By Donya Parrish, MCU VP- Risk Management

When our Montana Compliance Officer Community met last month, we had an engaging panel discussion with agents from the FBI and the IRS-CI local offices. They wanted to learn more about the tracking software credit unions use and your internal process for moving through an investigation and deciding a SAR is needed. The agents then provided tips for what they find helpful when they review the SARs filed and an interesting comment was made.

Brian Anderson, IRS-CI Special Agent, said there was one thing they had noticed and felt would be helpful. He said they just don’t see filings for fraudulent commercial loans. He went on to note that any time a credit union has a loan application that is not supported with the requested documentation, whether that is income statements or paystubs, they would like to see a SAR filing considered.

The discussion within the group was that this might be a result of a lack of communication between the BSA compliance officers and the loan departments, or even a lack of knowledge of the big picture on what a loan application with unsupported documents could mean. For example, there was much discussion during the PPP loans provided during COVID that companies were applying and claiming many more employees than their payroll records showed they were paying taxes on.

Credit unions might benefit from a discussion with your lending departments to talk about what the process might look like if they see suspicious information, how your BSA compliance officer might need to be notified, and talk about some examples. There are materials available on this FinCEN page, but fraud evolves with everything else, so 2011 examples are not the only ones to look for.