Suspicious Activity Report Filing Requirements for Nonbank Subsidiaries of Bank Holding Companies and State Member Banks
December 26, 2002
Circular No. 11488

To All Depository Institutions and Others Concerned in the Second Federal Reserve District:

In a Supervisory Letter (02-24) dated December 24, 2002, the Federal Reserve Board provides guidance regarding Suspicious Activity Report (SAR) filing requirements for certain nonbank subsidiaries of bank holding companies and state member banks.

Under the Board's current suspicious activity reporting rules, that are set forth in Regulations H, K and Y, state member banks and bank holding companies and their nonbank subsidiaries and the U.S. offices of foreign banking organizations supervised by the Federal Reserve System must file SARs to report known or suspected violations of laws and activities relating to suspected money laundering or violations of the Bank Secrecy Act (BSA).

Since the passage of the USA PATRIOT Act, the Treasury Department has utilized its rule making authority under the BSA to adopt suspicious activity reporting requirements for securities broker-dealers, including those which are subsidiaries of bank holding companies and banks. These reporting requirements become effective January 1, 2003.

The Treasury Department has also adopted a final rule to require certain money service providers, such as sellers of travelers' checks and money transmitters to file SARs. In addition, Treasury has proposed to require insurance companies to file reports of suspicious activities.

As a result, certain nonbank subsidiaries covered by the Board's SAR filing requirements could also be covered by those of the Treasury Department, and thus, technically, subject to duplicative filing requirements. The SR letter clarifies that a nonbank subsidiary of a bank holding company or state member bank that is subject to suspicious activity reporting requirements imposed by a separately applicable Treasury regulation satisfies the Board's SAR filing requirements if the nonbank subsidiary files suspicious activity reports in accordance with the applicable Treasury regulation.

Questions on this matter may be directed, at this Bank, to Robert Otero, Examining Officer, Anti-Money Laundering and Bank Secrecy Act Team.