Circular
Filing of Suspicious Activity Reports
May 5, 1998
Circular No. 11054

Interagency Advisory on "Safe Harbor" Protection

To the Chief Executive Officers of All State Member Banks, Bank Holding Companies,
and Branches and Agencies of Foreign Banks, in the Second Federal Reserve District:

Federal law provides some protection to financial institutions and their employees who refer suspicious or potentially criminal activity to the appropriate law enforcement and bank supervisory authorities in Suspicious Activity Reports (SARs). The statutory protection is generally referred to as a "safe harbor." As a result of two recent federal cases, some concerns have been raised about the applicability and extent of the "safe harbor" protections associated with the filing of SARs.

Working with the enforcement staffs of the other federal financial institutions supervisory agencies, Federal Reserve staff prepared an Interagency Advisory concerning the continued viability of the "safe harbor" protection. It was issued on March 23, 1998 by the bank, thrift and credit union supervisory agencies. The Interagency Advisory provides some background information concerning the "safe harbor" provisions of federal law, and describes the two pertinent cases. It also provides some useful information regarding steps that your banking organization should take to better ensure that it is fully protected under the "safe harbor" provisions of the law when it prepares and files an SAR. Importantly, the Interagency Advisory concludes that, in the opinion of the agencies' staffs, financial institutions and their employees who follow the agencies' SAR regulations and the filing instructions on the form will be fully protected by the "safe harbor" provisions of federal law.

In the event that you have any questions concerning this matter, please contact Thomas H. Roche, Deputy General Counsel and Vice President or Kausar Hamdani, Assistant Vice President, Advisory and Technical Services.