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Bribe Backfires on S.A.R. Reporter

Bribe Backfires on S.A.R. Reporter, and everyone in the AML field should know this – the SAR is confidential.

That is certainly nothing new.  Sometimes mistakes are made, people goof up, we’re all human, so be it.  However, a particular bank employee for Chase Bank knew very well about the confidentiality rules, but he viewed this as an opportunity.  He thought he could cash in on the deal.  File this story right in the section called, “The Enemy Within”.

Mr. Frank Mendoza of Victorville, California worked at Chase Bank as a Loss Mitigation Specialist.   He observed a customers activity that appear to be suspicious for the possibility of mortgage fraud.  Mendoza did his job correctly by observing and reporting this activity to his supervisors who subsequently filed a S.A.R.  Unfortunately, this story does not end here.  Mendoza, sensing opportunity, contacted the subject of the S.A.R. and advised him that a S.A.R. had been filed and that his account activity had raised suspicions.  Mendoza then offered the S.A.R. subject his assistance with the internal bank inquiry and any subsequent law enforcement investigation – all for the sum of $25,000.   (I hope you are all squirming in your seats right now).

Regrettably for Mendoza, the subject of the S.A.R. contacted the F.B.I. and advised them of the situation.  The F.B.I. set up a sting operation.  The bureau had the S.A.R. subject contact Mendoza and agreed on a $10,000 fee to be distributed in two $5000 increments.  They monitored two meetings in a parked car between Mendoza and the S.A.R. subject.  Each time the S.A.R. subject delivered $5000 to Mendoza.  After the second handoff, the F.B.I. swooped in and arrested Mendoza with the second set of $5000, and, he even was kind enough to have in his possession two marked $100 bills from the first handoff.  (Sometimes it really is like taking candy from a baby!)

Mendoza will be sentenced on May 25, 2011.  He faces up to 95 years in jail.

What would you do if Mendoza worked for you?  Well, once he had been arrested he’s out of your hair right?  Case closed.  You don’t’ have to worry about him anymore, correct?   Hmmmm…not so fast.

You should not sweep this under the rug and continue status quo.  This is the point where you need to do a little backtracking.  Don’t think that this single event is the only one that your bad employee was involved in.  It’s time to do a vertical and horizontal analysis of all of that employee’s workload.  Are there any other potential bribes floating around out there?  Any other information, S.A.R. or otherwise that might be compromised?  How much reputational damage would be done to your financial institution if it turns out that some major organized crime figure and or terrorist financier had been routinely receiving the “tip off” from your bad employee?  You need to dig deep and look closely at everything your employee touched and/or had access to.  Don’t make a bad situation worse by neglecting to do your own internal due diligence.

Personally, there is one more thing I’d do, and I understand that many managers would not do this, so consider this my added optional bonus suggestion. I would make sure the rest of the staff is well aware of the situation after the investigation is completed, and if possible, they all get a nice long look at the “perp walk” as the bad employee is led out of the building in handcuffs.  That paints a very powerful picture to anyone else who might have similar opportunistic ideas.

About the Author

Kevin Sullivan, CAMS, CCI is a retired New York State Police Investigator and Federal Agent who dedicated his career to AML and continues that work through his company, The AML Training Academy and Advisory LLC. Kevin coordinated AML investigations for the state of New York while being detailed to one of the worlds largest AML task forces, the NY High Intensity Financial Crime Area (HIFCA) El Dorado Task Force. He has helped develop and implement global AML guidelines and trained and advised all industries and government agencies requiring AML around the globe. He helped to write various certification programs for the Association of Certified Anti-Money Laundering Specialists’ (ACAMS) and was the co-founder and former chair of their inaugural chapter which was in NY. Follow Kevin or reserve a seat in one of his live webinars. Space is limited!

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