A routine review of account records reveals that suspicious activity involving foreign currency has occurred in the account of one of the bank's directors. Which of the following actions should be taken FIRST?
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A. B. C. D.A
The correct answer is A. A Suspicious Activity Report (SAR) should be filed first.
Explanation:
When suspicious activity is detected, the first and foremost action should be to report it to the relevant authorities. In this case, as a foreign currency is involved, the Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) regulations require the bank to file a SAR with the Financial Crimes Enforcement Network (FinCEN) of the US Department of Treasury.
A SAR is a confidential report that provides relevant information about the suspicious activity and the affected account holder to the authorities for further investigation. The bank must file a SAR within 30 days of detecting any suspicious activity in the account, and failure to do so can lead to significant fines and legal penalties.
The other options listed in the answer choices are not the first actions to be taken in response to such suspicious activity. Here is a brief explanation of each of those options:
B. The bank's board of directors should discuss the account activity without the affected director being present: This is not the first action to be taken as it may alert the affected director, who may then tamper with the account records or destroy evidence. This discussion can be held later, after the SAR has been filed, and the investigation has progressed.
C. The bank's president should meet with the affected director to discuss the account activity: This action can wait until after the SAR has been filed, and the authorities have initiated an investigation. The affected director should not be informed about the suspicious activity until the SAR has been filed, as it can compromise the investigation.
D. The bank should file a Currency Transaction Report (CTR), checking the box that indicates the report is for suspicious activity: A CTR is a report that banks file for any transaction involving cash above a certain amount. However, as the suspicious activity involves foreign currency, a SAR is more appropriate. A CTR alone may not provide sufficient information for authorities to investigate the matter. Moreover, checking the box that indicates the report is for suspicious activity in a CTR may not meet the BSA's SAR filing requirements.