South Florida Banks File More ‘Red Flag’ Reports than Other Florida Banks, Report Shows

South Florida banks filed more suspicious activity reports, or red flag reports, on average than banks in other parts of the state, according to a new report from Miami-based accounting firm Kaufman Rossin.

More than 10 percent of banks in South Florida filed more than 50 SARs a month, while none of the Central and North Florida banks surveyed filed more than 50 SARs on average per month, according to the report.

That high volume means that South Florida banks are used to identifying suspicious account activity and that there is a higher incidence of suspicious activity in the region.

“Part of it is the large amount of international business conducted here. The risk characteristics are different,” said Ivan Garces, principal of risk advisory services at the firm. “It has to do with both things, the nature of the activity as well as where they are.”

Larger banks also tend to file more SARs than smaller banks, which is not surprising considering the increase in volume of accounts, account size, and complexity.

This is the second Florida Anti-Money Laundering Compliance Survey Kaufman Rossin has conducted. The firm collected responses from 95 participants at banks across the state, asking questions about data verification, SARs, and AML and Bank Secrecy Act compliance.

The survey found that overall the infrastructure of banks in South Florida differs from other banks in the state due to the tri-county area’s high concentration of international business. The survey also indicates that South Florida banks plan to spend more on compliance infrastructure and staffing compared to other institutions in the state – 42 percent of South Florida banks intend to increase compliance spending by 10 to 25 percent, compared to 31 percent of Central Florida banks and 25 percent of North Florida banks.

However, 81 percent of the respondents said that BSA/AML compliance is a top priority for their banks.

An important part of bank security is data validation, or making sure that the transfer of data is happening in an efficient and safe manner. Approximately 97 percent of South Florida banks have conducted data validation in the last two years, and no local institutions have not had their data validated. Central and North Florida banks aren’t as timely – 35 percent haven’t had their data validated.