FinCEN Underestimates Time Required to File Suspicious Activity Report

The Financial Crimes Enforcement Network (FinCEN) significantly underestimates the time required for a bank to file a suspicious activity report, according to the Bank Policy Institute (BPI).

AA BPI survey found that banks dedicate an average of 21.41 hours to every suspicious activity report filed, which is 10 times the estimate of 1.98 hours that FinCEN produced as part of its obligations under the Paperwork Reduction Act.

The Paperwork Reduction Act, which was introduced in 1980, was designed to reduce the total amount of paperwork burden the federal government imposes on private businesses and citizens.

FinCEN’s estimate of 1.98 hours represents the administrative burden involved in producing and reviewing a suspicious activity report as well as overseeing the process and actually filing a report.

The regulator has previously noted it lacked sufficient information to take into account the cost and burden of managing a transaction monitoring system, reviewing alerts and transforming alerts into cases for review.

The survey was conducted in response to the FinCEN’s request for comment on its proposal to renew without change the suspicious activity report form used by financial institutions to report suspicious transactions to FinCEN.

In response to the request for comment, BPI recommended FinCEN alter its burden estimates to include these “very time and resource-intensive” processes.

Greg Baer, president and CEO of BPI, said: “Today’s findings show that SAR filings require significantly more resources than government estimates.

“While these resources might be manageable if the filings were effective, examiners at the federal banking agencies continue to push banks to investigate irrelevant matters, diverting time and resources from more effective methods of detecting and reporting illegal activity.”