We have a problem with a particular loan. Out of an abundance of caution, we filed a SAR on it. But we are not sure if we should have filed one.
Our concern began when we found that our customer was involved in unusual account activity, Even though she always maintained high balances. When our manager asked her why there were sudden increases in activity, she said that she was involved in converting her money to virtual currency.
Since it did not appear her account activity was without an economic purpose nor used for criminal activity, we took no action. But then she applied for a HELOC, and alarm bells went off in our compliance department. We found she used the proceeds to wire her funds to a virtual provider to buy virtual currency.
At this point, we filed the SAR. FinCEN contacted us, and they are now investigating. I have never seen anything like this and wonder if you can tell us what is happening. Thank you for your awesome weekly newsletter.
Why are home equity proceeds causing a red flag when used to buy virtual currency?