Locke Lord QuickStudy: FinCEN Publishes Second Edition of SAR Stats

With respect to FinCEN’s analysis of crowdfunding in relation to the SAR filings review, FinCEN indicates that while the mentions of crowdfunding associated with possible illicit activity are not significant, the trend is increasing. For example, the FinCEN figures demonstrate a 171% increase in mentions of crowdfunding in SAR filings between 2013 and 2015, many with a focus on rewards-based crowdfunding. FinCEN defines rewards-based crowdfunding as “a funds pooling method that relies heavily on internet campaigns to solicit contributions or ‘donations’ from a large number of individuals, most of whom are previously unknown to the campaign creator, to raise money for a specific business venture, personal cause, or project.” Kickstarter is an example of such a platform. The reporting indicates that SARs filings have identified illicit use of rewards-based crowdfunding for money laundering, fraud schemes, possible terrorist financing and other criminal activities. 

FinCEN also reviewed the Depository Institution sectors use of the filings, and specifically the free text fields of such filings, to “call out” suspicious activity that could not be adequately categorized in a check box available on the filing form itself. In the second edition of SAR Stats, FinCEN reviewed the most common types of suspicious activity called out by depository institutions in calendar year 2014. Some of the most prevalent categories FinCEN found were: social security number fraud; income fraud; tax fraud; ID fraud/theft; origination fraud; scams or schemes; and cyber-related issues.   

Locke Lord has a dedicated team of financial services regulatory, compliance and litigation attorneys with significant experience handling various aspects of banking and consumer finance. Locke Lord attorneys regularly advise financial institutions on regulatory compliance matters, BSA/AML compliance, new product development and represent clients in regulatory enforcement matters, class actions and various lawsuits in the U.S. and abroad. Visit Locke Lord’s Financial Services Regulatory Practice website or contact the author with questions.