Reprinted with permission of Law360. 

It appears that the U.S. Securities and Exchange Commission is beginning to use a new weapon against broker-dealers and other financial institutions. In SEC v. Alpine Securities Corp., the SEC filed suit against a broker-dealer, alleging that it "routinely and systematically" violated the Bank Secrecy Act by failing to file suspicious activity reports for stock transactions it had flagged as suspicious, and by filing SARs that omitted critical information, such as the customer’s history of criminal or regulatory violations or connections to foreign institutions. As discussed below, certain financial institutions are required to file a SAR to report transactions or patterns of transactions involving at least $5,000 where the filer "knows, suspects, or has reason to suspect" that the transaction involves funds representing ill-gotten gains, is intended to hide funds from illegal activities, is designed to evade the BSA, or has no business or apparent lawful purpose.

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