CRCM practice question 25 of 35

In which of the following circumstances is it LEAST appropriate for a bank to file a SAR regarding Internet activity?

Answer options

A: Bank determines that one of its customers is the victim of identity theft

B: Bank becomes aware of identity theft of its domain name (i.e., another entity selects a name similar to the bank’s in order to confuse customers and obtain confidential financial information)

C: Bank discovers that someone has hacked into its data system in order to obtain confidential customer data

D: Bank determines through its transaction-monitoring program that a customer is making electronic transfers between his own checking and savings accounts that are just below the $10,000 reporting level Correct answer

Correct Answer:

D. Bank determines through its transaction-monitoring program that a customer is making electronic transfers between his own checking and savings accounts that are just below the $10,000 reporting level

Explanation

Filing a Suspicious Activity Report (SAR) is least appropriate when a customer makes electronic transfers between their own accounts below the reporting threshold without other red flags. While this could be structuring, it is more commonly legitimate activity. The other options describe definitive illicit activities or security breaches that warrant a SAR. Computer intrusions (hacking) and instances where the bank or its customers are victims of fraud (identity theft, phishing) are specific events that generally require a SAR filing.

Why Incorrect

A. A customer being a victim of identity theft often involves unauthorized transactions, a clear basis for filing a SAR to report the suspicious activity.
B. Identity theft of a bank's domain name is a computer intrusion and an attempt to defraud customers, which requires a SAR filing.
C. A hack into the bank's data system is a significant computer intrusion that compromises confidential data, mandating a SAR filing.

References

1. Federal Financial Institutions Examination Council (FFIEC). (2021). Bank Secrecy Act/Anti-Money Laundering Examination Manual. "Suspicious Activity Reporting," p. 59, and "Cyber-Related SAR Filings," p. 63.

2. Financial Crimes Enforcement Network (FinCEN). (2016). Advisory to Financial Institutions on Cyber-Events and Cyber-Enabled Crime. FIN-2016-A005, pp. 4-5.

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