BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C.  20551
			DIVISION OF BANKING SUPERVISION AND REGULATION
			SR 98-7 (GEN) April 14, 1998

	TO THE OFFICER IN CHARGE OF SUPERVISION AND APPROPRIATE           SUPERVISORY AND EXAMINATION STAFF AT EACH FEDERAL           RESERVE BANK AND TO EACH DOMESTIC AND FOREIGN BANKING           ORGANIZATION SUPERVISED BY THE FEDERAL RESERVE SUBJECT: Interagency Advisory Concerning a "Safe Harbor" and the Filing of Suspicious Activity Reports                     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, Division 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, and a copy is attached.  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 banking organizations should take to better ensure that they are fully protected under the law.  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.                     Because questions concerning the "safe harbor" protections associated with the filing of Suspicious Activity Reports affect many banking organizations, the Interagency Advisory should be distributed to the domestic and foreign financial institutions supervised by the Federal Reserve in your District, as well as to the appropriate members of your Federal Reserve Bank's supervision and legal staffs.  A suggested transmittal letter is attached.                     In the event that you have any questions concerning this matter, please contact Richard Small, Assistant Director at (202) 452-5235. Herbert A. Biern Associate Director Attachments Suggested Transmittal Letter Interagency Advisory (10 KB PDF) cc:  General Counsel at Each Federal Reserve Bank Suggested Transmittal Letter Subject:   Interagency Advisory on the "Safe Harbor" Protections Associated with the Filing of Suspicious Activity Reports Dear ______________ :                     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, and a copy is enclosed for your information.  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 a Suspicious Activity Report.  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 __________ at _______________. Sincerely, [Reserve Bank Official] Enclosure
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