisit that decision.
