Federal law provides protection from civil liability to financial institutions and their employees who report suspicious or potentially criminal activity to the appropriate law enforcement and bank supervisory authorities in Suspicious Activity Reports (SARs). A recent federal court case reaffirmed the scope of this statutory protection, which is generally referred to as a "safe harbor." The enforcement staffs of the Federal Reserve Board and the other federal financial institutions supervisory agencies, along with the U.S. Department of the Treasury's Financial Crimes Enforcement Network, prepared an Interagency Advisory discussing the facts, holding, and implications of the court decision. A copy of the Interagency Advisory is attached.
In addition to a discussion of the case and the background of the "safe harbor" provisions, the Interagency Advisory also provides useful information regarding steps that banking organizations should take to better ensure that they are fully protected under the law. Most importantly, the Advisory states that, in the opinion of the staffs of the banking agencies, financial institutions and their employees who follow their respective agencies' SAR regulations and the filing instructions should be fully protected by the "safe harbor" provisions of federal law.
Reserve Banks are asked to distribute this SR letter and the attached Interagency Advisory to the state member banks, bank holding companies, and foreign banking organizations supervised by the Federal Reserve in their districts, as well as to their supervisory and examination staff. Questions pertaining to this letter should be directed to Herbert A. Biern, Senior Associate Director, at (202) 452-2620, Nina Nichols, Special Counsel, at (202) 452-2961, or to John McCormick, Special Counsel, at (202) 728-5829, in the Division of Banking Supervision and Regulation.