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Remote capture issues cause higher CU SARS filing
WASHINGTON (10/13/11)--Credit unions filed 15% of all suspicious activity report (SAR) inquiries between July 1, 2010 and June 31, 2011. The high percentage was attributed in large part to an increasing number of Remote Deposit Capture (RDC) transactions, which, while innovative, can create new types of risks, the Financial Crimes Enforcement Network (FinCEN) reported. RDC transactions allow credit union members and other bank customers to transmit scanned checks or share drafts to their financial institutions from remote locations. FinCEN in its release said “the adoption of new technologies or use of those technologies to provide innovative banking products and services, such as RDC services,” raise risk management issues. FinCEN added that smaller institutions such as credit unions “may require additional guidance to identify and appropriately mitigate these risks.” A total of 1,017 SAR reports were filed between July 1, 2010 and June 31, 2011, and 78% of these RDC-related SAR filings were tied to check fraud, FinCEN said. FinCEN added that “the vast majority of RDC-related SAR filers associated suspicious activities with the deposit of third-party or personal checks.” Money laundering, check kiting, and the use of counterfeit checks were among the specific instances of fraud. The agency recommended that “special precautions and commensurate due diligence efforts may be appropriate when processing items from non-U.S. correspondent accounts or foreign-located customers.” Credit unions and other institutions should also “ensure that their transaction monitoring systems adequately capture, monitor and report on suspicious activities occurring through RDC, especially as transactional levels increase,” FinCEN said. The agency also noted that SARs related to international prepaid cards accounted for 0.19% of all SARs filed between January 2008 and June 30, 2011. FinCEN on Wednesday proposed adding prepaid cards and other so-called "prepaid access devices" to the list of monetary items that must be reported when they are transported into or out of the United States. FinCEN Director James Freis in a release said "reporting tangible prepaid access devices puts another tool at the disposal of law enforcement to interrupt the transfer of monetary value anonymously across international borders when that value was obtained illegally." For FinCEN’s most recent SAR Activity Review and Wednesday's release, use the resource links.
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