Terrorist Financing Reports Rise as Overall SARs Edge Down

The Financial Crimes Enforcement Network (FinCEN), a unit of the U.S. Treasury Department, reported the first year-to-year decline in suspicious activity reports (SARs) since 1996, dropping from 1.29 million in 2008 to 1.28 million in 2009, but SARs indicating terrorist financing activity increased for the first time since 2004 after several years of steady declines. SARs filed by depository institutions, which include banks, credit unions and thrifts, declined for the first time since 1996 from 732,563 in 2008 to 720,309 in 2009.


The 14th edition of SAR Activity Review – By the Numbers , covering reports filed in 2009, said that SARs indicating terrorist financing filed by depository institutions increased 8% in 2009. Depository institution filers submitted 545 SARs indicating terrorist financing in 2009 and 4,914 total terrorist financing SARs since July 2003 when this category was added. Terrorist financing SARs had steadily declined every year since peaking at 987 in 2004.


FinCEN’s review, which has been issued roughly semiannually since October 2003, also noted large increases in reports of suspected computer intrusion (52%) and counterfeit checks (12%).


FinCEN said 27% of the suspicious activity reported by depository institutions in 2009 was attributed to suspected fraud-related activities including check fraud, commercial loan fraud, consumer loan fraud, credit card fraud, debit card fraud, mortgage loan fraud and wire transfer fraud. Mortgage loan fraud and check fraud remain the only two SAR categories that have increased every year since 1996.


Other changes from 2008 to 2009 where fraud was identified include:


  • Depository institution SARs identifying mortgage loan fraud rose 4%.
  • Suspected incidents of credit card fraud increased 5%.
  • SARs filed by securities and futures firms, or SAR-SF, and characterizing the suspicious activity type as check fraud increased 15%.
  • SAR-SF filings characterizing the suspicious activity type as wire fraud increased 39%.
  • SAR-SFs also identifying mail fraud as the suspicious activity increased 23%, and significant wire or other transaction without economic purpose increased 41%.


Areas where the reported incidence of suspected fraud fell in 2009 include:


  • Reports indicating consumer loan fraud fell, for the first time since 2000, down nearly 31% from the prior year.
  • Reports of check kiting fell 23%.


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