Last week, the GOP-controlled House Oversight Committee publicly outlined a series of financial transactions possibly implicating various Biden family members in corrupt financial dealings involving millions of dollars.
What the American public does not realize is that the information uncovered and made public by the committee, came primarily from what are known as Suspicious Activity Reports or “SARs.” These reports are secret and are routinely filed against private citizens by banks and other financial entities (including casinos and mortgage brokers) as mandated by federal law.
The grounds on which each SAR is filed can be for something as significant as a large international wire transfer, or as mundane as a deposit of a cashier’s check or cash by a bank customer who just sold an automobile and simply wants to place the money in their account.
The bank customer will almost never know that such a report has been filed with Uncle Sam, because under the 1970 law that created SARs the financial institution is prohibited from informing the customer.
SARs forms have been modified over the past half century, but still require all employees of financial institutions to file a report whenever they consider that a customer’s transaction has “raised suspicion.” While neither the SAR itself nor the SAR Instructions explain in detail what constitutes a legal basis on which to conclude that a customer’s activity is sufficiently “suspicious” to warrant filing a SAR, the sweep of the law is extremely broad.
Federal law requires, for example, that any transaction of $5,000 or more must be reported via a SAR whenever the bank employee concludes it “has no business or apparent lawful purpose or is not the sort in which the particular customer would normally be expected to engage . . .”
Let that last part about a transaction in which the customer would not “normally” engage sink in.
If an otherwise fully law-abiding bank customer goes to their bank where they have maintained an account for years or even decades, and makes a deposit of more than $5,000 while their normal deposit might be for, say, $1,500, the bank will secretly file a SAR with the U.S. Financial Crimes Enforcement Network (“FinCEN”).
All that is required to trigger such a filing is a transaction that does not fit the normal pattern of transactions for the particular customer. Regardless of whether such a report was filed because the bank management instructed the employee to do so, or because the employee decided for themself “on a voluntary basis” to send it in, neither the employee nor the bank can ever be sued by the customer or otherwise held liable for any SAR filings. They have complete immunity from being held accountable.
What the FinCEN does with the millions of SARs it receives and databases is, of course, up to the Treasury Department of which FinCEN is a part, but unless a customer is later charged with a crime, or, as in the most recent matter of the House Oversight Committee making SARs on the Biden family public, customers will never know their transactions are on file as being “suspicious.”
While some of the over-arching purposes of SARs – to identify drug cartel money laundering or financing of terrorist activities – are laudable and appropriate, the extremely broad sweep of the power the underlying legislation gives the federal government (including the 1970 Bank Secrecy Act and the 2001 USAPATRIOT Act) is far broader than needed to accomplish those purposes, and raises fundamental Fourth Amendment concerns.
Moreover, SARs can be used to assist the government investigating virtually any law enforcement policy priority, including gun control. As reported in November 2022, for example, SARs are under consideration as a vehicle to aid in pre-identifying “mass shooters.”
There was a time long, long ago, when conservative and liberal members of Congress on both sides of the aisle would join forces to rein in such broad, unnecessary, and privacy-invasive federal law enforcement powers as reflected in SARs. Unfortunately, that constitutional concern has almost totally disappeared – swept under by partisanship and fear of being labeled “soft on crime.”