Regulators say they're trying to give skeptical bank compliance officers some SAR-tisfaction.
Financial institutions have filed nearly 115,000 "SARs," or suspicious activity reports, since the federal government created them in April 1996. The reports and their predecessors, criminal referral forms, are used to notify law enforcement authorities of possible money laundering and fraud.
Compliance chiefs have a question about these costly and cumbersome reports: Does law enforcement use them to catch any bad guys, or does the information fall into a bureaucratic black hole?
"I know that one of the frustrations for the banks has been the lack of follow-up information on suspicious activity reports," said Raymond W. Kelly, the Treasury Department's under secretary for enforcement.
"You provide the information and then you never hear anything back," he told attendees of a two-day conference on money laundering enforcement held last week by the American Bankers Association and American Bar Association.
In response, Treasury and banking regulators said they're trying to devise a periodic report for bankers on emerging criminal trends drawn from suspicious activity reports.
"Now that we have this data base, we should be able to go in there and do a threat assessment" by region, said Stanley E. Morris, director of the Financial Crimes Enforcement Network known as Fincen-the Treasury unit that collects the data.
For instance, these periodic reports could warn bankers in northern California that check fraud is on the rise or tell bankers in Miami that a money laundering ring is evading cash transaction reporting requirements by making numerous small deposits.
However, authorities said, banks should give up waiting for the Internal Revenue Service or the Federal Bureau of Investigation to disclose whether each suspicious activity report led to an investigation or an arrest. The number of filings has skyrocketed, probes often last years, various agencies use the information, and a report is one among many clues, they said.
"I don't think they (bankers) are going to get what they want, unfortunately," said Richard A. Small, an assistant director of banking and supervision for the Federal Reserve Board.
The general report being discussed by Fincen and the banking regulators represents "a good compromise," Mr. Small said.
"Law enforcement are not going to share sensitive case information," said Stephen Harvey, manager of Bank Secrecy Act compliance for Bank of America. "It's not important, I think, that we get that level of detail."
Trend data could be used in training and to learn of new criminal activity, Mr. Harvey said. "That would be useful provided it is on a fairly timely basis."
Mr. Small said he hoped quarterly reports would be distributed starting next spring, but Mr. Morris said officials have made no decisions about when such reports would start nor how frequently they would be distributed.
"I am very pleased with the initial steps they have taken," said John J. Byrne, senior ABA counsel, who noted that Fincen has already released more data than some bankers realize.
In the meantime, government officials reassured bankers at the conference that they are helping deter money launderers.
"The banking industry needs to give itself a pat on the back on this one," said national drug czar Barry R. McCaffrey.
The IRS has begun more than 950 investigations from suspicious activity and other money laundering reports in the past three years, said Johnny C. Rose, deputy director of national criminal investigations.
"That's not an awful lot, but that's probably 900 more than we would have gotten without your help," Mr. Rose told bankers.