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Financial Services Law Insights and Observations

FinCEN Issues Guidance on New E-Filing System, Tax Refund Fraud

FinCEN

Financial Crimes

On March 29, the Financial Crimes Enforcement Network (FinCEN) announced that it is accepting the new Currency Transaction Report (CTR) and Suspicious Activity Report (SAR) into FinCEN’s BSA E-Filing System. FinCEN issued guidance to assist institutions in filing the new reports and indicated that the new forms will replace the existing forms (legacy reports), but do not create any new obligations or otherwise change existing statutory and regulatory expectations for financial institutions. The new forms are now accepted for electronic filing and their use becomes mandatory on March 31, 2013. Until that date institutions may electronically file either the new reports or the legacy reports. In a separate action FinCEN had already mandated the electronic filing of most reports through the BSA E-Filing System beginning on July 1, 2012.  FinCEN has recommended that institutions file electronically before that date, but until then they may continue to file via paper or by use of the legacy report form. The new CTR and SAR report forms may only be submitted electronically.

On March 30, FinCEN issued advisory FIN-2012-A005 to assist financial institutions with identifying tax refund fraud and filing SARs. The Advisory lists multiple “red flag” activities that could indicate tax refund fraud. When completing SARs on suspected tax refund fraud, financial institutions should use the term “tax refund fraud” in the narrative section of the SAR and provide a detailed description of the activity.

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