5/11/2006 Mutual Fund Suspicious Activity Reporting Requirements Finalized
FinCEN has issued final rules requiring mutual funds to file Suspicious Activity Reports. Funds will use the SAR-SF for this purpose. The preamble describes some red flags:
A mutual fund is repeatedly used as a temporary resting place for funds from multiple sources without a clear business (including investment) purpose.
In instances where suspicious activity may involve another mutual fund, another financial institution, or an agent of the mutual fund, information sharing is permitted, provided that a party with whom or which information is shared is not the subject of the filing. Parties may share information so that a single SAR-SF is filed by one of them which is as complete as possible (procedures also allow for joint filings), and to avoid duplicative reporting. An amendment to 31 CFR 103.16, on suspicious activity reporting by insurance companies, clarifies than an insurance company that issues variable products funded by separate accounts that meet the definition of a mutual fund is to file SARs under the new mutual fund rule, 31 CFR 103.15. The new rules are effective October 31, 2006 and will be discussed in a forthcoming issue of the Monitor.
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