## Facts

- Bankers Trust hired Let W. Lee in 1990, promoted him to Managing Director, and he worked in New Jersey in the bank’s Global Securities Services practice.
- In 1995, Lee asked employees to review dormant “custody credit” accounts to determine whether certain unclaimed funds could be retained by the bank rather than escheated to the state.
- After learning substantial funds might be non-escheatable, Lee and another employee directed that properly documented, non-escheatable funds be transferred into a reserve account, administered by an employee (Plante).
- Lee asserted he instructed Plante to clear actions with compliance, transfer only properly documented funds, avoid any arguably escheatable funds, and keep detailed records.
- In 1996, the bank investigated the reserve account; Plante allegedly told the bank that Lee directed transfers of escheatable funds, which Lee denied.
- Lee met with bank personnel for hours, signed a prepared statement, was told to stay away from his office during the investigation, and later resigned after being told the bank wanted his resignation.
- Press reports stated Lee resigned amid misconduct allegations.
- Lee sued, including a defamation claim premised on the bank’s alleged filing of a Suspicious Activity Report (SAR) with federal authorities; the bank invoked statutory immunity for SAR disclosures.

## Issues

1. Whether 12 U.S.C. § 5318(g)(3) grants absolute immunity to a financial institution for SAR-related disclosures, or only immunity conditioned on the institution’s good faith.

## Decision

- The Second Circuit affirmed dismissal under Rule 12(b)(6) of the defamation claim based on the alleged SAR filing.
- The court held § 5318(g)(3) provides unqualified, absolute immunity for required or authorized disclosures of possible legal violations to authorities, and does not impose a good-faith limitation.
- The court relied on the statute’s broad text, consistent implementing regulations, and Congress’s purpose to encourage reporting without fear of civil liability.

## Legal Principles

- Under 12 U.S.C. § 5318(g)(3), a financial institution is not liable under any law for making required or authorized disclosures to appropriate authorities regarding possible violations of law.
- Courts will not read a good-faith qualifier into a safe-harbor provision where the statutory text provides immunity in unconditional terms.
- Anti–money laundering reporting regimes are construed to prevent civil suits (including defamation) from chilling mandated or encouraged reporting to regulators and law enforcement.

## Conclusion

The Second Circuit held that the SAR safe-harbor provision in § 5318(g)(3) bars civil liability for SAR-related disclosures without any good-faith requirement, requiring dismissal of a defamation claim premised on an alleged SAR filing.


Lee v. Bankers Tr. Co., 166 F.3d 540 (2d Cir. 1999)