Suspicious activity reports (SARs) in the financing of commercial real estate (CRE) as reported by depository institutions almost tripled between 2007 and 2010, according to a new report issued by the Financial Crimes Enforcement Network (FinCEN).
FinCEN's data found that the largest class of suspicious transactions, as reflected in 45% of CRE SARs examined, was for loans under $1 million. Loans valued between more than $1 million but less than $2 million were reflected in another 16% of CRE SARs. Nine percent of transactions reported in the SARs examined were valued at $10 million or more.
FinCEN identified CRE fraud tactics as including the use of false documents, misappropriation of funds, collusion involving bank insiders and non-disclosure to lenders. Much of the fraud in this sector is not detected until long after a transaction has settled, FinCEN added.
FinCEN's new report is the second this week to focus on SARs within real estate finance – earlier this week, the agency issued a report on SARs within the residential mortgage industry.
SOURCE: FinCEN
