5 W’s of the SAR Narrative

5 W’s of the SAR Narrative

The Financial Crimes Enforcement Network (“FinCEN”) requires certain financial institutions to file Suspicious Activities Reports (“SARs”) in order to enable law enforcement to initiate or supplement major money laundering or terrorist financing investigations and other criminal cases. Financial institutions use the SAR to document and report suspicious or potentially suspicious activity among their clients. The report has a narrative format, requiring financial institutions to document all suspicious activity concisely and in chronological order.

In general, a SAR narrative should identify the five essential elements of information – who?  what? when? where? and why?

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Filing A Suspicious Activity Report ("SAR")

Filing A Suspicious Activity Report (“SAR”)

The Financial Crimes Enforcement Network requires certain financial institutions to file a Suspicious Activities Reports (“SAR”) to report suspicious transactions, as detailed in their FinCEN SAR Electronic Filing Instructions. This blog will go over some of the important aspects of filing a Suspicious Activity Report.

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FINRA Notice 21-03: Low-Priced Securities Fraud

FINRA Notice 21-03: Low-Priced Securities Fraud

FINRA released regulatory notice 21-03, FINRA Urges Firms to Review Their Policies and Procedures Relating to Red Flags of Potential Securities Fraud Involving Low-Priced Securities, discussing issues with these securities offerings and fraud. Specifically, including those involving COVID-19 and cannabis related businesses, which appear to have been part of potential pump-and-dump or market manipulation schemes that target unsuspecting investors.

In the notice, FINRA states that “Low-priced securities tend to be volatile and trade in low volumes. It may be difficult to find accurate information about them. There is a long history of bad actors exploiting these features to engage in fraudulent manipulations of low-priced securities. Frequently, these actors take advantage of trends and major events — such as the growth in cannabis-related businesses or the ongoing COVID-19 pandemic — to perpetrate the fraud.”

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