Recent leaks of information from confidential suspicious activity reports are stoking fears that the casual release of such data could inhibit future filings, harm bankers' reputations, and help criminals.
The disclosures have already drawn a protest from Financial Crimes Enforcement Network Director William Fox, who said federal investigators are pursuing the matter. But industry representatives demanded that federal authorities better protect the sensitive documents.
"We are outraged that there have been leaks of very confidential and federally protected documents in any investigation," said John Byrne, the head of the American Bankers Association's Center for Regulatory Compliance. "For these documents to have any value, we have to know at the end of the day that these are protected documents."
The issue first surfaced in an article in the April 7 issue of Newsweek which used information from, and quoted, SARs filed by Fleet National Bank of Boston. An article in Sunday's issue of The Washington Post used information and quotes from more than a dozen SARs filed by Riggs Bank. Neither article revealed the source of the reports.
Industry officials and observers said bankers may file fewer or less-detailed SARs if they believe the reports will go public.
"Once financial institutions suspect that the highly sensitive information they are filing on a SAR might be publicly disclosed, they may be reticent to be as candid and forthcoming as they have been in the past," said Peter Djinis, a former top official at Fincen, who has founded his own law firm.
"What you have to remember is that virtually every SAR represents a determination or at least a suspicion by the bank that one of its customers was involved in some type of illegal activity," he said. "It's a very serious allegation."
Other officials downplayed any possibility that banks could file fewer SARs and noted that they have a legal obligation to report any suspicious activity.
Still, several officials said the banks, which largely are protected by law from any customer litigation based on SARs, must worry about their reputation with customers when any document is publicly released.
"Thankfully, there is substantial protection under the Bank Secrecy Act to protect them from civil litigation from a depositor or a customer, but there is no protection from the court of public opinion," Mr. Djinis said.
Some industry representatives said the most damaging aspect of the leaks could be in law enforcement. Mr. Byrne said that the public release of a SAR could help a criminal avoid detection in the future.
Observers also said the public release of the document is damaging because it is not a formal accusation of wrongdoing, but merely a flag of suspicious activity.
"A premature disclosure can only undermine an investigation," said David Aufhauser, a partner at the Washington law firm Williams & Connolly LLP.
In a press release posted Tuesday on Fincen's Web site, Mr. Fox agreed with that assessment.
"The release of this information by those to whom it was entrusted threatens everything that we all have worked so hard to build - a program to protect the integrity of our financial system through the prevention, detection, and prosecution of financial crimes and terrorist financing," he said.
The number of SAR filings has grown in recent years. Fincen reported 273,823 in 2002, up 34% from the previous year. There were 136,115 filings as of mid-2003.
