Audit Report 

OIG-05-034 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing 

March 31, 2005 

Office of 

Inspector General 

Department of the Treasury

 

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Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 1 

Audit Report.................................................................................................. 3 

 Results in Brief............................................................................................. 4 

 Background ................................................................................................. 5 

 Findings ......................................................................................................12 

 BSA E-Filing is an Effective Mechanism for Filing BSA Reports ......................12 

 

 Few Institutions Use BSA E-Filing Due to Lack of Familiarity and Certain 

 System Limitations ..................................................................................19 

 Conclusion ..................................................................................................32 

 Recommendations ........................................................................................32 

 

Appendices

 Appendix 1: Objectives, Scope, and Methodology ...................................... 35 

 Appendix 2: Reports Required of BSA Filing Institutions, Businesses, 

 or By Other Persons...............................................................38 

 Appendix 3 Additional Survey Results .......................................................39 

 Appendix 4: Survey Instrument with Enrolled Institution Responses.............. 43 

 Appendix 5: Survey Instrument with Non-Enrolled Institution Responses ....... 53 

 Appendix 6: Schedule of Funds Put To Better Use ...................................... 63 

 Appendix 7: Management Comments........................................................ 64 

 Appendix 8: Report Distribution................................................................ 66 

Abbreviations

BSA Bank Secrecy Act 

BSA E-Filing BSA Direct E-Filing 

CTR Currency Transaction Report 
 

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CTRC Currency Transaction Report by Casinos 

EIN Employer Identification Number 

DEP Designation of Exempt Person 

FBAR Report of Foreign Bank and Financial Accounts 

FinCEN Financial Crimes Enforcement Network 

OIG Office of Inspector General 

IRS Internal Revenue Service 

IRS-DCC Internal Revenue Service’s Detroit Computing Center 

MSB Money Services Business 

PACS Patriot Act Communication System 

SAR Suspicious Activity Report 

SAR-C Suspicious Activity Report by Casinos and Card Clubs 

SAR-MSB Suspicious Activity Report by Money Services Business 

SAR-SF Suspicious Activity Report by the Securities and Futures Industries 

SBSE Small Business Self-Employed 

SSN Social Security Number 
OIG Audit 

Report

The Department of the Treasury 

Office of Inspector General 

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March 31, 2005 

William J. Fox 

Director 

Financial Crimes Enforcement Network 

In response to a requirement in the USA PATRIOT Act, the 

Financial Crimes Enforcement Network (FinCEN) developed the 

BSA Direct E-Filing (BSA E-Filing) system1 to provide institutions 

with a highly secure network to file Bank Secrecy Act (BSA) 

reports, and to provide alerts and other information regarding 

suspicious activities that warrant immediate attention and scrutiny. 

Use of BSA E-Filing is not mandatory; however, FinCEN promotes 

electronic filing in support of the federal government’s efforts to 

receive timely BSA information for law enforcement to use to 

prevent and detect money laundering, terrorist financing, and other 

financial crimes. 

We performed an audit of BSA E-Filing to determine (1) if BSA 

E-Filing is an effective mechanism for filing BSA reports and 

(2) how many institutions are using BSA E-Filing to file reports and, 

for those not using BSA E-Filing, the reasons why. As part of the 

audit, we queried a sample of enrolled and non-enrolled institutions 

about their experiences with BSA E-Filing or, if non-users, their 

reasons for not using the system. A more detailed description of 

 

1

 At the time of our audit, the system was known as the Patriot Act Communication System (PACS); 

however, on January 31, 2005, FinCEN changed the name of the system to BSA Direct E-Filing 

(BSA E-Filing). We have changed the name of the system in this report to BSA E-Filing to reflect the 

name change. However, because we referred to the system as PACS when we mailed our survey 

questionnaire to respondents, we refer to the system as PACS in Appendices 4 and 5. 
 

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the audit’s objectives, scope, and methodology is provided in 

Appendix 1. 

Results in Brief 

We found BSA E-Filing to be an effective mechanism for filing BSA 

reports. BSA E-Filing reduces processing time, provides controls to 

improve the accuracy, completeness, and security of BSA data, 

and, if used instead of paper processing, could significantly reduce 

the cost of processing BSA reports. Moreover, institutions using 

BSA E-Filing to file reports generally found the system easy to use. 

Our assessment was made from information provided by FinCEN 

and from our survey results of BSA E-Filing enrolled and nonenrolled institutions.2

In October 2003 only about 1 percent of the institutions filing BSA 

reports had enrolled with FinCEN to use BSA E-Filing, and of those, 

even fewer actually filed BSA reports using BSA E-Filing. More 

recent data provided by FinCEN shows little change in monthly 

numbers of new enrollees. Reasons for not using BSA E-Filing 

varied. Sixty-three percent of institutions not enrolled in BSA 

E-Filing to file BSA reports, or an estimated 15,941 of 25,303 

institutions, reported that they were not familiar with the system. 

Other non-enrollees cited low report volume, insufficient BSA 

E-Filing knowledge, or the lack of Internet capability. Enrolled 

institutions suggested easier user set-up, digital 

certification/authentication, and data entry could improve BSA 

E-Filing. 

We are recommending that FinCEN increase awareness of BSA 

E-Filing by working with financial regulatory partners to conduct 

additional outreach efforts among potential BSA E-Filing users, and 

evaluate and select certain system enhancements to BSA E-Filing 

that could encourage more enrollment and use of the system. As a 

long-term measure to maximize the benefits to law enforcement 

and reduce the cost associated with paper-filed BSA reports, we 

 

2 We did not independently test the transmission of BSA report data through BSA E-Filing. 
 

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are also recommending that FinCEN revise its regulations to 

mandate the use of BSA E-Filing. In this regard, cost savings of 

the approximately $16 million that Treasury currently spends 

annually on paper processing, or $48 million over a 3-year period, 

could be realized. 

In response to our draft report, FinCEN indicated full concurrence 

with our recommendations and plans to complete its corrective 

actions by October 2005. As of the first quarter of fiscal year 

2005, FinCEN stated that 23 percent of currency transaction 

reports and 34 percent of suspicious activity reports were filed 

through the BSA E-Filing system. FinCEN’s priority will be to 

expand outreach to the top 1550 magnetic/paper BSA report filers. 

FinCEN said it has already included a presentation on BSA E-Filing 

during conferences with the financial industry. FinCEN is also 

examining technology enhancements to BSA E-Filing, and plans to 

perform a usability analysis on the system to review and select the 

best additional improvements, considering time and budget 

constraints. The most significant of these enhancements is the 

secure direct e-file transfer enhancement that will allow the current 

high volume filers to file directly into the BSA E-Filing system. 

Regarding mandating the system’s use, FinCEN will assess the 

feasibility and advisability of mandating electronic filing, and 

develop a recommended course of action. FinCEN’s complete 

response is included as Appendix 7. 

Background 

Bank Secrecy Act 

The Bank Secrecy Act (BSA), enacted in 1970, authorizes the 

Secretary of the Treasury to issue regulations requiring financial 

institutions to keep records and file reports on certain financial 

transactions.3

 The authority of the Secretary to administer the 

BSA has been delegated to the Director of FinCEN. 

 

3

 Codified at 31 U.S.C. 5311-5330 with implementing regulations at 31 C.F.R. Part 103. 
 

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FinCEN, created in 1990, initially focused on the detection of 

financial crimes by providing analytical support to law 

enforcement investigations. Its role changed in October 1994, 

when it absorbed Treasury’s Office of Financial Enforcement—

the office that administered the BSA in conjunction with the IRS 

and other government agencies—consolidating into a single antimoney laundering agency charged with administering the BSA. 

The Internal Revenue Service (IRS) retained management control 

over the financial information reported under the BSA. 

Two of the more widely used BSA reports include the Currency 

Transaction Report (CTR) and the Suspicious Activity Report (SAR). 

CTRs are used to report transactions exceeding $10,000, while 

SARs are used to report suspicious financial transactions. 

Appendix 2 provides a description of the various BSA reports 

required of banks, securities dealers, casinos, money service 

businesses (MSB), and others. 

In accordance with BSA regulations, institutions must file a CTR 

within 15 days from the date of the transaction, and a SAR within 

30 days from the date in which the suspicious activity was first 

identified. If no suspect was identified on the date the incident 

requiring the filing was detected, an institution may take an 

additional 30 days to file the SAR (up to 60 days total) in order to 

further research the suspect’s identification. 

The BSA was amended by The Uniting and Strengthening of 

America by Providing Appropriate Tools Required to Intercept and 

Obstruct Terrorism Act (USA PATRIOT Act), which was signed into 

law on October 26, 2001. The number of financial institutions 

subject to BSA reporting requirements expanded dramatically 

following passage of the USA PATRIOT Act, largely due to a 

provision that requires non-financial trades or businesses to file a 

report when receiving over $10,000 in cash or cash equivalents 

(Form 8300). 

Currently, an estimated 220,000 financial institutions are 

potentially subject to BSA reporting and recordkeeping 
 

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requirements. The institutions include depository institutions 

(banks, thrifts, and credit unions); brokers or dealers in securities; 

money services businesses (money transmitters; issuers, 

redeemers, and sellers of money orders and travelers’ checks; 

check cashers and currency exchangers); as well as casinos and 

card clubs. However, a much smaller number of institutions—

25,513 at October 2003—actually filed reports. Institutions can 

file BSA reports by paper or electronic means. Electronic filings 

can be made using cartridge, tape, diskette, or through BSA 

E-Filing. 

BSA E-Filing 

BSA E-Filing was developed in response to a mandate in the USA 

PATRIOT Act. Specifically, the Act required FinCEN to develop a 

highly secure network that (1) allows financial institutions to file 

reports as required by BSA regulations,4 and (2) provides financial 

institutions with alerts and other information regarding suspicious 

activities that warrant immediate and enhanced scrutiny.5 

Development of the highly secured network was to be expedited 

and fully operational by approximately July 26, 2002. Although 

BSA E-Filing did not become available to institutions until 

October 1, 2002, FinCEN considered BSA E-Filing to have become 

“fully operational” in July 2002 when tested as part of a pilot 

involving 26 institutions and with just two BSA report types: the 

CTR and SAR. 

BSA E-Filing is a web-based interface that allows financial 

institutions to file BSA forms, such as CTRs and SARs, 

electronically over the Internet. The electronic filings flow through 

BSA E-Filing and are stored in mainframe databases maintained by 

the IRS for access by FinCEN, law enforcement, and other users. 

BSA E-Filing also allows FinCEN to issue system updates to the 

BSA E-Filing user community, and provides filing institutions with 

the ability to send secure messages to FinCEN as well as to receive 

responses where appropriate. 

 

4

 Subchapter II or III of chapter 53 of title 31, U.S.C.; and chapter 2 of Public Law 91-508. 5

 Subtitle B, Section 362 of Public Law 107-56—Oct. 26, 2001. 
 

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Not all BSA forms are available for filing through BSA E-Filing. 

Initially, BSA E-Filing went online with only bank CTR and SAR 

forms. Later, in October 2003, FinCEN added the SAR forms for 

securities and futures dealers, MSBs, and casinos.6 At the time of 

our audit, the BSA forms not available for filing through BSA EFiling included the (1) Report of International Transportation of 

Currency or Monetary Instruments (CMIR), (2) Currency 

Transaction Report by Casinos – Nevada (CTR-N), (3) Report of 

Foreign Bank and Financial Accounts (FBAR), (4) Report of Cash 

Payments over $10,000 Received in a Trade or Business (Form 

8300), (5) Designation of Exempt Person, and (6) Registration of 

Money Service Business. 

FinCEN’s plan is that all BSA forms, with some exceptions, would 

eventually be available in BSA E-Filing. FinCEN plans to include all 

new versions of the SAR and other forms as they are created. 

When considering new forms to include, FinCEN plans to factor in 

the time required for adequate preparation and testing, as well as 

the time after implementation to monitor the system for stability, 

reliability, and performance. 

The use of BSA E-Filing is not required, although FinCEN 

encourages its use because BSA information reported using BSA 

E-Filing is processed more timely. Some institutions regularly file 

thousands of electronic CTRs and dozens of SARs at a single time, 

while others file only a small number of electronic or paper-based 

CTR and SAR forms yearly. For both, BSA E-Filing serves as 

another conduit for filing BSA forms with the federal government. 

BSA E-Filing usage does not include any subscription or filing fees. 

The primary costs to filers take the form of organizational time and 

effort, and necessary upgrades to their software, hardware, or 

Internet connectivity in order to use the system. As suggested by 

 

6

 The CTR form used by both securities and futures dealers and MSBs is the same form used by 

depository institutions; a CTR form specific to securities and futures dealers and MSBs does not 

presently exist. 
 

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FinCEN, filing through BSA E-Filing can provide cost savings to 

financial institutions using the system; for example, it eliminates 

direct mailing costs associated with paper filings. 

BSA E-Filing is hosted on a secure website on the Internet 

(http://bsaefiling.fincen.treas.gov/index.jsp). On the following page 

is a graphic depiction of the Website’s homepage. 
 

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All BSA data submissions through BSA E-Filing are encrypted. 

Filing institution personnel can access BSA E-Filing only after they 

have applied for and received digital certification. Digital 

certification refers to an electronic credit card that establishes the 

user’s identification on the Web and works with public key 

encryption to produce digital signatures. A certification authority 

issues digital certificates. 

Upon receiving digital certification, institutions can download and 

install PureEdge software from FinCEN’s BSA E-Filing Website. 

PureEdge software is used to fill out and digitally sign, where 
 

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appropriate, BSA reports such as CTRs and SARs. BSA E-Filing 

also provides notification back to the filing institution confirming 

the receipt of CTR submissions. Although institutions do not 

receive such notification for SARs filed through BSA E-Filing, they 

are able to check the system to confirm the federal government’s 

receipt of the submission. 

Section 362 of the USA PATRIOT Act requires FinCEN to 

“...provide financial institutions with alerts and other information 

regarding suspicious activities that warrant immediate and 

enhanced scrutiny.” However, FinCEN is not using BSA E-Filing to 

issue such alerts to institutions because not all institutions are 

using BSA E-Filing. FinCEN does not plan to issue alerts through 

BSA E-Filing unless and until use of the system becomes 

mandatory. FinCEN also believes using BSA E-Filing to disseminate 

information is unnecessary given the success of the 314(a)7

process in sending out alerts, financial record check requests, and 

other information. 

Although suspicious activity alerts are not issued through BSA 

E-Filing, system upgrade alerts and user questions are 

communicated through the system. In addition, BSA E-Filing 

related issues are communicated to institutions through, for 

example, the American Bankers Association, by outreach programs 

(such as letters and helpdesk callings), and through the BSA EFiling Website. 

FinCEN and IRS Detroit Computer Center (IRS-DCC) Relationship 

FinCEN uses IRS-DCC for processing BSA reports and other BSArelated services. FinCEN has used IRS-DCC for these services for 

many years because of IRS’s capability to securely handle 

substantial financial information. Currently, BSA reports filed 

 

7

 In accordance with Section 314(a) of the USA PATRIOT Act, regulatory and law enforcement 

authorities are to share with financial institutions information regarding individuals, entities, and 

organizations engaged in or reasonably suspected based on credible evidence of engaging in terrorist 

acts or money laundering activities. 
 

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through BSA E-Filing are transmitted by institutions to FinCEN, and 

then FinCEN, in turn, forwards the data to IRS-DCC. BSA reports 

filed through BSA E-Filing are routed in this manner because IRS 

system security prevents receipt of the BSA E-Filing data directly 

from filing institutions. 

Findings 

Finding 1 BSA E-Filing is an Effective Mechanism for Filing BSA 

 Reports

We found BSA E-Filing to be an effective mechanism for filing BSA 

reports. The system reduces processing time, provides controls to 

improve the accuracy, completeness, and security of BSA data, 

and has the potential to reduce the cost of processing BSA reports. 

Cost reduction would occur if IRS-DCC no longer needed to 

contract for converting paper BSA reports into electronic media or 

have staff devoted to handling paper forms. 

BSA E-Filing Reduces Processing Time 

When compared to BSA reports filed by paper and other electronic 

media, BSA E-Filing speeds up the process of getting the BSA data 

into databases once IRS-DCC receives the filings from institutions. 

The availability of the BSA data for law enforcement purposes is 

impacted by the time allowed by regulation for institutions to file 

the BSA reports with IRS-DCC. 

During our audit, we examined IRS-DCC BSA filings for the week 

of January 5, 2004, to identify the timeframes for processing BSA 

reports filed through the different methods, including paper, 

magnetic media,8 and BSA E-Filing. An IRS-DCC official indicated 

this period represented a typical week of BSA filings. We also 

interviewed IRS-DCC officials with BSA responsibilities to obtain an 

overview of the controls in place to ensure completeness and 

 

8

 For purposes of this report, magnetic media includes all electronic formats other than BSA E-Filing, 

including cartridge, tape, or diskette. 
 

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accuracy of report data. We found that BSA report processing 

timeframes varied significantly by filing method.9

As shown in Chart 1 below, our analysis of the week of BSA filing 

data showed that processing of paper-filed SARs and other BSA 

reports (primarily CTRs) took an average of 14 days and 22 days, 

respectively.10 The processing of magnetic media-filed SARs and 

other BSA reports took an average of 3 days and 6 days, 

respectively. In contrast, the processing of BSA E-Filing for BSA 

reports took 1 to 2 days.11 

 

9

 By timeframes, we mean from the point at which the BSA reports were received at IRS-DCC to the 

point at which the data was entered into BSA databases. 

10 According to IRS-DCC officials, IRS policy requires that paper-filed SARs be processed (entered into 

the BSA database) within 10 days of receipt by the IRS and other paper-filed BSA reports within 45 

days of receipt. BSA reports filed by magnetic media are to be processed within 10 days of receipt. 11 We found that IRS-DCC processes BSA E-Filing reports within 24 hours; however, data shows 2 days 

when the filing is received one day and processed the following day. 
 

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Chart 1: BSA Report Processing Timeframes from IRS-DCC Receipt to 

Posting in BSA Databases 

Source: OIG analysis of IRS-DCC Data. 

Our analysis showed that BSA E-Filing is the most expedient of the 

three methods for processing BSA reports. BSA E-Filing reduces 

the time it takes to process BSA data, thereby making BSA 

information more quickly available for law enforcement purposes. 

It should be noted that processing paper-filed BSA reports is a 

multi-step process involving work at IRS-DCC and an IRS dataentry contractor in North Dakota. According to IRS-DCC officials, 

paper reports upon receipt are (1) date-stamped; (2) routed to the 

appropriate section for a preliminary review; and (3) then 

inventoried, batched, and transported to the data-entry contractor. 

There, the data for each form is manually keyed for entry into the 

BSA databases. The reports are then shipped back to IRS-DCC, 

2

1

3

6

14

22

0

5

10

15

20

25

Days

BSA E-Filing Magnetic Paper

SAR Other Reports 
 

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where contact is made with the filing institutions for any necessary 

corrections. Once corrected, the reports are inventoried, boxed, 

and forwarded to the warehouse where they are retained for 10 

years. The following diagram depicts this process. 

Processing of Paper-Filed BSA Forms 

 Filer Mails IRS-DCC Receives IRS-DCC Opens IRS-DCC 

BSA Forms Forms in Detroit, MI and Date-Stamps Conducts a 

 Forms Preliminary 

Review 

 IRS-DCC Inventories 

 and Batches Forms Transported Contractor Contractor Keyes

 (North Dakota) Forms Into BSA 

 Database 

 Transported DCC IRS-DCC Keyes IRS-DCC Boxes 

 (Michigan) Corrections and and Warehouses

 Inventories Forms Forms 

 

Source: OIG-generated based on interviews with IRS-DCC officials. 
 

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BSA E-Filing Provides Controls to Improve the Accuracy, 

Completeness, and Security of BSA Data 

Compared to BSA reports filed by paper, filing through BSA E-Filing 

provides controls to improve the accuracy, completeness, and 

security of the data entered into BSA databases. 

The accuracy and completeness of data is controlled in several 

ways. All dates and numbers are subjected to edit checks in BSA 

E-Filing so as to ensure correct format—a user cannot enter an 

alpha character into a date field or a field where currency or a zip 

code is required.12 Also, drop down boxes are provided for certain 

fields such as federal regulators, countries, or states. Moreover, 

FinCEN told us that certain information must be entered for the 

system to accept the submission. 

For CTR forms to be transmitted, filers must include the following 

information: 

• individual’s last name or organization on whose behalf 

transaction is conducted; 

• amount of transaction: cash in, cash out, date of 

transaction; and 

• the filer’s (financial institution) information: name, address, 

filing officer name. 

For SAR forms to be transmitted, the following information must 

be included: 

• name, address, and EIN of financial institution; and 

• address of branch office where activity occurred. 

If the filer submits a form without this information, the filer 

receives an error message, must reopen the form and either enter 

missing information or correct information that failed edit checks. 

 

12 We obtained information about these features from both FinCEN and the institutions using BSA 

E-Filing; however, we did not independently test BSA E-Filing to determine if control features in BSA 

E-Filing performed as described.
 

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To submit the report, the filer must also save (for permanent 

record) and digitally sign the form prior to submission. 

In addition, IRS-DCC returns acknowledgements, via BSA E-Filing, 

when CTRs are successfully submitted through BSA E-Filing, or 

when more information is needed. Filers may also check the status 

of their filings. For SARs, IRS-DCC does not send 

acknowledgements, but filers can query the system for 

confirmation that submitted BSA reports were received. 

Security is controlled using electronic features to ensure data 

integrity. First, BSA E-Filing uses digital certification. Second, 

once digital certification is received, users may download and 

install software to fill out and digitally sign, where appropriate, the 

BSA submission.

Filing through BSA E-Filing is Less Costly than Paper Filing 

Much of Treasury’s cost to process BSA forms is borne by IRS. 

However, neither FinCEN nor IRS routinely collected auditable cost 

data for processing paper-filed BSA reports. We were provided 

with the data FinCEN obtained for cost estimates for BSA data 

entry and processing. The estimates show that the cost of paper 

filing is significantly greater than electronic filing using either 

magnetic media or BSA E-Filing. 

Specifically, FinCEN’s Assistant Director, Office of Strategic 

Analysis, provided calendar year 2000 data FinCEN obtained from 

IRS-DCC regarding the costs for processing paper CTRs. The 2000 

data showed costs of approximately $5 million for the keying 

contractor and around $11.1 million for staff devoted exclusively 

to paper CTR processing, totaling around $16 million, or about $4 

per paper CTR.13

 

13 As shown in Table 3 on p. 23, as of September 2003 CTRs accounted for most of the paper reports 

filed, totaling approximately 2.3 million out of 3 million total paper reports, or about 72 percent. 
 

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Similar costs were reported by a FinCEN consultant in a May 2003 

study of BSA processes and systems. The consultant reported 

that the paper collection process 

“...involves a $5 million keying contract and $12 million for IRS 

Small Business Self Employed (SBSE) compliance staff, and uses 

significant human resources. One hundred and twenty full-time 

equivalents are employed for paper collection and processing, and 

another 60 FTE are involved in support, training, and outreach.”

In comparison, we obtained cost data from FinCEN that indicated 

the cost of BSA E-Filing, including development and enhancement 

activities as well as deployment, operation, and maintenance costs, 

was $2.5 million in FY 2002 and $2.9 million in FY 2003. 

Projected costs in FYs 2004 and 2005 were much lower, in the 

range of $1.5 - $1.7 million. Table 1 below shows FinCEN’s 

obligated costs for BSA E-Filing in FYs 2002 and 2003, and 

planned costs for FYs 2004 and 2005. The cost per form filed 

through BSA E-Filing was not available. 

 

Table 1: Obligated and Planned Costs for BSA E-Filing (in millions)

FY 2002 FY 2003 FY 2004 FY 2005

Pilot $2.275 N/A N/A N/A

Development/ 

Enhancement

0 .150 $1.376 $0.390 $0.500

Deployment/Operation 

& Maintenance

0 .125 1.562 1.129 1.168

Total $2.550 $2.938 $1.519 $1.668

Source: OIG presentation of FinCEN data. 

Eliminating the use of paper processing could save the $16 million 

Treasury currently spends annually on paper processing, based on 

the best available cost estimates. 
 

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Finding 2 Few Institutions Use BSA E-Filing Due to Lack of 

Familiarity and Certain System Limitations 

As of October 2003, only 336 institutions, or about 1 percent of 

the 25,513 institutions filing BSA reports, had enrolled with 

FinCEN to use BSA E-Filing. Of those, even fewer—210 

institutions—actually filed BSA reports using BSA E-Filing, 

according to our analysis of FinCEN data. 

The reasons for not using BSA E-Filing vary. We surveyed a 

sample of 532 total institutions, with 137 enrolled in BSA E-Filing 

and 395 non-enrolled, and found that 63 percent of the nonenrolled institutions were unfamiliar with BSA E-Filing. In addition, 

many enrolled users in our sample identified features of BSA 

E-Filing that they believed needed to be enhanced to allow easier 

use of the system. For example, these institutions wanted easier 

user set-up, digital certification/authentication, and data-entry. 

Others mentioned that not all required BSA forms can be filed in 

BSA E-Filing, and suspicious activity alerts are not issued through 

the system. 

FinCEN provided more recent summary data for November 2003 

through September 2004 showing the number of BSA E-Filing 

enrolled institutions each month and the number of BSA forms filed 

through BSA E-Filing. This data revealed a significant increase in 

the percentage of BSA forms filed through BSA E-Filing, from about 

5 percent to 20 percent; however, there was little change in the 

number of new enrollees each month. 

The Number of Institutions Enrolled with BSA E-Filing is Limited 

Compared to the Number of BSA Filing Institutions 

We analyzed October 2003 data provided by FinCEN, and used 

that data to select institutions to survey. At the time, the number 

of institutions enrolled with BSA E-Filing was relatively small. 

FinCEN data listed only 336 institutions enrolled to use BSA 

E-Filing, or 1 percent of approximately 25,513 BSA filers. The 
 

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majority of the enrolled institutions were banks. Table 2 shows the 

breakdown of the enrolled institutions by industry type. 

Table 2: BSA E-Filing Enrolled Institutions by Industry Type 

Industry 

Institutions 

Enrolled 

Percentage of Total 

Enrolled 

Banks 272 81% 

Bank Holding Company 18 5% 

MSBs 13 4% 

Broker/Dealers 6 2% 

Casinos 7 2% 

Other or Unknown 20 6% 

Total 336 

 Source: OIG analysis of FinCEN data. 

In its efforts to enroll institutions in BSA E-Filing during the first 

year of the system’s implementation, FinCEN had a “managed 

growth” plan to identify and directly market to the top 1,550 

volume filers. FinCEN believed that the most cost savings would 

be achieved by having these largest filers be the first to implement 

BSA E-Filing. FinCEN indicated that transitioning the top 1,550 

volume filers, responsible for 66 percent of all BSA forms filed, to 

BSA E-Filing would yield a 20 percent reduction in processing 

costs. A review of FinCEN data, however, showed that FinCEN 

was able to enroll only 162 of these volume filers. 

As shown in Chart 2, monthly enrollment peaked at 49 in 

December 2002 and has since ranged between 14 and 39. 

Through October of calendar year 2003, monthly enrollment 

averaged about 24 new institutions per month. 
 

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Chart 2: BSA E-Filing Enrollment Trend 

22

31

49

25

17

30

26

18

29

15

22

14

39

0

5

10

15

20

25

30

35

40

45

50

55

Number of Institutions

Oct-02

Nov-02

Dec-02

Jan-03

Feb-03

Mar-03

Apr-03

May-03

Jun-03

Jul-03

Aug-03

Sep-03

Oct-03

Month-Year

Source: OIG analysis of FinCEN data. 

Recent BSA E-Filing Enrollee Data

Data provided by FinCEN in October 2004 showed no significant 

increase in the monthly enrollment of institutions in BSA E-Filing. 

From November 2003 through September 2004 the number of 

enrolled institutions increased to a total of 560, or about 2 percent 

of the approximately 25,000 institutions filing BSA reports. From 

January 2004 through September 2004, the average monthly 

enrollment was 24, though May 2004 showed a peak of 43 newly 

enrolled institutions. 
 

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The Volume of BSA Reports Filed through BSA E-Filing is Small 

Compared to Those Filed through Other Methods

Not only is the number of institutions filing through BSA E-Filing 

limited, the number of BSA reports filed annually through BSA EFiling was also small in comparison to the total number of BSA 

reports filed. We found that institutions continue to largely use 

paper or magnetic media to file their reports. 

As part of the survey, we asked institutions about the methods 

used to file BSA reports. A large number of institutions—both 

enrolled and non-enrolled institutions—filed BSA reports by paper. 

Approximately 71 percent of enrolled institutions said they used 

BSA E-Filing—of which 89 percent were depository institutions. 

Nonetheless, even BSA E-Filing enrolled institutions also filed BSA 

reports by other media, often depending on the type of report. Of 

the BSA E-Filing enrolled institutions, 42 percent indicated they 

filed BSA reports by paper and 8 percent by magnetic media. With 

regard to non-enrolled institutions, approximately 93 percent 

indicated they filed BSA reports by paper—of which 77 percent 

were depository institutions. Many of the institutions responding 

used a combination of filing methods.

For the 9-month period ended September 30, 2003, a total of 

approximately 11 million BSA forms were filed through all media, 

29 percent of which were filed by paper. Table 3 below compares 

the number of paper and electronic BSA filings by report type. 

(BSA E-Filing reports are included in the electronic category.) 
 

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Table 3: Number of Posted BSA Filings by Report Type & Filing Method 

 as of September 30, 2003 (in thousands)

Report 

Type 

 Paper 

Filings 

Electronic 

Filings Total Filed 

CTR 2,265 7,564 9,829 

CTRC 351 -- 351 

SAR 92 117 209 

SARC 4 -- 4 

SAR-MSB 106 8 114 

SAR-SF 3 -- 3 

8300 100 -- 100 

FBAR 181 -- 181 

DEP 44 11 55 

MSB 5 -- 5 

Total Filings: 3,151 7,700 10,851 

 Percent Paper: 29% 

Source: OIG presentation of FinCEN data. 

FinCEN recognizes the need to have more institutions filing through 

BSA E-Filing. The Director of FinCEN, in an April 2004 testimony, 

acknowledged that the current number of forms filed through BSA 

E-Filing remained proportionately quite small.14 At the time, the 

number filed through BSA E-Filing represented approximately 

5 percent of all BSA reports filed. He directed FinCEN’s BSA 

E-Filing team to reach out to the financial industry and determine 

what needed to be done to convince industry members to file 

electronically. 

Recent Volume Data

Since the Director’s comments, FinCEN has achieved a notable 

increase in the number of BSA forms filed through BSA E-Filing. 

Specifically, FinCEN data showed that during September 2004, 

approximately 220,000 BSA forms were filed through the system, 

 

14 Statement of William J. Fox, Director, Financial Crimes Enforcement Network, United States 

Treasury, before the Senate Committee on Banking, Housing and Urban Affairs, on April 29, 2004. 
 

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representing about 20 percent of the approximately 1 million forms 

filed that month. 

Most Institutions were Not Familiar with BSA E-Filing 

Despite FinCEN’s notable progress in increasing the percentage of 

BSA reports filed through BSA E-Filing, the results of our survey 

indicate that many institutions are still unaware that the system 

exists. In this regard, we surveyed 532 institutions and found that 

63 percent of the respondents from the 395 non-enrolled 

institutions in our sample, or an estimated 15,94115 from the 

universe of 25,303 filers of BSA reports, said they were not 

familiar with BSA E-Filing. Table 4 identifies the 213 responding 

institutions by type. 

Table 4: Surveyed Non-Enrolled Institutions Not Familiar with BSA 

E-Filing by Institution Type 

Institution Type 

Number of 

Responses 

Depository Institutions 162

MSBs 37

Casinos 4

Securities and Futures Dealers 2

Other 8

Source: OIG analysis of survey response data.

Regarding enrolled institutions, Table 5 shows that the survey 

revealed that institutions learned about BSA E-Filing through 

various sources. 

 

15 Using a 95% confidence interval with an expected error rate of plus or minus 5 percent, the number 

of institutions ranges from 15,144 to 16,738. See Appendix 1 for more information. 
 

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Table 5: Sources through which Enrolled Institutions Surveyed Became 

Familiar with BSA E-Filing 

Source 

Response 

Rate* 

FinCEN Outreach 64% 

Trade Associations 18% 

Office of the Comptroller of the Currency 10% 

Federal Deposit Insurance Corporation 7% 

Federal Reserve Bank 4% 

Office of Thrift Supervision 3% 

Internal Revenue Service 3% 

Securities and Exchange Commission 1% 

Other** 18% 

Source: OIG analysis of survey response data. 

*Total exceeds 100 percent because institutions provided multiple answers in 

response to the question. 

** “Other” sources typically included state regulators.

 

Enrolled Institutions – Generally Satisfied with BSA E-Filing but 

Certain Enhancements Could Encourage Greater Participation 

Most enrolled institutions we surveyed were satisfied with BSA EFiling. The institutions generally found BSA E-Filing easy to use and 

were satisfied with FinCEN’s technical support. However, a 

number of the enrolled institutions identified limitations or 

drawbacks associated with BSA E-Filing. Many believed changes 

were needed, and offered specific suggestions. 

Enrolled Institutions are Satisfied with BSA E-Filing

Overall, most of the BSA E-Filing enrolled institutions responding to 

our survey were satisfied with the system, found it easy to use, 

and believed it offered a variety of benefits. Approximately 

89 percent of the enrolled institutions were either “Very Satisfied” 

(47 percent) or “Satisfied” (42 percent) with BSA E-Filing. Another 

9 percent of the institutions were “Somewhat Satisfied.” All of the 
 

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institutions enrolled with and using BSA E-Filing indicated they 

would continue to use the system.

We asked the enrolled institutions what the benefits were to using 

BSA E-Filing. As shown in Table 6, “Enhanced Record Keeping and 

Submission Management” was the benefit most often identified. 

Table 6: Benefits to Using BSA E-Filing per Enrolled Institutions 

 Surveyed 

Benefit 

Response 

Rate 

Enhanced Record Keeping and Submission Management 84%

Time Savings 75%

Enhanced Accuracy of Form Completion 66%

Cost Savings 65%

Facilitated Data Storage 51%

No Benefit 0%

Source: OIG analysis of survey response data.

 

With regard to the “Cost Savings” benefit, approximately 66 

percent of the institutions identified “Internal Routing and 

Shipping” and/or “Office Supplies Used to Manually File BSA 

Reports” as the specific costs saved, and 32 percent reported cost 

savings associated with “Producing or Handling Disks.” Very few 

institutions, however, identified specific dollar amounts saved. 

The survey results also revealed that 89 percent of enrolled 

institutions found BSA E-Filing “Very Easy” (55 percent) or 

“Somewhat Easy” (34 percent) to use. As shown in Table 7,

institutions enrolled with BSA E-Filing also indicated a high-level of 

satisfaction with FinCEN’s BSA E-Filing technical assistance. 
 

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Table 7: Satisfaction with BSA E-Filing Technical Assistance Received 

Level of Satisfaction 

Response 

Rate 

Very Satisfied 58% 

Satisfied 30% 

Somewhat Satisfied 6% 

Somewhat Dissatisfied 3% 

Very Dissatisfied 1% 

No Opinion 3% 

Source: OIG analysis of survey response data. 

Notes: (1) Those institutions which indicated dissatisfaction with BSA E-Filing 

technical assistance did not offer any specific information on the nature or 

causes of their dissatisfaction. (2) Total exceeds 100 percent due to 

rounding. 

Limitations or Drawbacks to BSA E-Filing

We asked the enrolled institutions surveyed if there were 

limitations or drawbacks associated with the use of BSA E-Filing. 

About 16 institutions, or 19 percent, answered yes. Of those, 

approximately 47 percent indicated they had concerns with 

“Employee Training.” Another 13 percent of the respondents 

indicated “Required BSA Forms Unavailable,” and 7 percent 

identified “Confirmation of Data Transmissions Not Always 

Received.”

Survey results also suggested that BSA E-Filing might be 

somewhat difficult to implement for many enrollees. We asked 

institutions how they would rate BSA E-Filing in terms of the 

overall ease of implementation. Approximately 36 percent of the 

enrolled institutions rated BSA E-Filing as “Somewhat Difficult” 

(28 percent), “Difficult” (7 percent) or “Very Difficult” (1 percent), 

while 61 percent rated implementation as either “Somewhat Easy” 

(28 percent) or “Very Easy” (33 percent). Approximately 27 

percent of the enrolled institutions offered suggestions to make 

BSA E-Filing easier to implement, most often citing the need for an 

easier user set-up and digital certification/authentication process. 
 

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We asked FinCEN about efforts to address the digital certification 

process, and were advised that FinCEN plans to explore technical 

options. 

Enrolled Institutions Offer Suggestions for Improving BSA E-Filing 

We asked the surveyed institutions if they felt changes were 

needed to improve BSA E-Filing. Approximately 41 percent of the 

enrolled institutions responding felt changes to improve the system 

were needed. Suggested improvements included: 

• enhancing BSA report forms to allow easier data entry or 

editing;

• increasing the size of certain fields to allow the input of 

more text;

• adding access and view capabilities of completed BSA 

reports; 

• adding the ability to extract data – for example, a list of 

SARs filed within a certain date range, or name-search 

capability; 

• removing drop down boxes in order to directly type into the 

fields;16 and 

• allowing the user to save a template for future entries. 

Non-Enrolled Institutions – Misconceptions and Unfamiliarity with 

BSA E-Filing May be Hindering Greater Utilization

BSA E-Filing is not used to file BSA reports by approximately 

53 percent of non-enrolled institutions because of “Low BSA 

Report Volume” (see Table 8 for the number of those institutions 

responding by institution type), and by approximately 49 percent of 

non-enrolled institutions because of “Insufficient BSA E-Filing 

Knowledge” (see Table 9 for the number of those institutions 

responding by type). 

 

16 In general, drop down menus provide for more consistent information; however, respondents 

suggested alternate methods for entering data into BSA E-Filing. 
 

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Table 8: Surveyed Non-Enrolled Institutions Not Using BSA E-Filing 

because of “Low BSA Report Volume” by Institution Type 

Institution Type 

Number of 

Responses 

Depository Institutions 141

MSBs 22

Casinos 3

Securities and Futures Dealers 1

Other 4

Source: OIG analysis of survey response data. 

Table 9: Surveyed Non-Enrolled Institutions Not Using BSA E-Filing 

because of “Insufficient BSA E-Filing Knowledge” by Institution 

Type 

Institution Type 

Number of 

Responses 

Depository Institutions 120

MSBs 26

Casinos 4

Securities and Futures Dealers 1

Other 9

Source: OIG analysis of survey response data. 

Approximately 7 percent of the non-enrolled institutions do not use 

BSA E-Filing because of the “Lack of Internet Capabilities,” 

6 percent because BSA E-Filing Does Not Fit My Business Process, 

and 3 percent because of “Cost.” Approximately 1 percent 

indicated BSA E-Filing is Difficult to Use. Other reasons most often 

cited by non-enrolled institutions for not using BSA E-Filing 

included (broadly categorized) unfamiliarity with BSA E-Filing, and 

systems were already in place to generate BSA reports. 

When the non-enrolled institutions were asked if they intended to 

use BSA E-Filing in the near future, only about 16 percent indicated 
 

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“Yes,” while 23 percent indicated “No,” and 62 percent had “No 

Opinion.” 

Additional Outreach Could Increase the Number of Users 

The results of our survey, which found a large number of 

institutions unfamiliar with BSA E-Filing, coupled with the limited 

number of institutions enrolled with and using BSA E-Filing, 

indicate a need for FinCEN to conduct additional outreach to 

potential users. 

Table 10 identifies the types and topics of outreach suggested by 

enrolled institutions that responded to the survey. 

Table 10: Types and Topics of Outreach Suggested by Enrolled 

Institutions 

Outreach 

Response 

Rate 

Type 

 Enhanced Content on the BSA E-Filing Website 70% 

 User Groups 49% 

 Presentation by FinCEN Staff at Industry Conferences 43% 

Topic 

 BSA E-Filing Overview (Refresher for Existing Users) 65% 

 Future Enhancements Overview 64% 

 General User Training 57% 

 User Feedback to Include Problem Discussions and 

 Suggestions for System Enhancements 53% 

 Supervisor User Training 38% 

Source: OIG analysis of survey response data. 

Table 11 identifies the types and topics of outreach suggested by 

the non-enrolled institutions that responded to the survey. 
 

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Table 11: Types and Topics of Outreach Suggested by Non-Enrolled 

Institutions 

Outreach 

Response 

Rate 

Type 

 Enhanced Content on the BSA E-Filing website 50% 

 Presentation by FinCEN Staff at Industry Conferences 35% 

 User Groups 21% 

Topic 

 General User Training 74% 

 Supervisor User Training 32% 

 BSA E-Filing Overview (Refresher for Existing Users) 25% 

 User Feedback to Include Problem Discussions and 

 Suggestions for System Enhancements 21% 

 Future Enhancements Overview 15% 

Source: OIG analysis of survey response data. 

Additional survey results regarding the use of BSA E-Filing are 

available in Appendix 3. 

FinCEN has the Authority to Mandate BSA E-Filing Usage 

In Finding 1 we discussed how BSA E-Filing reduced the cost to 

the federal government, and reduced the risk of information being 

compromised when BSA reports are filed through BSA E-Filing 

instead of by paper. During our audit, we discussed the possibility 

of mandating BSA E-Filing with FinCEN’s Associate Director, 

Regulatory Policy and Programs Division. The Associate Director 

told us that BSA E-Filing is the most practical means for filing BSA 

reports, and that FinCEN is open to exploring such a requirement. 

The Associate Director also told us that although FinCEN had the 

regulatory authority to impose electronic filing through BSA 

E-Filing, several impediments to a universal electronic filing 

requirement exist which first need further study. For example, 

smaller businesses subject to the BSA may not currently have 

access to the Internet. Other challenges include potential filers 

that are non-English speaking and resistance by large filers that 
 

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have already invested in their own BSA reporting systems. In this 

regard, the Associate Director indicated that FinCEN may consider 

a phased approach to mandating electronic filing. 

Conclusion 

In conclusion, while we found that BSA E-Filing is an effective 

system for filing BSA reports and our survey results indicate that 

BSA E-Filing users are generally satisfied with the system, the 

number of users and volume of reports remains low. One 

unanticipated result of our survey, given that BSA E-Filing has been 

operational for over a year, was the relatively large number of 

respondents, including many banks, who indicated that they were 

unaware of BSA E-Filing or its functionality. Accordingly, increased 

and more targeted outreach efforts, both by FinCEN directly and 

through its regulatory partners, is warranted to encourage greater 

usage. The survey results also revealed a number of areas where 

the system could be improved. 

Ultimately, to maximize the benefits of BSA E-Filing to law 

enforcement and reduce costs associated with processing paperfiled BSA reports, we believe FinCEN should look to mandate use 

of the system going forward. We recognize, however, this may be 

a longer-term initiative as FinCEN assesses certain technical issues 

and impediments raised by current users and non-users. 

Recommendations 

The FinCEN Director should: 

1. Increase outreach efforts to ensure that institutions are 

educated on the benefits of using BSA E-Filing and are 

encouraged to enroll with and use BSA E-Filing to file BSA 

reports. 

Management Response FinCEN concurred with the 

recommendation. The bureau has already begun to expand 
 

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outreach and, as an example, its Regulatory Policy and 

Programs Division will include a short presentation on BSA 

E-Filing at conferences with the financial industry. FinCEN’s 

priority will be to expand outreach to the top 1550 

magnetic/paper BSA report filers which the bureau believes will 

allow it to reach the goal of 90 percent electronic filing by 

2008. FinCEN plans to complete an outreach plan to target 

these filers by June 2005. 

OIG Comments FinCEN’s planned corrective action meets the 

intent of our recommendation. 

2. Evaluate and select for implementation enhancements to BSA 

E-Filing that will encourage enrollment with and use of the 

system. Enhancements could include, but not be limited to, 

simplifying user setup and digital certification. 

Management Response FinCEN concurs with the 

recommendation. FinCEN stated it has begun a complementary 

effort to examine the technology enhancements to BSA E-Filing 

required to assure that the system could meet future electronic 

filing volume. The most significant of these enhancements is a 

secure direct e-file transfer enhancement that will allow high 

volume filers to file directly with the BSA E-Filing system. This 

enhancement is expected to bring filing volumes near 

40 percent by the end of the fiscal year. In addition, FinCEN 

plans to perform a usability analysis of the BSA E-Filing system 

to review and select the best additional improvements to the 

system based on time and budget constraints. FinCEN also 

indicated the bureau has already expanded the types of forms 

available to be filed on the system. FinCEN intends to complete 

its plan for implementation of system enhancements by 

October 2005. 

OIG Comments FinCEN’s plan for enhancing the BSA E-Filing 

system meets the intent of our recommendation. 
 

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3. Assess the feasibility and advisability of mandating electronic 

filing of BSA reports, including analyzing the types of filers for 

which mandating electronic filing would be most appropriate 

and practical. Based on this analysis, establish a timeframe for 

amending, as appropriate, any corresponding BSA regulations. 

Management Comment FinCEN concurs with the 

recommendation. FinCEN will assess the feasibility and 

advisability of mandating the use of BSA E-Filing and develop a 

recommended course of action. FinCEN plans to complete its 

assessment by September 2005. 

OIG Comment FinCEN’s planned corrective action meets the 

intent of our recommendation. 

****** 

We would like to extend our appreciation to FinCEN for its 

cooperation and courtesies extended to our audit staff during the 

audit. If you have any questions, please contact me at 

(617) 223-8640 or Sharon Torosian, Audit Manager, at 

(617) 223-8642. Other major contributors to the report were Mark 

Ossinger, Auditor-in-Charge, and Brian Worth, Auditor, of our 

Eastern Field Audit Office in Boston, Massachusetts. 

/s/ 

Donald P. Benson 

Director, Eastern Field Audit Office 
Appendix 1 

Objectives, Scope, and Methodology 

 

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The objectives of this audit were to determine (1) if BSA E-Filing is 

an effective mechanism for filing BSA reports, and (2) how many 

institutions are using BSA E-Filing to file BSA reports, and, for 

those not using BSA E-Filing, the reasons why. To accomplish our 

objectives, we conducted a survey of BSA E-Filing enrolled and 

non-enrolled institutions17 and interviewed FinCEN officials involved 

with BSA E-Filing as well as officials from financial institutions and 

bank associations. We also interviewed officials at the IRS-DCC, 

observed BSA processing operations, and analyzed BSA report 

filing data provided. The audit scope and methodology is explained 

in more detail below. 

Survey 

We surveyed by mail a statistical sample of 137 BSA E-Filing 

enrolled institutions selected from the 336 institutions enrolled with 

BSA E-Filing on October 29, 2003. We received responses from 

121 of the 137 (88 percent) enrolled institutions, of which 

approximately 85 (70 percent) actually used BSA E-Filing to file 

BSA reports. The results of the sampling of 137 institutions are 

projectable to the universe of the 336 enrolled institutions with a 

95 percent level of confidence and an expected error rate of plus or 

minus 5 percent. The survey instrument used for the enrolled 

institutions is presented in Appendix 4.18

We also surveyed by mail a statistical sample of 395 institutions 

that were not enrolled with BSA E-Filing. The 395 institutions 

 

17 The institutions surveyed were selected from electronic data files provided by FinCEN. The electronic 

data files were to include, at the request of OIG, all institutions filing BSA reports with the government 

at October 29, 2003 by either paper or electronic means. The reliability of the electronic data provided 

by FinCEN was not tested, substantiated, or otherwise determined by OIG except to indirectly 

substantiate the BSA E-Filing enrollee and non-enrollee data through survey responses categorized as 

either BSA E-Filing users or non-users.

18 Comments and suggestions offered by the institutions in response to the survey are not detailed in 

either Appendix 4 or 5 but have been included in the body of this report on a selected basis. All 

comments and suggestions received from the institutions surveyed were provided to FinCEN prior to the 

issuance of this report. 
Appendix 1 

Objectives, Scope, and Methodology 

 

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were selected from 25,30319 BSA filing institutions identified as 

not being enrolled with BSA E-Filing as of October 29, 2003. We 

received responses from 343 (87 percent).20 The results of the 

sampling of the 395 institutions are projectable to the 25,303 nonenrolled institutions with a 95 percent level of confidence interval 

and an expected error rate of plus or minus 5 percent. The survey 

instrument used for the non-enrolled institutions is presented in 

Appendix 5. 

All of the institutions surveyed were subject to BSA filing 

requirements and had a history of filing BSA reports. The survey 

results are subject to sampling errors and other potential types of 

errors associated with surveys including, but not limited to, nonresponses and question misinterpretation. 

Interviews 

We interviewed FinCEN officials to obtain information regarding 

BSA E-Filing. 21 In addition, we interviewed officials from two 

Boston, Massachusetts, area financial institutions regarding their 

BSA filings and knowledge of and use of BSA E-Filing.22 We also 

interviewed representatives from both the American Bankers 

Association and the Independent Community Bankers of America to 

obtain industry and institution perspectives on BSA E-Filing. 

 

19 FinCEN provided listings, segregated by BSA report types, that when combined identified a total of 

25,513 BSA filing institutions at October 29, 2003. From this file we eliminated 210 institutions that 

had used BSA E-Filing to file reports, resulting in a total of 25,303 non-BSA E-Filing using institutions. 20 The survey responses included 14 institutions that were not identified as enrolled institutions when 

the sample was initially selected but responded to certain questions numbered 10 through 24 as 

enrolled institutions, perhaps because enrollment with BSA E-Filing occurred after our sample selection. 

We did not use the responses from these 14 institutions in our analysis of the results of survey 

questions 10 through 24 (see Appendix 5). 

21 We did not independently transmit BSA reports through BSA E-Filing to review or test system 

features and controls.

22 The Boston area institutions contacted were not part of a representative sample of the universe of 

BSA filers. 
Appendix 1 

Objectives, Scope, and Methodology 

 

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DCC Visit and Data Analysis 

We conducted an onsite visit to the IRS-DCC to obtain an 

understanding of BSA report processing, including the time-frames 

for processing the reports filed using the different methods (paper, 

magnetic media, and BSA E-FIiling). We obtained an overview of 

controls in place for the completeness and accuracy of BSA report 

data. The scope of our work at IRS-DCC did not include evaluating 

or testing the controls identified at either IRS-DCC or its keying 

contractor in North Dakota. 

Our work at IRS-DCC also included an analysis of one week’s 

worth of BSA report filings obtained from officials at that location. 

Using data extraction and analysis software, we selected and 

examined approximately 110,000 electronic BSA records that were 

filed during January 5, 2004, through January 9, 2004, to 

determine the length of time required to process the reports of 

various types from the point of receipt at IRS-DCC to posting in 

BSA databases. An IRS-DCC official indicated this period 

represented a typical week of BSA filings. The records consisted, 

in part, of approximately 91,500 CTR-related reports and 12,600 

SAR-related reports. 

The scope of the audit included neither an assessment of the 

accuracy of BSA filings nor a review of BSA E-Filing security. 

Assessing the extent to which BSA E-Filing expedites the 

availability of BSA data for law enforcement purposes was also 

beyond the scope of our audit. 

We conducted our audit work from October 2003 through June 

2004 in accordance with generally accepted government auditing 

standards. 
Appendix 2 

Reports Required of BSA Filing Institutions, Businesses, or by other Persons 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 38 

 

BSA Report Description 

Currency Transaction Report (CTR) (FinCEN Form 

104), replaces Form 4789 effective December 1, 

2003* 

Depository institutions for transactions 

exceeding $10,000. 

Currency Transaction Report by Casinos (CTRC) 

(FinCEN Form 103)* 

Casinos for transactions exceeding $10,000. 

Currency Transaction Report by Casinos – Nevada 

(CTRC-N) (FinCEN Form 103-N) 

 Nevada casinos for transactions exceeding 

$10,000. 

Suspicious Activity Report for Depository 

Institutions (SAR) (TDF 90 – 22.47)* 

Depository institutions for suspicious financial 

transactions. 

Suspicious Activity Report by the Securities and 

Futures Industries (SAR-SF) (FinCEN Form 101)* 

Securities and futures industries for suspicious 

financial transactions. 

Suspicious Activity Report by Casinos and Card 

Clubs (SAR-C) (FinCEN Form 102), replaces Form 

TD F 90 - 22.49* 

Casinos and card clubs for suspicious financial 

transactions. 

Suspicious Activity Report by Money Services 

Business (SAR-MSB) (TD F 90-22.56)* 

Money transmitters and issuers, sellers and 

redeemers of traveler’s checks and money 

orders for suspicious financial transactions. 

Report of International Transportation of Currency 

or Monetary Instruments (CMIR) (FinCEN Form 

105) 

Persons to report transportation into or out of 

the U.S. of currency and certain other 

monetary instruments in excess of $10,000. 

Report of Cash Payments over $10,000 Received 

in a Trade or Business (FinCEN Form 8300) 

Each person engaged in a trade or business 

who, in the course of that trade or business, 

receives more than $10,000 in cash in one 

transaction or in two or more related 

transactions. 

Report of Foreign Bank and Financial Accounts 

(FBAR) (TD F 90 – 22.1) 

Persons to make an annual report of financial 

interest in a foreign account if the aggregated 

value of the foreign financial account exceeds 

$10,000 at any time during the calendar year. 

Designation of Exempt Person (DEP)(TD F 90 – 

22.53) 

Depository institution customers with routine 

transactions who qualify for exemption from 

filing CTRs. 

Registration of Money Service Business (TD F 90 – 

22.55) 

Each money services business, except one that 

is a money services business solely because it 

serves as an agent of another money services 

business must register. 

Source: OIG presentation of FinCEN data. 

*BSA reports available through BSA E-Filing.
Appendix 3 

Additional Survey Results 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 39 

 

Additional Survey Results 

This section includes additional information from our survey of 

enrolled and non-enrolled institutions that was not included in the 

body of the report. We include it here to provide additional detail 

about the use or non-use of BSA E-Filing. 

Profile of BSA E-Filing Enrolled and Non-Enrolled Institutions 

The percentages of enrolled and non-enrolled institutions by the 

type of institution responding to our survey are presented in the 

following table: 

Institution 

Enrolled 

Institutions* 

Non-Enrolled 

Institutions* 

Banks 79% 55% 

Credit Unions 13% 22% 

Casinos 4% 2% 

Securities and Futures Dealers 3% 1% 

MSBs 1% 16% 

Other** 2% 7% 

Source: OIG analysis of survey response data 

*Total exceeds 100 percent because institutions provided multiple answers in 

response to the question. 

** “Other” sources typically included institutions operating a money services 

business but did not designate themselves as an MSB. For example, these 

institutions described themselves as check cashing stores or as Western Union 

agents. 

CTRs and SARs were the BSA report types most often filed by the 

responding institutions. Approximately 97 percent of the enrolled 

institutions and 98 percent of the non-enrolled institutions 

indicated that CTRs were filed. Approximately 99 percent of the 

enrolled and 96 percent of the non-enrolled institutions indicated 

that SARs were filed. 
Appendix 3 

Additional Survey Results 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 40 

 

The following tables present a profile of the responding institutions 

based on various categories, as noted: 

Number of CTRs Filed 

Number 

Enrolled 

Institutions 

Non-Enrolled 

Institutions 

0-1,000 63% 89% 

1,001-5,000 18% 7% 

5,001-10,000 5% 1% 

10,001-50,000 5% 2% 

More than 50,000 9% 2% 

Source: OIG analysis of survey response data.

Number of SARs Filed

Number 

Enrolled 

Institutions 

Non-Enrolled 

Institutions 

0-10 46% 79% 

11-20 16% 10% 

21-30 4% 4% 

More than 30 35% 9% 

Source: OIG analysis of survey response data.

CTR Filing Frequency

Frequency 

Enrolled 

Institutions 

Non-Enrolled 

Institutions 

By Transaction 55% 76% 

Weekly 23% 13% 

Monthly 1% 3% 

Other 22% 11% 

Source: OIG analysis of survey response data. 
Appendix 3 

Additional Survey Results 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 41 

 

SAR Filing Frequency 

Frequency 

Enrolled 

Institutions 

Non-Enrolled 

Institutions 

By Transaction 80% 94% 

Weekly 8% 3% 

Monthly 6% 2% 

Other 10% 3% 

Source: OIG analysis of survey response data. 

Forms Filed through BSA E-Filing 

We asked the institutions surveyed about the purposes for using 

BSA E-Filing. The survey results revealed that BSA E-Filing is used 

to file CTRs and SARs by approximately 77 percent and 79 percent 

of the enrolled institutions, respectively. 

Reasons why Enrolled Institutions were Not Using BSA E-Filing 

With regard to enrolled institutions, 44 institutions responded as to 

why BSA E-Filing was not used. Approximately 30 percent of 

those institutions indicated BSA E-Filing is Difficult to Use, while 

16 percent indicated “Low BSA Report Volume” or Insufficient BSA 

E-Filing Knowledge. In addition, roughly 7 percent of the 

institutions indicated that BSA E-Filing was not used because BSA 

E-Filing Does Not Fit My Business Process, and 2 percent because 

of “Lack of Internet Capabilities” or “Cost.” Other reasons most 

often cited by the institutions for not using BSA E-Filing included 

systems that are already in place to generate BSA reports, setup is 

too time consuming and cumbersome, and it is difficult and 

complicated to get started and to use. When the enrolled 

institutions were asked if they would use BSA E-Filing in the near 

future, approximately 67 percent of the 39 respondents indicated 

“Yes” while 10 percent indicated “No” and 23 percent had “No 

Opinion.” 
Appendix 3 

Additional Survey Results 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 42 

 

BSA E-Filing Not Used for All Filings 

Survey results indicated that approximately 64 percent of enrolled 

institutions used BSA E-Filing for 100 percent of BSA filings, while 

many used the system for less than 100 percent of their filings. 

Twenty-eight institutions using BSA E-Filing for less than 100 

percent of BSA filings explained why. Preference for filing CTRs or 

SARs manually was the explanation most often provided 

(approximately 36 percent). Unfamiliarity with a particular BSA 

report available in BSA E-Filing, or the need for training to file a 

report was also identified (roughly 11 percent). Some respondents 

identified batching issues, or that internal systems were in place to 

generate the particular BSA reports.
Appendix 4 

Survey Instrument With Enrolled Institution Responses 

 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 43 

 
Appendix 4 

Survey Instrument With Enrolled Institution Responses 

 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 44 

 
Appendix 4 

Survey Instrument With Enrolled Institution Responses 

 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 45 

 
Appendix 4 

Survey Instrument With Enrolled Institution Responses 

 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 46 

 
Appendix 4 

Survey Instrument With Enrolled Institution Responses 

 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 47 

 
Appendix 4 

Survey Instrument With Enrolled Institution Responses 

 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 48 

 
Appendix 4 

Survey Instrument With Enrolled Institution Responses 

 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 49 

 
Appendix 4 

Survey Instrument With Enrolled Institution Responses 

 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 50 

 
Appendix 4 

Survey Instrument With Enrolled Institution Responses 

 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 51 

 
Appendix 4 

Survey Instrument With Enrolled Institution Responses 

 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 52 

 
Appendix 5 

Survey Instrument With Non-Enrolled Institution Responses 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 53 

 
Appendix 5 

Survey Instrument With Non-Enrolled Institution Responses 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 54 

 
Appendix 5 

Survey Instrument With Non-Enrolled Institution Responses 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 55 

 
Appendix 5 

Survey Instrument With Non-Enrolled Institution Responses 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 56 

 
Appendix 5 

Survey Instrument With Non-Enrolled Institution Responses 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 57 

 
Appendix 5 

Survey Instrument With Non-Enrolled Institution Responses 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 58 

 
Appendix 5 

Survey Instrument With Non-Enrolled Institution Responses 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 59 

 
Appendix 5 

Survey Instrument With Non-Enrolled Institution Responses 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 60 

 
Appendix 5 

Survey Instrument With Non-Enrolled Institution Responses 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 61 

 
Appendix 5 

Survey Instrument With Non-Enrolled Institution Responses 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 62 

 
Appendix 6 

 Schedule of Funds Put To Better Use 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 63 

 

A recommendation that funds be put to better use means a recommendation 

that funds could be used more efficiently if management took action to 

implement and complete the recommendation, including (1) reductions in 

outlays; (2) de-obligations of funds from programs or operations; (3) costs not 

incurred by implementing recommended improvements related to operations; 

(4) avoidance of unnecessary expenditures noted in pre-award reviews of 

contract agreements; (5) any other savings which are identified; or 

(6) enhancements to revenue. The following potential cost savings will be 

recorded in the Joint Audit Management Enterprise System (JAMES) under 

the category Funds Put to Better Use. This amount will also be included in 

the OIG Semiannual Report to Congress. 

Recommendation Number 

 

Funds Put to Better Use 

 

Finding 2 – Recommendation 3 $48,000,000 

The potential cost savings listed above represents the estimated savings 

Treasury will receive over a 3-year period if the cost of paper processing can 

be eliminated through increased use of the Patriot Act Communication 

System (BSA E-Filing). The estimate is based on the cost of paper processing 

provided by FinCEN from IRS data and a May 2003 consultant study. 
Appendix 7 

Management Response 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 64 

 
Appendix 7 

Management Response 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 65 

 
Appendix 8 

Report Distribution 

TERRORIST FINANCING/MONEY LAUNDERING: Additional 

Outreach and System Enhancements are Needed to Encourage 

Greater Use of FinCEN’s BSA E-Filing (OIG-05-034) 

Page 66 

 

The Department of the Treasury

Under Secretary, Office of Terrorism and Financial Intelligence 

Assistant Secretary, Terrorist Financing and Financial Crimes 

Office of Strategic Planning and Evaluations 

Office of Accounting and Internal Controls 

Financial Crimes Enforcement Network

Director 

Associate Director, Regulatory Policy and Programs Division 

Assistant Director, Deputy Chief Financial Officer 

Office of Management and Budget

OIG Budget Examiner 

Internal Revenue Service

Associate Commissioner for Modernization/Chief Information 

 Officer 

Director, Fraud/Bank Secrecy Act 

 Small Business Self/Self Employed Division 

Legislative Analysis Officer (Audit Coordinator)