Detecting and Preventing Financial Fraud in First National Bank

C

Based on the scenario given, Lillian Redmond, the teller supervisor for First National Bank, discovered five counterfeit $20 bills in several teller drawers in April, and two additional counterfeit $20 bills in May and June, respectively. She has no knowledge of criminal activity on the part of any of the bank's employees or customers, and she does not suspect any particular person in this transaction. The question asks which of the following statements is true.

A. Ms. Redmond must report the counterfeit funds on a SAR and must name the most likely individual(s) on the report.

This statement is incorrect. A Suspicious Activity Report (SAR) is required to be filed by financial institutions with FinCEN (the Financial Crimes Enforcement Network) whenever the institution detects suspicious activity indicating that funds are derived from illegal activities or are intended to be used for illegal purposes. In this case, there is no evidence that any individual is involved in criminal activity, nor is there any indication that the counterfeit bills are part of a larger pattern of suspicious activity. Therefore, Ms. Redmond is not required to name any individual(s) on the report.

B. Ms. Redmond must report the counterfeit funds on a SAR but is not required to name any individual(s) on the report.

This statement is correct. Even though the amount of counterfeit funds is relatively small, it is still considered a suspicious activity that must be reported to FinCEN. The SAR should describe the activity, including the amount of the counterfeit funds involved, the manner in which they were detected, and any other relevant information. While Ms. Redmond is not required to name any individual(s) on the report, she should include as much information as possible to assist law enforcement in their investigation.

C. Ms. Redmond need not file a SAR on this incident because the total amount is less than $25,000.

This statement is incorrect. The threshold for SAR reporting is not based on the total amount of the transaction, but on whether the activity is suspicious and indicative of illegal activity.

D. Ms. Redmond need not report this incident on a SAR because each incident is less than $5,000.

This statement is incorrect. Again, the threshold for SAR reporting is not based on the total amount of the transaction, but on whether the activity is suspicious and indicative of illegal activity. Additionally, in this case, the counterfeit bills were discovered on multiple occasions, so they cannot be considered separate incidents.