I love SARs (The First in a Series)
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Too often in loss prevention the numbers (losses, attacks by fraud type, charge-offs, etc.) are hard to get our hands on. Just gathering up the right numbers is difficult enough, let alone performing meaningful analysis once everything is pulled together. Which is why I love SARs. I can hear the collectively groan, but I admit it, I love SARs, and I'll tell you why.
I love SARs because I can quickly get my hands on data that spans the entire financial services industry. Just go to FinCEN's website and all the historical SAR data (since 1996) is there for you to grab. And, it's already in excel which just happens to be a good tool for analyzing data. Now the fun starts. In this post I thought I'd look at overall SAR filing, and in subsequent posts I'll narrow my lens to look at which type of institutions are filing SARs and different SAR types.
The fact that SAR filing (fraud and suspicious activity) increased in 2008 over 2007 isn't overly surprising. After all, the economy basically melted down last September and is still wallowing in a recession. But the SAR data does reveal some interesting trends. Comparing the first quarters of 2007 and 2008, SAR filing actually decreased 2%.
However, this trend reversed itself and SAR filing increased over 17% for the next three quarters. Looking forward to 2009, what do you think that means for SAR filing? I estimated (economy is still wallowing) that SAR filing would increase 10% over all of 2009.
If the poor economy does indeed cause a 10% jump in SAR filing for 2009 the industry will file over 72,000 more SARs in 2009 than 2008. What economic and time impact would the additional SARs have on financial institutions? This is hard to quantify but here's one approach. The ABA Deposit Account Fraud Survey says the average check fraud loss is $1,700. If that holds for the increase in SARs, the industry will get whacked with over $122 million more in losses in 2009. Additionally, assume that each SAR takes an hour to file and we are talking about 72,000 hours or 9,000 business days that will be consumed filing these new SARs. Fincen will be busy generating SAR-By-The-Numbers (their bi-annual reports) and I'm sure loss prevention departments this year will not taking long summer vacations and enjoying much downtime.
In the next installment of "I love" I'll cover which banks are filing the most SARs and how that has changed over the last few years.