Bank Secrecy Act: FinCEN Needs to Further Develop Its Form Revision Process for Suspicious Activity Reports Page: 2 of 15
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' GAO
Accountability* Integrity* Reliability
Highlights
Highlights of GAO-10-609T, a testimony
before the Subcommittee on Oversight
and Investigations, Committee on
Financial Services, House of
Representatives
Why GAO Did This Study
To assist law enforcement agencies
in their efforts to combat money
laundering, terrorist financing, and
other financial crimes, the Bank
Secrecy Act (BSA) requires
financial institutions to file
suspicious activity reports (SAR) to
inform the federal government of
transactions related to possible
violations of law or regulation.
Depository institutions have been
concerned about the resources
required to file SARs and the extent
to which SARs are used.
The Subcommittee asked GAO to
discuss our February 2009 report
on suspicious activity reporting.
Specifically, this testimony
discusses (1) factors affecting the
number of SARs filed, (2) actions
agencies have taken to improve the
usefulness of SARs, (3) federal
agencies' use of SARs, and (4) the
effectiveness of the process used to
revise SAR forms.
To respond to the request, GAO
relied primarily on the February
2009 report titled Bank Secrecy
Act: Suspicious Activity Report
Use Is Increasing, but FinCEN
Needs to Further Develop and
Document Its Form Revision
Process (GAO-09-226), and updated
it with additional information
provided by FinCEN. In that report,
GAO recommended that FinCEN
work to further develop a strategy
that fully incorporates certain
GAO-identified practices to
enhance and sustain collaboration
among federal agencies into the
forms-change process.
View GAO-10-609T or key components.
For more information, contact Richard J.
Hillman at (202) 512-8678 or
hillmanr@ gao.gov.BANK SECRECY ACT
FinCEN Needs to Further Develop Its Form Revision
Process for Suspicious Activity Reports
What GAO Found
In 2000 through 2008, total SAR filings by depository institutions increased
from about 163,000 to 732,000 per year; representatives from federal
regulators, law enforcement, and depository institutions with whom GAO
spoke attributed the increase mainly to two factors. First, automated
monitoring systems can flag multiple indicators of suspicious activities and
identify significantly more unusual activity than manual monitoring. Second,
several public enforcement actions against a few depository institutions
prompted other institutions to look more closely at client and account
activities. Other factors include institutions' greater awareness of and training
on BSA requirements after September 11, 2001 and more regulator guidance
for BSA examinations.
FinCEN and law enforcement agencies have taken actions to improve the
quality of SAR filings and educate filers about their usefulness. Since 2000,
FinCEN has issued written products with the purpose of making SAR filings
more useful to law enforcement. FinCEN and federal law enforcement agency
representatives regularly participate in outreach on BSA/anti-money
laundering, including events focused on SARs. Law enforcement agency
representatives said they also establish relationships with depository
institutions to communicate with staff about crafting useful SAR narratives.
FinCEN, law enforcement agencies, and financial regulators use SARs in
investigations and financial institution examinations and have taken steps in
recent years to make better use of them. FinCEN uses SARs to provide public
and nonpublic analytical products to law enforcement agencies and
depository institution regulators. Some federal law enforcement agencies
have facilitated complex analyses by using SAR data with their own data sets.
Federal, state, and local law enforcement agencies collaborate to review and
start investigations based on SARs filed in their areas. Regulators use SARs in
their examination process to assess compliance and take action against abuse
by depository institution insiders.
After revising a SAR form in 2006 that could not be used because of
information technology limitations, in 2008, FinCEN developed a new process
for revising BSA forms, including SARs, that may increase collaboration with
some stakeholders, including some law enforcement groups concerned that
certain of the 2006 revisions could be detrimental to investigations. Available
documentation on the process did not detail the degree to which the new
process would incorporate GAO-identified best practices for enhancing and
sustaining federal agency collaboration. For example, it did not specify roles
and responsibilities for stakeholders or depict monitoring, evaluating, and
reporting mechanisms. According to FinCEN officials, it is taking some
additional steps toward obtaining greater collaboration with law enforcement
agency representatives, prosecutors, and multi-agency law enforcement teams
and others to determine the contents of the form, but it is too soon to
determine the effectiveness of the process..United States Government Accountability Office
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United States. Government Accountability Office. Bank Secrecy Act: FinCEN Needs to Further Develop Its Form Revision Process for Suspicious Activity Reports, text, April 28, 2010; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc294222/m1/2/: accessed April 25, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.