Q: Do we actually have to file a Suspicious Activity Report
(SAR) when there has been an insider theft of less than $1,000,
or even when a client sells collateral out of trust in an amount
over $5,000? We have filed these reports before and nothing happened.
Isn't this just a waste of time?
A: It is not a waste of time; in fact treasury regulations
require it and failure to file it is a violation of rules and regs.
All financial institutions operating in the United States, including
insured banks, savings associations, savings association service
corporations, credit unions, bank holding companies, and non-bank
subsidiaries of bank holding companies are required to make this
report following the discovery of insider abuse involving any amount,
violations aggregating $5,000 or more where a suspect can be identified,
violations aggregating $25,000 or more regardless of a potential
suspect, or transactions aggregating $5,000 or more that involve
potential money laundering or violations of the Bank Secrecy Act.
Law enforcement officials often do follow up on these reports. Even
if they do not, if an audit reveals a loss to the institution and
no SAR was filed, the auditor has just caught you in violation of
a regulation.
The SAR rules require that a SAR be filed no later than 30 calendar
days from the date of the initial detection of the suspicious activity,
unless no suspect can be identified, in which case, the time period
for filing a SAR is extended to 60 days. It may be appropriate for
institutions to perform a review of the activity to determine whether
a need exists to file a SAR. The fact that a review of customer
activity or transactions is determined to be necessary does not
necessarily mean there is a need to file a SAR, even if a reasonable
review of the activity or transactions might take an extended period
of time. The time to file a SAR starts when the institution, in
the course of its review or on account of other considerations,
reaches the point where it knows, or has reason to suspect, that
the activity or transactions under review meets one or more of the
definitions of suspicious activity.
Q: We will eventually be setting up the sale of a borrower's
personal property collateral. What is the process once we get our
judgment?
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A: A sale of
personal property under execution is a statutory animal requiring
particular steps. Once you have your judgment in hand, the sheriff
will levy upon (or seize) the borrower's personal property if the
borrower has not claimed the property as exempt, and it is not exemptible
by law. The sheriff will then commence to sell the property after
he has given public notice as to the time and place of the sale by
publishing this notice once a week for two successive weeks immediately
prior to the sale. The notice is to be published in a newspaper printed
in the county, but if no newspaper is published in that county, notice
can be met by posting advertisements in five public places in the
county. A 1987 North Dakota Supreme Court case held that an execution
sale is a non-UCC alternative and is not subject to the notice or
the “commercially reasonable” requirements of North Dakota's
UCC as long as the statutory procedures are complied with.
All sales of property under execution must be made at public auction
and sold to the highest bidder between the hours of 9:00 a.m. and
4:00 p.m. After enough property has been sold to satisfy the execution,
no more property may be sold. When the sales of personal property
is capable of manual delivery, the property must be within the view
of those who attend the sale and must be sold in such parcels or groups
as is likely to bring the highest price. The borrower, if present
at the sale, may direct the order in which the property must be sold.
In other words, if the borrower wants his grandmother's antique dishes
sold before the snowmobile, the sheriff must offer them in that order.
When there are no bidders or when the amount offered for the property
is “grossly inadequate,” the sheriff may postpone the
sale for not more than three days without being required to give any
further notice of the sale, but may not make more than two such postponements.
These postponements must be publicly announced when and where the
sale should have taken place the first time. When the property sells
for more than the amount required to be collected under the judgment,
the surplus must be paid to the judgment debtor unless the sheriff
is holding another execution upon which the surplus may be applied.
The statutes on sales under execution are found in N.D.C.C. Ch. 28-23.
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