Bob Jones, president of ACME bank, has had a banking relationship with Linda O'Reilly, a local real estate agent for several years. Ms. O'Reilly keeps most of her deposit accounts with ACME and also has had several personal loans there. Over a three-month time period, Ms. O'Reilly consistently (two or three times a week) brings to the bank a series of money orders in amounts ranging from $7,000 to $15,000, made payable to her in denominations of $1,000, and asks the teller to take them and issue one cashier's check payable to her. After this activity has continued for three months, Mr. Jones notices the frequency of cashier's checks issued to Ms. O'Reilly on a management report. It catches his attention because he does not know why Ms. O'Reilly would need this number of cashier's checks.
On inquiry, the head teller explains the weekly transactions. Which of the following statements best describes Mr. Jones's responsibility?
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A. B. C. D.C
In this scenario, Bob Jones, the president of ACME bank, notices a pattern of unusual activity in the banking relationship with Linda O'Reilly, a local real estate agent who keeps most of her deposit accounts and has had several personal loans with the bank. Specifically, Ms. O'Reilly has been regularly bringing in money orders ranging from $7,000 to $15,000, made payable to her in denominations of $1,000, and asking the teller to issue one cashier's check payable to her. This activity has been going on for three months, and Mr. Jones becomes concerned about the frequency of cashier's checks being issued to Ms. O'Reilly.
In this situation, Mr. Jones has a responsibility to investigate the transactions and determine if they are suspicious. The Bank Secrecy Act (BSA) requires financial institutions to monitor and report suspicious activity that may indicate money laundering, terrorist financing, or other illegal activities. The BSA also requires banks to file Currency Transaction Reports (CTRs) for cash transactions over $10,000.
Option A suggests that Mr. Jones should immediately file a Suspicious Activity Report (SAR). However, it may not be appropriate to file a SAR without further investigation into the transactions. While the activity is unusual, there may be a logical explanation for it.
Option B suggests that Mr. Jones should file a CTR because Ms. O'Reilly may be trying to evade the BSA currency transaction reporting requirements. However, this is not necessarily true, as the transactions involve money orders and not cash. Additionally, the amount of the transactions is below the $10,000 threshold for reporting on a CTR.
Option C suggests that Mr. Jones should ask Ms. O'Reilly about the transactions and then determine whether to file a SAR. This option is more appropriate because it allows for further investigation into the transactions and may provide a legitimate explanation for the activity. If Ms. O'Reilly can provide a reasonable explanation for the transactions, such as purchasing properties or making large payments, then there may be no need to file a SAR. However, if her explanation is not credible, then Mr. Jones should consider filing a SAR.
Option D suggests that Mr. Jones is not required to do anything since he is well acquainted with Ms. O'Reilly and it is not illegal to purchase cashier's checks. However, this option is not entirely accurate since Mr. Jones still has a responsibility to investigate suspicious activity and determine whether to file a SAR.
In summary, Mr. Jones's responsibility is to investigate the transactions further, ask Ms. O'Reilly about the transactions, and determine whether to file a SAR based on the information gathered. It is important for financial institutions to take a risk-based approach to monitor and report suspicious activity to prevent financial crimes and comply with regulatory requirements.