This, the second edition of SAR Stats, is FinCEN’s annual review of aggregated Suspicious Activity Report (SAR) filings. The 44-page PDF report contained statistical and qualitative analysis of SAR filings, including emerging trends; highlights from within each sector (e.g. MSB, Securities & Futures); and, SAR narratives. While the bulletin did not contain any explicit references to bitcoin or digital currency, there were a couple of key takeaways.
First, FinCEN indicated that SARs within the MSB industry generally contained less specificity and in many cases minimal detail concerning the underlying unusual or suspicious activity. Further, when referencing the type of activity, MSBs checked the “Other” box with greater frequency than any other financial sector. According to FinCEN, “[i]n more than 100,000 instances filers should have furnished more detail relative to the suspicious activity being reported. Greater detail and context better assists in identifying a more accurate and discernable variety of trends.” This should be concerning. The quality of information and attention to detail within your SAR filings is a direct reflection of your AML program and commitment to regulatory compliance.
Secondly, FinCEN analysis of MSB SAR filings determined that references to “Excessive Payments” and “Flipping” exhibited the greatest annual increase at 2,000% and 304%, respectively. It’s possible that these increases were fueled by the growth of bitcoin-MSBs. Both terms, it could be argued, apply to bitcoin. Larger purchases of bitcoin might be viewed as excessive, while high-velocity arbitrage exchanges of BTC could be labeled “flipping”.
Click here to view the SAR Stats Technical Bulletin