[Federal Register Volume 61, Number 56 (Thursday, March 21, 1996)]
[Rules and Regulations]
[Pages 11525-11527]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-6702]



=======================================================================
-----------------------------------------------------------------------

[[Page 11526]]


NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 748


Suspicious Activity Report; Report of Catastrophic Act and Bank 
Secrecy Act Compliance

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This final rule changes existing references from ``Criminal 
Referral Form'' to ``Suspicious Activity Report'' to conform the 
language in the rule to the new Suspicious Activity Report (SAR) which 
the financial regulatory agencies and the Department of the Treasury 
have developed to replace the Criminal Referral Form (CRF). It also 
reduces the required retention period for SARs' and any attachment 
thereto from the current 10 years to 5 years. This final rule 
streamlines reporting requirements by providing that credit unions file 
a new SAR with NCUA and appropriate Federal law enforcement agencies by 
sending the SARs to the Financial Crimes Enforcement Network of the 
Department of the Treasury.

EFFECTIVE DATE: April 1, 1996.

ADDRESSES: National Credit Union Administration, 1775 Duke Street, 
Alexandria, VA 22314-3428.

FOR FURTHER INFORMATION CONTACT: John K. Ianno or Jon Canerday, Office 
of General Counsel, at the above address or telephone: (703) 518-6540.

SUPPLEMENTARY INFORMATION: An interagency Bank Fraud Working Group 
(BFWG), consisting of representatives from many federal agencies, 
including the federal financial institutions supervisory agencies (the 
Agencies) \1\ 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.

    \1\ The federal financial institutions supervisory agencies are 
the Office of the Comptroller of the Currency, 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.
---------------------------------------------------------------------------

Suspicious Activity Report

    The Agencies have been working on a project to improve the criminal 
referral process, to reduce unnecessary reporting burdens on financial 
institutions, and to eliminate confusion associated with the current 
duplicative reporting of suspicious currency transactions in criminal 
referral forms and currency transaction reports (CTRs). 
Contemporaneously, Treasury analyzed the need to revise the procedures 
used by financial institutions for reporting suspicious currency 
transactions. As a result of these reviews, the Agencies and Treasury 
approved the development of a new referral process that includes 
suspicious currency transaction reporting.
    To implement the reporting process, and to reduce unnecessary 
burdens associated with these various reporting requirements, the 
Agencies and the Department of the Treasury, through its Financial 
Crimes Enforcement Network (FinCEN), developed a new form for reporting 
known or suspected federal criminal law violations and suspicious 
currency transactions. The new report 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 credit unions for reporting known or suspected criminal 
violations and suspicious currency transactions. The SAR increases the 
reporting thresholds at which filing by credit unions becomes 
mandatory. It also reduces from several to one the number of copies of 
the form a credit union is required to file and eliminates the need to 
file supporting documents with the form. Supporting documents must be 
retained for five years instead of the ten years currently required. 
These changes will reduce reporting burdens for credit unions.
    Agencies anticipate that the new reporting system will be 
operational April 1,1996. Once implemented, all referrals will be 
housed in one central database. As with the CRF, complete instructions 
for filing will continue to be on the SAR itself. The new referral 
process will be detailed in a Letter to Credit Unions to be issued 
contemporaneously with the new form. Until that time, credit unions 
will continue to file reports in accordance with current requirements.

Rulemaking--5 U.S.C. 553

    The NCUA finds that good cause exists to make this final rule 
effective on April 1, 1996, less than 30 days after its publication 
date. The rule implements technical changes to NCUA's existing rule 
intended to conform its language to the adoption of the SAR, and 
reduces the reporting and recordkeeping requirements of credit unions. 
The adoption of this rule, effective April 1, 1996, will assure that 
credit unions are able to comply with NCUA and Treasury reporting 
requirements for suspicious activity by completing a single SAR and 
filing it at one location.

Regulatory Flexibility Act

    The Regulatory Flexibility Act requires the NCUA to prepare an 
analysis to describe any significant economic impact any regulation may 
have on a substantial number of small credit unions (primarily those 
under $1 million in assets). The types of changes made by this rule 
have no economic impact on credit unions. These are merely housekeeping 
changes. Therefore, the NCUA Board has determined and certifies that, 
under the authority granted in 5 U.S.C. 605(b), this final rule will 
not have a significant economic impact on a substantial number of small 
credit unions. Accordingly, the Board has determined that a Regulatory 
Flexibility Analysis is not required.

Paperwork Reduction Act

    This final rule makes technical changes to reflect the use of 
Suspicious Activity Reports in place of Criminal Referral Forms and 
shortens the records retention requirements for the form and related 
documents. The Agencies and Treasury have submitted the SAR to OMB for 
approval. The same amount of information will continue to be collected 
under this rule although reporting will be simplified. The Rule does 
not change any paperwork requirements.

Executive Order 12612

    Executive Order 12612 requires NCUA to consider the effect of its 
actions on state interests. This Rule applies to all federally insured 
credit unions, simplifies the reporting process, and shortens the 
document retention period from that contained in the present rule. The 
NCUA Board has determined that this amendment is not likely to have any 
direct effect on states, the relationship between states, or the 
distribution of power and responsibilities among the various levels of 
government because federally insured credit unions are currently 
required to report crimes or suspected crimes which occur at their 
offices.

List of Subjects in 12 CFR Part 748

    Bank Secrecy Act, Credit unions, Crime, Currency, Reporting and 
recordkeeping requirements, Security measures.


[[Page 11527]]

    By the National Credit Union Administration Board on March 13, 
1996.
Becky Baker,
Secretary of the Board.

    Accordingly, NCUA amends 12 CFR chapter VII as follows:

PART 748--SUSPICIOUS ACTIVITY REPORT; REPORT OF CATASTROPHIC ACT 
AND BANK SECRECY ACT COMPLIANCE

    1. The heading of Part 748 is revised as set forth above.
    2. The authority citation for Part 748 is revised to read as 
follows:

    Authority: 12 U.S.C. 1766(a), 1786(q); 31 U.S.C. 5311.

    3. Section 748.1 (c) is revised to read as follows:


Sec. 748.1  Filing of reports.

* * * * *
    (c) Suspicious Activity Report. (1) Each federally-insured credit 
union will report any crime or suspected crime that occurs at its 
office(s), utilizing NCUA Form 2362, Suspicious Activity Report (SAR), 
within thirty calendar days after discovery. Each federally-insured 
credit union must follow the instructions and reporting requirements 
accompanying the SAR. Copies of the SAR may be obtained from the 
appropriate NCUA Regional Office.
    (2) Each federally-insured credit union shall maintain a copy of 
any SAR that it files and the original of all attachments to the report 
for a period of five years from the date of the report, unless the 
credit union is informed in writing by the National Credit Union 
Administration that the materials may be discarded sooner.
    (3) Failure to file a SAR in accordance with the instructions 
accompanying the report may subject the federally-insured credit union, 
its officers, directors, agents or other institution-affiliated parties 
to the assessment of civil money penalties or other administrative 
actions.
    (4) Filing of Suspicious Activity Reports will ensure that law 
enforcement agencies and NCUA are promptly notified of actual or 
suspected crimes. Information contained on SARs' will be entered into 
an interagency database and will assist the federal government in 
taking appropriate action.

[FR Doc. 96-6702 Filed 3-20-96; 8:45 am]
BILLING CODE 7535-01-P