Without Better Use of Narratives, SARs Fail to Show Extent of Mortgage Fraud

By Kieran Beer

The current design of federally-mandated suspicious activity reports makes it difficult for banks to report important information tied to suspected mortgage fraud, say former law enforcement agents and consultants. Under U.S. regulations, banks must inform the U.S. Treasury Department of possible mortgage fraud through the same regulatory filing they use for suspected terrorist financing and money laundering. The reports, known as SARs, allow compliance staff to detail information on potential mortgage schemes through free-form input fields. But the forms fall short in directing bank compliance staff to provide law enforcement agents information on potential co-conspirators, including mortgage brokers and appraisers,...