Suspicious activity on the rise

From Compliance Reporter:

Financial institutions filed a record number of suspicious activity reports last year, according to data released by the Financial Crimes Enforcement Network. Between them, all firms covered by Bank Secrecy Act reporting requirements filed 1,250,439 SARs in 2007, up 16% from the year before. Depositary institutions continued to dominate the field, making 649,176 reports, up 14%. Firms in the securities and futures industries make comparatively few filings, although that number has leapt up in the last few years, in part because mutual fund firms are now covered by the BSA requirements. The sector filed 12,881 SARs last year, a rise of almost 60% on 2006. Among these, reports by mutual funds more than doubled to roughly 1,400.

Gregory Baldwin, a partner with Holland & Knight in Miami, said the results for the securities and futures industries don’t necessarily reflect better due diligence by brokerage firms, adding, “It’s hard to say that the securities industry has come to Jesus.” But the figures do indicate that institutions across the BSA reporting community, particularly newly-included mutual fund firms, are getting up to speed with reporting requirements, and are becoming sensitive to a wider range of potential violations such as mortgage fraud, he said.

A spokesman for FinCEN said the increase in SARs could be attributed both to the growing population of institutions having to comply with the rules and the improving ability of firms to file correctly.

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