[Federal Register Volume 60, Number 127 (Monday, July 3, 1995)]
[Proposed Rules]
[Pages 34476-34481]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-16240]



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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 21

[Docket No. 95-14]
RIN 1557-AB19


Minimum Security Devices and Procedures, Reports of Crimes and 
Suspected Crimes, and Bank Secrecy Act Compliance

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Notice of proposed rulemaking.

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[[Page 34477]]


SUMMARY: The Office of the Comptroller of the Currency (OCC), as part 
of its Regulation Review Program, is proposing to revise its regulation 
on minimum security devices and procedures for banks, reports of crimes 
and suspected crimes, and Bank Secrecy Act (BSA) compliance. This 
proposal implements a new interagency suspicious activity referral 
process and updates and clarifies various portions of the underlying 
reporting regulation. The proposal also reduces substantially the 
burden on banks in reporting suspicious activities while enhancing 
access to such information by the Federal law enforcement agencies, the 
Federal financial institutions supervisory agencies, and Treasury.

DATES: Comments must be received by September 1, 1995.

ADDRESSES: Comments should be sent to: Communications Division, Office 
of the Comptroller of the Currency, 250 E Street SW, Washington, DC 
20219, Attention Docket No. 95-14; or FAX number 202-874-5274. Comments 
will be available for public inspection and photocopying at the same 
location.

FOR FURTHER INFORMATION CONTACT: Robert S. Pasley, Assistant Director, 
or Neil M. Robinson, Senior Attorney, Enforcement and Compliance 
Division, (202/874-4800), or Daniel Cooke, Attorney, Legislative and 
Regulatory Activities Division (202/874-5090).

SUPPLEMENTARY INFORMATION:

Background

    The Federal financial institutions supervisory agencies (the 
Agencies) 1 and the Department of the Treasury 2 (Treasury) 
are responsible for ensuring that financial institutions apprise 
Federal law enforcement authorities of any known or suspected violation 
of a Federal criminal statute and of any suspicious financial 
transaction. Suspicious financial transactions, which will be the 
subject of regulations and other guidance to be issued by Treasury, can 
include transactions that the bank suspects involve funds derived from 
illicit activities, were conducted for the purpose of hiding or 
disguising funds from illicit activity, otherwise violated the money 
laundering statutes (18 U.S.C. 1956 and 1957), were potentially 
designed to evade the reporting or recordkeeping requirements of the 
BSA (31 U.S.C. 5311 through 5330), and transactions that the bank 
believes were suspicious for any other reason.

    \1\ The Federal financial institutions supervisory agencies are 
the OCC, the Office of Thrift Supervision, the Board of Governors of 
the Federal Reserve System, the Federal Deposit Insurance 
Corporation, and the National Credit Union Administration.
    \2\ Through its Financial Crimes Enforcement Network (FinCEN).
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    Fraud, abusive insider transactions, check kiting schemes, money 
laundering, and other crimes can pose serious threats to a financial 
institution's continued viability and, if unchecked, can undermine the 
public confidence in the nation's financial industry. The Agencies and 
Federal law enforcement agencies need to receive timely and detailed 
information regarding suspected criminal activity to determine whether 
investigations, administrative actions, or criminal prosecutions are 
warranted.
    An interagency Bank Fraud Working Group (BFWG), consisting of 
representatives from many Federal agencies, including the Agencies and 
law enforcement agencies, was formed in 1984. The BFWG addresses 
substantive issues, promotes cooperation among the Agencies and Federal 
and State law enforcement agencies, and improves the Federal 
government's response to white collar crime in financial institutions. 
It is under the auspices of the BFWG that the revisions to this 
regulation and the reporting requirements are being made.

Suspicious Activity Report

    The Agencies have been working on a project to improve the criminal 
referral process, to reduce unnecessary reporting burdens on banks, and 
to eliminate confusion associated with the current duplicative 
reporting of suspicious financial transactions in criminal referral 
forms and currency transaction reports (CTRs). Contemporaneously, 
Treasury analyzed the need to implement the procedures for reporting 
suspicious financial transactions by banks following the enactment of 
the Annuzio-Wylie Anti-Money Laundering Act of 1992. As a result of 
these reviews, the Agencies and Treasury approved the development of a 
new referral process that includes suspicious financial transaction 
reporting.
    To implement the reporting process, and to reduce unnecessary 
burdens associated with these various reporting requirements, the 
Agencies and FinCEN developed a new report form for reporting known or 
suspected Federal criminal law violations and suspicious financial 
transactions. The new form is designated the Suspicious Activity Report 
(SAR). The SAR is a simplified and shortened version of its 
predecessors. The new referral process and the SAR reduce the burden on 
national banks for reporting known or suspected violations and 
suspicious financial transactions. The Agencies anticipate that the new 
process will be operational by October 1995.
Proposal

    The OCC proposes to revise 12 CFR part 21 as part of its Regulation 
Review Program by updating and clarifying the current rule governing 
the filing of criminal referral reports, expanding the rule to cover 
suspicious financial transactions, implementing the new SAR, and 
eliminating current confusing and overly burdensome reporting 
requirements. This action should improve reporting of known or 
suspected violations and suspicious financial transactions relating to 
Federally insured financial institutions while providing uniform data 
for entry into the new interagency computer database. The OCC expects 
that each of the other Agencies will be making substantially similar 
changes contemporaneously.

Subpart B--Suspicious Activity Reports

    The principal proposed changes to the OCC's current criminal 
referral reporting rules are discussed below in the summary of the 
proposed rule's paragraphs. Of particular note are the following: (1) 
Raising the mandatory reporting thresholds for criminal offenses, 
thereby reducing unnecessary reporting burdens; (2) filing only one 
form with a single repository, rather than submitting multiple copies 
with several Federal law enforcement and the Agencies, thereby further 
reducing reporting burdens; and (3) melding the criminal referral and 
suspicious financial transactions reporting requirements of the 
Agencies and Treasury into one uniform reporting system, thereby 
eliminating duplicative referrals.
    The subpart heading has been changed to conform to the name on the 
SAR. The current subpart is titled ``Reports of Crimes and Suspected 
Crimes.'' The proposed subpart heading, ``Suspicious Activity 
Reports,'' conforms to the name of the report.

Section 21.11(a)  Purpose and Scope

    The proposal clarifies the scope of the current rule. Under the 
proposal, the SAR replaces the various criminal referral forms that the 
Agencies currently require banks to file; and a bank also will file a 
SAR instead of a CTR to report a suspicious financial 
transaction.3

    \3\  The BSA requires all financial institutions to file CTRs in 
accordance with the Department of the Treasury's implementing 
regulations (31 CFR part 103). Part 103 requires a national bank to 
file a CTR whenever a currency transaction exceeds $10,000. If a 
currency transaction exceeds $10,000 and is suspicious, the bank, 
under these new requirements, will file both a CTR (reporting the 
currency transaction) and a SAR (reporting the suspicious criminal 
aspect of the transaction). If a currency transaction equals or is 
below $10,000 but is suspicious, the bank will only file a SAR. 

[[Page 34478]]

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    Combining suspicious financial transaction reporting and criminal 
referral reporting should reduce confusion, increase the accuracy and 
efficiency of reporting, and reduce the burden on banks in reporting 
known or suspected violations, including suspicious financial 
transactions.

Section 21.11(b)  Definitions

    Proposed Sec. 21.11(b) defines the following terms: ``FinCEN,'' 
``institution-affiliated party,'' ``instructions,'' ``known or 
suspected violation,'' and ``SAR.'' The definitions should make the 
rule easier to interpret and apply.
    In particular, the definition of a ``known or suspected violation'' 
refers to any matter for which a national bank has a basis to believe 
that a violation of any Federal criminal statute has occurred, has been 
attempted, is occurring, or may occur, coupled with a basis to believe 
that a national bank was an actual or potential victim of the criminal 
violation, involved in, or used to facilitate the criminal violation. 
The definition supplants current Sec. 21.11(i), which explains the term 
``suspected.''

Section 21.11(c)  Reports Required

    Proposed Sec. 21.11(c), which replaces current Sec. 21.11(b), 
clarifies and expands the provision that requires a bank to file a 
completed SAR. This provision raises the dollar thresholds that trigger 
a filing requirement. It also modifies the scope of events that a 
national bank must report by using the new term ``known, or suspected 
violation,'' which is defined at Sec. 21.11(b)(4), and by requiring 
that a national bank file a SAR to report a suspicious financial 
transaction.
    Under the current rule, the OCC requires a bank to file a criminal 
referral form with many different Federal agencies. The proposal, which 
replaces all other requirements for filing criminal referrals and 
suspicious financial transactions, requires a bank to file only a 
single SAR at one location, rather than the multiple copies of the 
criminal referral form that must now be filed with various Federal 
agencies.
    Under proposed Sec. 21.11(c), a national bank effectively files a 
SAR with all appropriate Federal law enforcement agencies by sending a 
single copy of the SAR to FinCEN, whose address will be printed on the 
SAR.
    FinCEN will input the information contained on the SARs into a 
newly created database that FinCEN will maintain. This process meets 
the regulatory requirement that a bank refer any known or suspected 
criminal violation to the various Federal law enforcement agencies. The 
database will enhance Federal law enforcement and supervisory agencies' 
ability to track, investigate, and prosecute individuals suspected of 
violating Federal criminal law.
    This change ensures that all SARs are placed in the database at 
FinCEN and that the information is made available on computer to the 
appropriate law enforcement and supervisory agencies as quickly as 
possible. This change will reduce the filing burdens of national banks.
    The proposal removes Sec. 21.11(b)(1), which now requires national 
banks to report any mysterious disappearance or unexplained shortage of 
bank funds, because it would be redundant in light of proposed 
Sec. 21.11(c)(3). In instances where criminal activity is suspected in 
connection with any disappearance or shortage of bank funds, 
Sec. 21.11(c)(3) requires a national bank to file a SAR.
    The proposal modifies current Sec. 21.11(b)(2), which requires 
reporting of known or suspected criminal activity involving bank 
insiders. The proposal replaces current Sec. 21.11(b)(2) with 
21.11(c)(1) and describes suspects who are bank personnel more 
precisely. Specifically, the proposal replaces ``responsible bank 
personnel'' with ``directors, officers, employees, agents, or other 
institution-affiliated parties.'' The proposal, however, does not 
change the requirement that a bank file a SAR, regardless of the dollar 
amount involved, whenever it has a substantial basis for believing that 
a bank insider has violated a Federal criminal statute.
    The proposal modifies current Sec. 21.11(b)(3), which requires 
reporting of known or suspected criminal activity when a bank has a 
substantial basis for identifying a non-insider suspect where bank 
funds or other assets involve or aggregate $1,000 or more. Proposed 
Sec. 21.11(c)(2), which replaces current Sec. 21.11(b)(3), raises the 
reporting threshold to $5,000.
    The proposal also modifies current Sec. 21.11(b)(4), which requires 
banks to report any known or suspected criminal violation involving 
$5,000 or more where the bank has no substantial basis for identifying 
a suspect. Specifically, proposed Sec. 21.11(c)(3), which replaces 
current Sec. 21.11(b)(4), raises the dollar reporting threshold from 
$5,000 to $25,000.
    Proposed Sec. 21.11(c)(4) requires a national bank to report any 
financial transaction, regardless of the dollar amount, that: (1) the 
bank suspects involved funds derived from illicit activity, was 
conducted for the purpose of hiding or disguising funds from illicit 
activity, or in any way violated the money laundering statutes (18 
U.S.C. 1956 and 1957); (2) the bank suspects was potentially designed 
to evade the reporting or recordkeeping requirements of the BSA (31 
U.S.C. 5311 through 5330); or (3) the bank believes to be suspicious 
for any reason.

Section 21.11(d)  Time for Reporting

    Proposed Sec. 21.11(d), which replaces current Sec. 21.11(c), sets 
forth the time requirements a bank must meet when filing a SAR. The 
proposal does not substantively change the current requirements.
    Under current Sec. 21.11(e), ``Manner of Reporting,'' a bank may 
file the appropriate criminal referral form in several ways, including 
submitting a photocopy or facsimile of the appropriate form. Under the 
proposal, a bank may file a SAR by photocopy and also by magnetic 
means, such as by a computer disk. However, FinCEN will not be able to 
receive SARs by facsimile machine. In the future, the OCC anticipates 
that a bank will be able to file a SAR electronically.
    The Agencies, working with FinCEN, are developing computer software 
to assist banks in preparing and filing SARs. The software will allow a 
bank to complete a SAR, to save the SAR on its computers, and to print 
a hard copy of the SAR for its own records. The computer software will 
also enable a bank to file a SAR using various forms of magnetic media, 
such as computer disk or magnetic tape. The OCC will make the software 
available to all national banks. A bank, of course, may complete and 
file a SAR using a printed form, without using this software, if it so 
desires.
    Because the permitted methods of filing the SAR may change, the OCC 
has removed current Sec. 21.11(e). The permissible methods of filing 
the SAR will be stated in the instructions to the SAR.

Section 21.11(e)  Reports to State and Local Authorities

    Proposed Sec. 21.11(e), which replaces current Sec. 21.11(d), 
modifies the scope of this provision slightly. Proposed Sec. 21.11(e) 
encourages national banks to file SARs with State and local law 
enforcement agencies where appropriate. Proposed Sec. 21.11(e) 

[[Page 34479]]
removes the unnecessary reference to Federal law.

Section 21.11(f)  Retention of Records

    Proposed Sec. 21.11(f) requires a bank to retain a copy of the SAR 
and the original of any related documentation relating to a SAR for a 
period of ten years. The current rule is silent on this issue. However, 
the current criminal referral forms require a bank to submit copies of 
all related documentation when it files a criminal referral.
    The new SAR reduces this burden by eliminating altogether the 
requirement to submit underlying documentation in connection with a 
criminal referral. Instead, the proposal requires that the 
documentation be identified and treated as filed with the SAR and that 
the bank maintain the documentation, along with a copy of the SAR, for 
ten years from the submission date. This time frame corresponds with 
the statutes of limitations for most Federal criminal statutes 
involving financial institutions.
    This approach ensures that Federal law enforcement agencies and the 
Agencies, upon request, have access to any documentation necessary to 
prosecute a violation or pursue an administrative action by requiring 
banks to preserve underlying documentation for ten years.

Section 21.11(g)  Exemptions

    Proposed Sec. 21.11(g), which replaces current Sec. 21.11(f), does 
not substantively revise this provision.

Section 21.11(h)  Notification of the Board of Directors

    Proposed Sec. 21.11(h), which replaces current Sec. 21.11(g), 
reduces the burden the current rule places on boards of directors to 
review criminal referrals. Under the current rule, each national bank 
must have procedures that ensure that the bank's board of directors is 
notified of each criminal referral before the next board meeting.
    The proposal does not require a bank to have specific procedures 
for notifying its board of directors of a SAR. In addition, the 
proposal permits the management of the bank to notify either the board 
of directors or a committee of directors or executive officers 
designated by the board to receive notice of the filing of a SAR.
    The OCC intends that each national bank maintain appropriate 
mechanisms to ensure that its board of directors can be informed 
promptly of SARs when appropriate. However, the OCC recognizes that 
board review of all SAR filings is impracticable in some cases. 
Therefore, under the proposal, the OCC gives each bank discretion to 
establish reporting systems appropriate for the particular institution.
    The proposal also ensures, however, that if the bank elects to 
provide notice to a committee rather than the entire board, the bank 
may not give notice of a SAR filing to any director or officer who is a 
suspect in the known or suspected violation. The proposal also requires 
management to notify the entire board of directors, except the suspect, 
when an executive officer or director is a suspect.

Section 21.11(i)  Compliance

    The proposal changes the heading of the paragraph from 
``Penalties'' to ``Compliance'' to reflect better the range of informal 
and formal supervisory actions available to the Agencies. The proposal 
clarifies that the OCC treats a national bank's failure to comply with 
reporting requirements like any other violation of law or regulation, 
which may result in supervisory actions, including enforcement actions. 
The current rule, at Sec. 21.11(h) (Penalties), appears to set a 
standard for penalties (willful failure to file or careless disregard 
in filing reports), that is inconsistent with the applicable statutory 
standard for violation of an agency regulation. This proposed change 
conforms the OCC's rules with the rules of the Board of Governors of 
the Federal Reserve System and the Federal Deposit Insurance 
Corporation.

Section 21.11(j)  Obtaining the SAR

    Proposed Sec. 21.11(j) states that SARs may be obtained from the 
appropriate OCC District Office at the address listed in 12 CFR part 4. 
The current rule does not contain a comparable instruction.

Section 21.11(k)  Confidentiality of SARs

    The proposal preserves the confidential nature of criminal referral 
reports by stating that a SAR and the information contained in a SAR 
are confidential.

Comments

    The OCC invites public comment on all aspects of this proposal.
DERIVATION TABLE FOR 12 CFR PART 21
    This table directs readers to the provisions of the current 12 CFR 
part 21.11 on which the revised 12 CFR part 21.11 is based.

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     Revised provision            Current provision          Comments   
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Sec.  21.11(a).............  Sec.  21.11(a)............  Modified.      
Sec.  21.11(b)(1)..........  - - -.....................  Added.         
Sec.  21.11(b)(2)..........  - - -.....................  Added.         
Sec.  21.11(b)(3)..........  - - -.....................  Added.         
Sec.  21.11(b)(4)..........  Derived in part from Sec.   Added.         
                              21.11(i).                                 
Sec.  21.11(b)(5)..........  - - -.....................  Added.         
Sec.  21.11(c)(1)..........  Sec.  21.11(b)(2).........  Modified.      
Sec.  21.11(c)(2)..........  Sec.  21.11(b)(3).........  Modified.      
Sec.  21.11(c)(3)..........  Sec.  21.11(b)(1) & (4)...  Modified.      
Sec.  21.11(c)(4)..........  Derived in part from the    Added.         
                              OCC's current criminal                    
                              referral forms.                           
Sec.  21.11(d)(1)..........  Sec.  21.11(c)(1) & (3)...  Modified.      
Sec.  21.11(d)(2)..........  Sec.  21.11(c)(2).........  Modified.      
Sec.  21.11(e).............  Sec.  21.11(d)............  Modified.      
Sec.  21.11(f).............  - - -.....................  Added.         
Sec.  21.11(g)(1)..........  Sec.  21.11(f)(1).........  Modified.      
Sec.  21.11(g)(2)..........  Sec.  21.11(f)(2).........  Modified.      
Sec.  21.11(h)(1)..........  Sec.  21.11(g)............  Modified.      
Sec.  21.11(h)(2)..........  - - -.....................  Added.         
Sec.  21.11(i).............  Sec.  21.11(h)............  Modified.      
Sec.  21.11(j).............  - - -.....................  Added.         
Sec.  21.11(k).............  - - -.....................  Added.         
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Regulatory Flexibility Act

    Pursuant to section 605(b) of the Regulatory Flexibility Act, the 
OCC hereby certifies that this proposed rule will not have a 
significant economic impact on a substantial number of small entities. 
This proposal primarily reorganizes the process for making criminal 
referrals and has no material impact on national banks, regardless of 
size. Accordingly, a regulatory flexibility analysis is not required.

Paperwork Reduction Act

    The collection of information contained in this notice of proposed 
rulemaking have been submitted to the Office of Management and Budget 
for review in accordance with the Paperwork Reduction Act of 1980 (PRA) 
(44 U.S.C. 3504(h)). Comments on the collection of information should 
be sent to the Office of Management and Budget (OMB), Paperwork 
Reduction Project (1557-0180), Washington, DC 20503, with copies to the 
Legislative and Regulatory Activities Division (1557-0180), Office of 
the Comptroller of the Currency, 250 E Street, SW, Washington, DC 
20219.
    The collection of information in this proposed rule is limited to 
the retention of records and is found in 12 CFR 21.11(f), which 
requires national banks to retain copies of all documentation 
supporting a SAR for ten years. The SAR will be submitted to OMB 
separately for PRA review. The OCC requires banks to retain this 
information to ensure that law enforcement and supervisory agencies 
have access to the documentation necessary to prosecute a violation or 
pursue an administrative action. The likely respondents are banks.
    Estimated total annual recordkeeping burden: 5,400 hours.
    The estimated annual burden per recordkeeper varies from less than 
one hour to 1,300 burden hours, depending on individual circumstances, 
with an average of 1.8 hours.
    Estimated number of recordkeepers: 3,000.

Executive Order 12866

    The OCC has determined that this document is not a significant 
regulatory action under Executive Order 12866.

Unfunded Mandates Act of 1995 Statement

    Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law 
104-4 (Unfunded Mandates Act) (signed into law on March 22, 1995) 
requires that an agency prepare a budgetary impact statement before 
promulgating a rule that includes a Federal mandate that may result in 
expenditure by State, local, and tribal governments, in the aggregate, 
or by the private sector, of $100 million or more in any one year. If a 
budgetary impact statement is required, section 202 of the Unfunded 
Mandates Act also requires an agency to identify and consider a 
reasonable number of regulatory alternatives before promulgating a 
rule. The OCC has determined that it is not required to prepare a 
written statement under section 202 and has concluded that, on balance, 
this proposal provides the most cost-effective and least burdensome 
alternative to achieve the objectives of the rule.

List of Subjects in 12 CFR Part 21

    Bank Secrecy Act, Check kiting, Criminal referrals, Criminal 
transactions, Currency, Defalcations, Embezzlement, Insider abuse, 
Money laundering, National banks, Reporting and recordkeeping 
requirements, Security measures, Theft.

Authority and Issuance

    For the reasons set out in the preamble, part 21 of chapter I of 
title 12 of the Code of Federal Regulations is proposed to be amended 
to read as follows:

PART 21--MINIMUM SECURITY DEVICES AND PROCEDURES, REPORTS OF 
SUSPICIOUS ACTIVITIES, AND BANK SECRECY ACT COMPLIANCE PROGRAM

    1. The heading for part 21 is revised as set forth above.
    2. The authority citation for part 21 continues to read as follows:

    Authority: 12 U.S.C. 93a, 1818, 1881-1884, and 3401-3422.

    3. Subpart B of part 21 is revised to read as follows:
Subpart B--Reports of Suspicious Activities


Sec. 21.11  Suspicious Activity Report.

    (a) Purpose and scope. This section ensures that national banks 
file a Suspicious Activity Report when they detect a known or suspected 
violation of Federal law or a suspicious financial transaction. This 
section applies to all national banks as well as any Federal branches 
and agencies of foreign banks licensed or chartered by the OCC.
    (b) Definitions. For the purposes of this section:
    (1) FinCEN means the Financial Crimes Enforcement Network of the 
Department of the Treasury.
    (2) Institution-affiliated party means any institution-affiliated 
party as that term is defined in sections 3(u) and 8(b)(5) of the 
Federal Deposit Insurance Act (12 U.S.C. 1813(u) and 1818(b)(5)).
    (3) Instructions means the instructions on the SAR.
    (4) Known or suspected violation means any matter for which there 
is a basis to believe that a violation of a Federal criminal statute 
(including a pattern of criminal violations) has occurred or has been 
attempted, is occurring, or may occur, and there is a basis to believe 
that a national bank was an actual or potential victim of the criminal 
violation, involved in, or used to facilitate the criminal violation.
    (5) SAR means a Suspicious Activity Report.
    (c) SARs required. A national bank shall file a SAR with the 
appropriate Federal law enforcement agencies and Treasury and in 
accordance with the Instructions, by sending a completed SAR to FinCEN 
in the following circumstances:
    (1) Whenever the national bank detects a known or suspected 
violation of Federal criminal law and has a substantial basis to 
believe that one of its directors, officers, employees, agents, or 
other institution-affiliated parties committed or aided in the 
commission of the violation;
    (2) Whenever the national bank detects a known or suspected 
violation of Federal criminal law, there is an actual or potential loss 
to the national bank (before reimbursement or recovery) aggregating 
$5,000 or more, and the bank has a substantial basis for identifying a 
possible suspect or group of suspects, where none of the suspects are 
included in paragraph (c)(1) of this section;
    (3) Whenever the national bank detects a known or suspected 
violation of Federal criminal law, there is an actual or potential loss 
to the national bank (before reimbursement or recovery) aggregating 
$25,000 or more, and the bank has no substantial basis for identifying 
a possible suspect or group of suspects; or
    (4) Whenever a financial transaction is conducted, or attempted, at 
the national bank and:
    (i) The bank suspects that the transaction involved funds derived 
from illicit activity, was conducted for the purpose of hiding or 
disguising funds from illicit activity, or in any way violated the 
money laundering statutes (18 U.S.C. 1956 and 1957);
    (ii) The bank suspects that the transaction was potentially 
designed to evade the reporting or recordkeeping requirements of the 
Bank Secrecy Act (31 U.S.C. 5311 through 5330) or regulations issued 
thereunder; or 

[[Page 34481]]

    (iii) The bank believes that the transaction was suspicious for any 
reason.
    (d) Time for reporting.--(1) Generally. A national bank shall file 
the SAR required by paragraph (c) of this section within 30 calendar 
days after the date of initial detection of an act described in 
paragraph (c) of this section, and, in situations involving violations 
requiring immediate attention, such as when a reportable violation is 
on-going, the financial institution shall immediately notify, by 
telephone, the appropriate law enforcement authority in addition to 
filing a timely SAR.
    (2) No suspect identified. If no suspect was identified on the date 
of detection of an act described in paragraph (c) of this section, the 
national bank may delay filing a SAR for an additional 30 calendar days 
after identification of a suspect, but in no case may a national bank 
delay filing a SAR more than 60 calendar days after the date of 
detecting an act described in paragraph (c) of this section.
    (e) Reports to State and local authorities. A national bank is 
encouraged to file a copy of the SAR with State and local law 
enforcement agencies where appropriate.
    (f) Retention of records. A national bank shall maintain a copy of 
any SAR filed and the original of any related documentation for a 
period of ten years from the date of filing the SAR, unless the OCC 
informs the bank in writing that the bank may discard the materials 
sooner. A national bank shall make all supporting documentation 
available to appropriate law enforcement agencies upon request. 
Supporting documentation shall be identified and treated as filed with 
the SAR.
    (g) Exemptions. (1) A bank need not file a SAR for a robbery or 
burglary committed or attempted that is reported to appropriate law 
enforcement authorities.
    (2) A bank need not file a SAR for lost, missing, counterfeit, or 
stolen securities if it files a report pursuant to the reporting 
requirements of 17 CFR 240.17f-1.
    (h) Notification to board of directors--(1) Generally. Whenever a 
national bank files a SAR pursuant to this section, the management of 
the bank shall promptly notify its board of directors, or a committee 
of directors or executive officers designated by the board of directors 
to receive notice.
    (2) Suspect is a director or executive officer. If the bank files 
the SAR pursuant to paragraph (c) of this section and the suspect is a 
director or executive officer, the bank may not notify the suspect, 
pursuant to 31 U.S.C. 5318(g)(2), but shall notify all directors who 
are not suspects.
    (i) Compliance. Failure to file a SAR in accordance with this 
section and the Instructions may subject the national bank, its 
directors, officers, employees, agents, or other institution-affiliated 
parties to supervisory actions including enforcement actions.
    (j) Obtaining SARs. A national bank may obtain SARs and the 
Instructions from the appropriate OCC District Office listed in 12 CFR 
part 4.
    (k) Confidentiality of SARs. SARs are confidential. Any person 
subpoenaed or otherwise requested to disclose a SAR or the information 
contained in a SAR shall decline to produce the information citing this 
section, applicable law (e.g., 31 U.S.C. 5318(g)), or both.

    Dated: June 27, 1995.
Eugene A. Ludwig,
Comptroller of the Currency .
[FR Doc. 95-16240 Filed 6-30-95; 8:45 am]
BILLING CODE 4810-33-P