United States General Accounting Office

GAO Report to the Chairman, Subcommittee

on General Oversight and Investigations,

Committee on Banking and Financial

Services, House of Representatives

June 1998 MONEY

LAUNDERING

FinCEN Needs to

Better Manage Bank

Secrecy Act Civil

Penalty Cases

GAO/GGD-98-108

GAO United States

General Accounting Office

Washington, D.C. 20548

General Government Division

B-279254 

June 15, 1998

The Honorable Spencer Bachus

Chairman

Subcommittee on General Oversight

 and Investigations

Committee on Banking and Financial Services

House of Representatives

Dear Mr. Chairman:

This report responds to your request regarding efforts of the Department

of the Treasury’s Financial Crimes Enforcement Network (FinCEN) to

process civil penalty referrals for violations of the Bank Secrecy Act (BSA).

At a recent hearing held by this Subcommittee, we testified on FinCEN’s

various roles, including the processing of civil penalty cases.1

 This report

provides a more detailed analysis of BSA civil penalty cases and FinCEN’s

related efforts.

FinCEN receives civil penalty referrals for BSA violations from various

sources, including the Federal Deposit Insurance Corporation (FDIC), the

Office of the Comptroller of the Currency (OCC), other federal banking

regulatory agencies, and the Internal Revenue Service’s (IRS) Examination

Division. In February 1992, after analyzing statistics for calendar years

1985 through 1991 (as of October 24, 1991), we reported that civil penalty

cases had not been processed in a timely manner by the then-responsible

Treasury component, the Office of Financial Enforcement.2

 In May 1994,

Treasury’s Assistant Secretary for Enforcement transferred this

responsibility within the Department from the Office of Financial

Enforcement to FinCEN. In September 1994, Congress passed and the

President signed the Money Laundering Suppression Act (MLSA).3

 Among

other provisions, the MLSA required the Secretary of the Treasury to

delegate authority to impose civil penalties for BSA violations to the

appropriate federal banking regulatory agencies. The purpose of this

delegation requirement was to increase efficiency by allowing these

agencies to impose civil penalties directly, rather than referring violations

to FinCEN.

1

Money Laundering: FinCEN’s Law Enforcement Support, Regulatory, and International Roles

(GAO/T-GGD-98-83, Apr. 1, 1998).

2

Money Laundering: Treasury Civil Case Processing of Bank Secrecy Act Violations (GAO/GGD-92-46,

Feb. 6, 1992).

3

The Money Laundering Suppression Act is Title IV of the Riegle Community Development and

Regulatory Improvement Act of 1994, Public Law 103-325, 108 Stat. 2160, 2243 (1994).

Page 1 GAO/GGD-98-108 BSA Civil Penalty Case Processing
B-279254 

As agreed with your office, in developing updated information on civil

penalties for BSA violations, we focused our work on the following

questions:

• How, if at all, has Treasury changed its policies and procedures for

processing civil penalty cases since 1992?

• Based upon workload and related statistics, what was Treasury’s

performance in processing civil penalty cases during calendar years 1992

through 1997?

• What is the status of FinCEN’s efforts to develop and issue a final regulation

delegating the authority to assess civil penalties for BSA violations to the

federal banking regulatory agencies, as required by the MLSA?

In addressing these questions, we interviewed cognizant FinCEN officials

and reviewed relevant documentation on FinCEN’s policies and procedures

for processing civil penalty cases. Also, we reviewed civil penalty case

inventory and processing timeliness data for calendar years 1985 through

1997. Further, to determine the status of the delegation of civil penalty

authority, we interviewed Treasury and FinCEN officials to obtain their

views on (1) when a final regulation is expected to be issued and (2) if

applicable, whether any substantive or procedural issues must be resolved

before a final rule can be promulgated.

We performed our work from December 1997 to May 1998 in accordance

with generally accepted government auditing standards. Appendix I

provides more details about our objectives, scope, and methodology.

We requested comments on a draft of this report from the Acting Director,

FinCEN. A reprint of FinCEN’s written comments can be found in appendix IV,

and our evaluation of those comments follows our recommendation.

Results in Brief Except for the May 1994 delegation to FinCEN, Treasury’s policies and

procedures for processing civil penalty cases generally have not changed

since 1992. Also, the number of staff processing civil penalty cases has

remained fairly constant, at about six, before and after the May 1994

delegation to FinCEN.

The problem of lengthy processing times for civil penalty cases is growing

worse. For example, according to FinCEN’s data for cases closed in calendar

years 1985 through 1991, the average processing time to close a case was

1.77 years, and the most lengthy time was 6.44 years. In comparison,

Page 2 GAO/GGD-98-108 BSA Civil Penalty Case Processing
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FinCEN’s data for calendar years 1992 through 1997 indicate an average

processing time was 3.02 years, and the most lengthy time was 10.14 years.

For cases closed in the 2 most recent years, 1996 and 1997, the average

processing times were 3.57 years and 4.23 years, respectively.

Lengthy processing can negatively affect the public’s perception of the

government’s efforts to enforce the BSA, thereby lessening the credibility

and deterrent effects of the act’s provisions. Another result is that the

6-year statute of limitations for BSA civil penalties could expire. According

to FinCEN’s data, for the period January 1, 1992, through March 27, 1998, a

total of 16 cases had one or more BSA violations that could not be pursued

because the statute of limitations had expired. Insufficient management

attention is a significant cause of the lengthy processing times for civil

penalty cases. FinCEN officials told us, for example, that the agency has

never set timeliness goals for processing civil penalty cases.

FinCEN has issued neither a notice of proposed rulemaking nor a final

regulation to delegate civil penalty assessment authority to the banking

regulatory agencies. FinCEN officials told us they have been working with

the federal banking regulatory agencies for some time to devise an

appropriate plan for delegating civil penalty assessment authority, but

some issues still required resolution. FinCEN’s current strategic plan

indicates that such delegation may not occur before 2002. Thus, for several

more years, FinCEN could still be responsible for processing civil penalty

referrals. Therefore, to better manage the processing of such referrals, we

are recommending that FinCEN set timeliness goals for evaluating and

disposing of each civil penalty case, based on the complexity of the case,

and monitor the progress of managers and staff responsible for meeting

those goals.

Background The BSA and its implementing regulations, in general, require financial

institutions to maintain certain records and to file certain reports (e.g.,

currency transaction reports) that are useful in criminal, tax, or regulatory

investigations, such as money laundering cases. Failure to file BSA reports

can result in criminal and/or civil penalties, depending on the nature of the

violation. Criminal investigations are the responsibility of IRS’ Criminal

Investigation Division. Civil penalties are currently assessed by FinCEN, and

the agency is to send each referral to IRS for review before any

administrative or civil enforcement action is taken.

Page 3 GAO/GGD-98-108 BSA Civil Penalty Case Processing
B-279254 

Treasury has issued guidelines to assist regulatory agencies in determining

which BSA violations warrant referral to Treasury for consideration of

criminal and/or civil penalties.4

 For example, according to the guidelines,

violations customarily warranting referral include a pattern of failing to

file currency transaction reports on applicable transactions.

After receiving a referral, FinCEN’s role includes evaluating the

circumstances of the alleged violation and determining whether some type

of civil action, including seeking the imposition of a civil monetary

penalty, should be taken against the person or financial institution.

Generally, FinCEN disposes of the majority of its civil penalty cases with

one of three courses of action: (1) close the case without contacting the

subject of the referral, (2) issue a letter of warning to the subject

institution or individual, or (3) assess a civil monetary penalty. The

Director, FinCEN, makes the final decisions. Civil monetary penalties

generally can range from $25,000 to $100,000 per willful violation. In

addition, civil monetary penalties may be assessed for each negligent

violation of the BSA up to $500. Appendix II provides more information

about FinCEN’s procedures.

Treasury’s Policies

and Procedures

Generally Unchanged

Since 1992

Except for the delegation of responsibility to FinCEN in 1994, Treasury’s

policies and procedures for processing civil penalty referrals for BSA

violations generally have remained unchanged since our 1992 report.

Treasury’s Office of Financial Enforcement was established in 1985 to,

among other things, develop referrals of alleged civil violations of the BSA

and make recommendations as to whether civil penalties should be

assessed against noncompliant financial institutions and their officers,

directors, employees, and individuals, and if so, the amounts of the

penalties. Treasury’s Assistant Secretary for Enforcement was responsible

for making the final decision to assess a penalty.

In May 1994, the Assistant Secretary for Enforcement delegated civil

penalty authority to FinCEN. Presently, civil penalty referrals are processed

by FinCEN’s Office of Compliance and Regulatory Enforcement (OCRE).

According to FinCEN, in processing civil penalty referrals, OCRE staff follow

the same policies and procedures that existed before the 1994 delegation.

4

U.S. Department of the Treasury, Office of Financial Enforcement, “Bank Secrecy Act Referral

Guidelines for Financial Institutions,” October 31, 1990. At the time of our review, FinCEN officials

told us that these guidelines were still applicable.

Page 4 GAO/GGD-98-108 BSA Civil Penalty Case Processing
B-279254 

Also, the number of staff processing civil penalty referrals has remained

fairly constant, at about six, before and after the 1994 delegation of

authority to FinCEN. FinCEN officials told us that the staff of Treasury’s

Office of Financial Enforcement—the unit previously responsible for

processing civil penalty referrals—was merged into OCRE in 1994. FinCEN

officials noted, however, that none of OCRE’s six staff work on civil penalty

referrals on a full-time or exclusive basis; rather, they spend about

one-half of their time performing other mission functions and

responsibilities.

As a result of the merger, several staffing changes occurred. For example,

four former Office of Financial Enforcement senior analysts who had

worked on referral cases were transferred into other divisions within

FinCEN, while four other FinCEN staff members, with no experience in

administering the BSA, were transferred into OCRE.

FinCEN officials told us that there have been several personnel departures

during the past year, which have affected the management and expertise in

this area. For example, OCRE’s chief and deputy chief left the agency. As of

May 1998, these positions were still vacant.

The Problem of

Lengthy Processing

Times for Civil

Penalty Cases Is

Growing Worse

In the past, civil penalty cases have not been processed in a timely

manner. That was the conclusion we reached in our 1992 report, which

analyzed Treasury’s case inventories between 1985 and 1991. Our current

work, which analyzed case inventory data provided by FinCEN for 1992

through 1997, shows that the problem of lengthy processing times is

growing worse.

Fewer Cases Closed in

Recent Years

For the period 1985 through 1997, data from Treasury’s Office of Financial

Enforcement and/or FinCEN showed a total of 648 closed civil penalty

cases. Of this total, 430 cases were closed during 1985 through 1991 (a

7-year period), and the remaining 218 cases were closed during 1992

through 1997 (a 6-year period).

Our analyses show that relatively few cases have been closed in recent

years, particularly after 1994.

• Case closures in each of the 3 most recent years, 1995 through 1997,

dropped below 30 for the first time since 1985 (see fig. 1).

Page 5 GAO/GGD-98-108 BSA Civil Penalty Case Processing
B-279254 

• Civil penalty cases closed represented 22 percent, 8 percent, and

13 percent, respectively, of FinCEN’s annual workloads in 1995, 1996, and

1997 (see fig. 2).

• During each of these 3 years, the number of cases closed was fewer than

the number of referrals received, which represented a reversal of the trend

in 1990 through 1994 (see fig. 3). For example, in 1997, 19 cases were

closed while 34 referrals were received. In contrast, in 1990, 103 cases

were closed while 65 referrals were received.

Figure 1: Civil Penalty Annual Workload and Number of Civil Penalty Cases Closed, Calendar Years 1985 Through 1997

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

0

50

100

150

200

250

300

Number of cases

Calendar year

Annual workload

Cases closed

Few cases have been

closed

104

230

268

238

260 254

184

203

148

139

132 128

152

19

10

29

39 39

82

48

103

59 59

77 73

11

Note: Annual workload consists of beginning inventory (as of Jan. 1) plus referrals received

during the year.

Source: GAO analysis of data from FinCEN’s civil penalty tracking system. See table III.1 in

appendix III.

Page 6 GAO/GGD-98-108 BSA Civil Penalty Case Processing
B-279254 

Figure 2: Civil Penalty Cases Closed as a Percentage of Annual Workload, Calendar Years 1985 Through 1997

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

0

10

20

30

40

50

Calendar year

Percentage of cases closed

was the smallest since 1985

11

32

29

25

23

40 40

26 28 26

22

8

13

Percent

Source: GAO analysis of data from FinCEN’s civil penalty tracking system. See table III.1 in

appendix III.

Page 7 GAO/GGD-98-108 BSA Civil Penalty Case Processing
B-279254 

Figure 3: Number of Civil Penalty Referrals Received and Cases Closed, Calendar Years 1985 Through 1997

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

0

20

40

60

80

100

120

140

160

11

73

77

101

137

111

59

47

59

75

65

103

48

27

67

82

27

39 39

30 29

32

25

34

10

19

Calendar year

The cases closed were

fewer than referrals received

Number of referrals or cases

Referrals received

Cases closed

Source: GAO analysis of data from FinCEN’s civil penalty tracking system. See table III.1 in

appendix III.

Processing Times Slower

in Recent Years

For 1985 through 1991, Treasury’s data show that the average processing

time to close a case was 1.77 years. Processing times for the 430 cases

closed during this 7-year period ranged from 4 days to 6.44 years.

According to FinCEN’s data, the processing times have slowed during the

more recent period, 1992 through 1997 (see fig. 4). Specifically, the

average processing time to close a case was 3.02 years. Processing times

for the 218 cases closed during this period ranged from 8 days to 10.14

years.

For cases closed in each of the 4 most recent years, 1994 through 1997,

figure 4 shows that average processing times were 3 years or higher, a

threshold not reached in any of the previous years.

Page 8 GAO/GGD-98-108 BSA Civil Penalty Case Processing
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Figure 4: Average Processing Times for Civil Penalty Cases That Were Closed, Calendar Years 1985 Through 1997

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

0

1

2

3

4

5

Average time to close case (in years)

0.45

0.57

1

1.49

2.25

2.87

2.55

2.72 2.6

3.26 3.16

3.57

4.23

Calendar year

Average processing time for the 7-year period was 1.77 years Average processing time for the 6-year period was 3.02 years

Source: GAO analysis of data from FinCEN’s civil penalty tracking system. See table III.2 in

appendix III.

Lengthy processing times for civil penalty cases potentially can have

various negative effects. For example, in 1992 congressional testimony, we

stated that:

“Officials at 2 of...[the primary referring] agencies...told us that they believed—although it

could not be proved or measured—that the lengthy processing times resulted in a decrease

in enforcement efforts....

“We think it would be reasonable to assume that the effectiveness of any penalty as a

deterrent to prevent future violations would be directly related to the length of time

between the violation and the action taken. Given this assumption, lengthy processing

times for civil penalty referrals could affect compliance with the Bank Secrecy Act.

Page 9 GAO/GGD-98-108 BSA Civil Penalty Case Processing
B-279254 

“Perhaps the most serious result of civil penalty cases remaining inactive for lengthy

periods of time can be the expiration of the statute of limitations....”5

According to FinCEN’s data for the period January 1, 1992, through

March 27, 1998, a total of 16 cases had one or more BSA violations that

could not be pursued because the statute of limitations had expired.

Insufficient

Management

Attention to Civil

Penalty Case

Processing

Our 1992 report, which analyzed civil penalty case inventories between

1985 and 1991, concluded that cases had not been processed in a timely

manner. More recently, as shown in figure 4, the average processing times

for civil penalty cases closed since 1994 are higher than the average times

for previous years.

There may be several reasons for this trend. Regarding recent years, for

example, FinCEN officials mentioned staff inexperience and personnel

departures as being reasons. Further, the officials noted a change in the

kinds of cases being referred to FinCEN. Specifically, the officials said the

majority of cases referred to FinCEN now involve nonbank financial

institutions (i.e., casinos, check cashers, and currency exchangers).

According to FinCEN officials, it generally is more difficult to obtain records

and documentary evidence and to reconstruct transactions for these

entities than for banks.

In addition, we believe that insufficient management attention has been a

significant cause of the lengthy processing times for civil penalty cases.

First, FinCEN and its predecessor, Treasury’s Office of Financial

Enforcement, did not (1) set timeliness goals for civil penalty case

processing and (2) monitor or measure performance against those goals.

FinCEN officials told us that the agency has never set timeliness goals for

civil penalty processing. The officials also said that any such goals would

prove arbitrary since each case varies significantly based on complexity,

volume of transactions, and other factors. However, those goals can be

valuable performance management tools for improving overall results and

can take into account the differences in cases. Moreover, goal setting and

performance measurement are widely considered to be good management

practices, and these practices are reflected in the Government

Performance and Results Act of 1993.6

 Implementing such practices

should help FinCEN (1) better identify the key factors that determine the

5

Money Laundering: Civil Penalty Referrals for Violations of the Bank Secrecy Act Have Declined

(GAO/T-GGD-92-57, June 30, 1992), pp. 9-10.

6

Government Performance and Results Act of 1993, Public Law 103-62, 107 Stat. 285 (1993).

Page 10 GAO/GGD-98-108 BSA Civil Penalty Case Processing
B-279254 

timeliness of processing civil penalty cases and (2) find ways to streamline

the management and processing of cases to reverse the trend of

increasingly lengthy processing times.

Second, FinCEN’s civil penalty tracking system, which resides on a

stand-alone microcomputer, has not been an effective management tool,

according to a 1990 report by Treasury’s Inspector General. Generally, the

tracking system has remained unchanged since 1990, even though the

Inspector General reported that database improvements were needed to

assist in prioritizing, managing, and controlling civil penalty cases. The

Inspector General’s report noted, for example, that the database was not

being used to track the age of referrals and cases nor to track statute of

limitation expiration dates.

Third, as previously mentioned, according to FinCEN’s data for the period

January 1, 1992, through March 27, 1998, a total of 16 cases were affected

by expiration of the statute of limitations. However, FinCEN did not close

several of these cases until months or years after expiration of the statute

of limitations. In fact, since our inquires about the status of case

processing, FinCEN has closed 15 of these 16 cases involving expiration of

the statute of limitations. For example, FinCEN’s data for the 16 cases show

the following.

• One case had a statute of limitations expiration date in 1993, but FinCEN did

not close the case until November 1995.

• Two cases had statute of limitations expiration dates in 1995, and FinCEN

closed one case in February 1998 and one case in March 1998.

• Five cases had statute of limitations expiration dates in 1996, but FinCEN

did not close the cases until February 1998.

• Four cases had statute of limitations expiration dates in 1997, and FinCEN

closed two cases in February 1998 and the other two cases in March 1998.

• Four cases had statute of limitations expiration dates in either

January 1998 or February 1998, and FinCEN closed one case in

February 1998 and the other three cases in March 1998.

FinCEN Has Not

Issued a Regulation to

Delegate Civil Penalty

Authority

Section 406 of the MLSA directed the Secretary of the Treasury to delegate

to appropriate federal banking regulatory agencies the authority to assess

civil penalties for BSA violations. This statutory section further specified

that the Secretary shall prescribe by regulation the terms and conditions

that shall apply to any such delegation. The intent of such delegation, as

described in the MLSA’s conference report, is to increase efficiency by

Page 11 GAO/GGD-98-108 BSA Civil Penalty Case Processing
B-279254 

allowing the federal banking agencies to impose civil penalties directly

rather than to make referrals to FinCEN. The conference report also noted

that, after the delegation, FinCEN “would still be able to oversee the process

and ensure that penalties are consistently imposed.”7

In February 1998, we reported to the Subcommittee that a notice of

proposed rulemaking still had not been issued, and FinCEN had not

established a projected issuance date.8

 In April 1998, a senior FinCEN

official provided us the status of the agency’s efforts substantially as

follows:

• FinCEN has had numerous meetings with federal bank regulators to begin

the process of delegating some or all of FinCEN’s civil penalty enforcement

authority. Much progress has been made, but some serious issues are

unresolved.

• One issue is whether violations will be enforced under BSA provisions or

under the bank regulators’ general examination powers granted by Title 12

of the U.S. Code. According to FinCEN, the bank regulators may be less

inclined to assess BSA penalties and may instead use their non-BSA

authorities under the general examination powers of Title 12. FinCEN

prefers that the BSA provisions be used to ensure consistency of

interpretation and sanctions for similar violations.

• Another issue involves oversight or monitoring by FinCEN. The details of

Treasury’s continued oversight responsibility for BSA penalties, even after

the delegation, have not yet been worked out.

• Further, while not required by the MLSA, FinCEN is studying the possibility of

also delegating BSA civil penalty authority to IRS, which conducts BSA

compliance examinations of nonbank financial institutions. FinCEN and IRS

have engaged in several discussions concerning such a delegation. As a

result, IRS is currently studying the relevant policy and resource

considerations.

FinCEN’s current strategic plan indicates that delegation of civil penalty

authority to the banking regulatory agencies may not occur before 2002.

Conclusions Except for the delegation of civil penalty authority to FinCEN in 1994,

Treasury’s policies and procedures for processing civil penalty referrals

for BSA violations generally have not changed since our 1992 report. Also,

7

H.R. Conf. Rep. No. 103-652, at 190 (1994).

8

Money Laundering: FinCEN Needs to Better Communicate Regulatory Priorities and Time Lines

(GAO/GGD-98-18, Feb. 6, 1998), p. 15.

Page 12 GAO/GGD-98-108 BSA Civil Penalty Case Processing
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the number of staff processing civil penalty referrals has remained fairly

constant, at about six, before and after the May 1994 delegation to FinCEN.

However, FinCEN officials noted that over the past year, personnel

departures—including OCRE’s chief and deputy chief—have affected

management and expertise in this area. As of May 1998, these positions

remained vacant.

The problem of lengthy processing times for civil penalty cases has grown

worse since our 1992 report. Overall, FinCEN’s data showed a smaller

percentage of civil penalty cases being closed between 1992 and 1997 than

1985 and 1991, and the annual workload was smaller during the more

recent years. Also, in the more recent years, the average processing times

to close civil penalty cases are higher than in previous years. Among other

reasons, insufficient management attention—as indicated by the absence

of timeliness goals and monitoring, ineffective civil penalty tracking

system, and 16 cases that could not be pursued because the statute of

limitations had expired—contributed to lengthy processing times in recent

years. Goal setting and performance measurement are widely considered

to be good management practices, and implementing such practices may

help FinCEN focus its attention on better managing and processing civil

penalty cases and reverse the trend of increasingly lengthy processing

times.

FinCEN’s current strategic plan indicates that delegation of civil penalty

authority to federal banking regulatory agencies may not occur for another

3 or 4 years. Pending such delegation, FinCEN is still responsible for

processing civil penalties.

Recommendation to

the Acting Director,

FinCEN

To reduce the lengthy processing times associated with civil penalties, we

recommend that the Acting Director, FinCEN, set average timeliness goals

for evaluating and disposing of civil penalty cases, taking into account the

varying complexity of the cases, and monitor the progress of managers

and staff responsible for meeting those goals. We recognize that setting

timeliness goals, by themselves, may not necessarily lead FinCEN to resolve

all the problems that may have contributed to the lengthy processing times

for evaluating and disposing of civil penalty cases. However, setting and

managing to meet such goals should help FinCEN better focus its attention

on processing civil penalty cases and provide a means to determine what

corrective actions might be needed to decrease processing times in the

future.

Page 13 GAO/GGD-98-108 BSA Civil Penalty Case Processing
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Agency Comments

and Our Evaluation

In a letter dated May 20, 1998, FinCEN’s Acting Director provided written

comments on a draft of this report (see app. IV). The Acting Director

concurred that greater or more diligent management oversight is needed

to ensure that civil penalty cases are processed in an expeditious, yet

thorough manner. To address the timeliness issue, the Acting Director

noted that FinCEN has taken or has plans to take definitive steps, such as

• working with OCRE staff to identify individual training needs;

• assigning two non-OCRE employees the tasks of analyzing open civil

penalty referrals, highlighting cases that warrant immediate attention, and

providing oversight to ensure that progress continues on those referrals;

and

• developing civil penalty referral procedures that include time lines and

due dates.

The Acting Director commented that FinCEN plans to establish strict time

lines for the initial assessment of civil penalty referrals, where such

guidelines are practicable and predictable. Regarding the adjudicative or

disposition phase of case processing, the Acting Director said that FinCEN

favored more diligent management oversight (e.g., case reviews by the

OCRE Assistant Director) rather than the establishment of strict or arbitrary

time lines. However, to provide further management oversight, the Acting

Director said that FinCEN had recently reinstated the use of quarterly

reports showing the status of BSA referrals, including the number of cases

received and closed during the reporting period. Moreover, we note that,

at the April 1, 1998, hearing held by this Subcommittee, FinCEN agreed to

provide quarterly reports to the Subcommittee.

Generally, if they are fully implemented, we believe that the various steps

or initiatives presented by the Acting Director collectively meet the

substantive intent of our recommendation. As this report indicates, our

principal concern is that insufficient management attention has been a

significant cause of the lengthy processing time for civil penalty cases.

Agency recognition of the need for greater or more diligent management

oversight, including the use of timeliness goals, is a key to corrective

action. Nonetheless, we still believe that FinCEN should consider

opportunities for using timeliness goals as guides for managing and

monitoring all phases of civil case processing, not just the initial case

assessment phase.

Page 14 GAO/GGD-98-108 BSA Civil Penalty Case Processing
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We are sending copies of this report to the Subcommittee’s Ranking

Minority Member; the Chairman and Ranking Minority Member, House

Committee on Banking and Financial Services; the Secretary of the

Treasury; the Acting Director, FinCEN; and other interested parties. We will

also make copies available to others on request.

Major contributors to this report are listed in appendix V. Please contact

me on (202) 512-8777 if you or your staff have any questions.

Sincerely yours,

Richard M. Stana

Associate Director

Administration of Justice Issues

Page 15 GAO/GGD-98-108 BSA Civil Penalty Case Processing
Contents

Letter 1

Appendix I 

Objectives, Scope,

and Methodology

18

Appendix II 

Procedures for

Processing BSA Civil

Penalty Cases

21

FinCEN Receives BSA Violation Referrals From Various Sources 21

Each Referral Is Reviewed by IRS for Criminal Potential 21

FinCEN Develops Information to Evaluate the Case 22

Disposition of Cases 23

Appendix III 

Data on BSA Civil

Penalty Cases

25

Appendix IV 

Comments From the

Financial Crimes

Enforcement Network

31

Appendix V 

Major Contributors to

This Report

33

Tables Table III.1: BSA Civil Penalty Annual Workload and Cases Closed,

Calendar Years 1985 Through 1997

25

Table III.2: Average and Range of Processing Times for the 648

Civil Penalty Cases That Were Closed During Calendar Years

1985 Through 1997

26

Table III.3: Processing Times for the 648 Civil Penalty Cases That

Were Closed During Calendar Years 1985 Through 1997

27

Table III.4: Average and Range of Processing Times by Type of

Action Taken for the 648 Civil Penalty Cases That Were Closed

During Calendar Years 1985 Through 1997

27

Page 16 GAO/GGD-98-108 BSA Civil Penalty Case Processing
Contents

Table III.5: Closed Penalty Cases by Type of Action Taken,

Calendar Years 1985 Through 1997

28

Table III.6: Average and Range of Penalty Dollar Amounts,

Calendar Years 1985 Through 1997

29

Table III.7: Number of Civil Penalty Referrals by Source, Calendar

Years 1985 Through 1997

30

Figures Figure 1: Civil Penalty Annual Workload and Number of Civil

Penalty Cases Closed, Calendar Years 1985 Through 1997

6

Figure 2: Civil Penalty Cases Closed as a Percentage of Annual

Workload, Calendar Years 1985 Through 1997

7

Figure 3: Number of Civil Penalty Referrals Received and Cases

Closed, Calendar Years 1985 Through 1997

8

Figure 4: Average Processing Times for Civil Penalty Cases That

Were Closed, Calendar Years 1985 Through 1997

9

Abbreviations

BSA Bank Secrecy Act

FDIC Federal Deposit Insurance Corporation

FinCEN Financial Crimes Enforcement Network

FRS Board of Governors of the Federal Reserve System

IRS Internal Revenue Service

MLSA Money Laundering Suppression Act of 1994

NCUA National Credit Union Administration

OCC Office of the Comptroller of the Currency

OCRE Office of Compliance and Regulatory Enforcement

OTS Office of Thrift Supervision

SEC Securities and Exchange Commission

Page 17 GAO/GGD-98-108 BSA Civil Penalty Case Processing
Appendix I 

Objectives, Scope, and Methodology

The Chairman, Subcommittee on General Oversight and Investigations,

House Committee on Banking and Financial Services, asked us for

information regarding efforts of the Treasury Department’s Financial

Crimes Enforcement Network (FinCEN) to process civil penalty referrals for

violations of the Bank Secrecy Act (BSA). Generally, the request involved

two objectives. The first was to update the BSA civil penalty case inventory

and processing timeliness statistics that we presented in our 1992 report.1

The second was to determine the status of FinCEN’s efforts regarding a

provision of the Money Laundering Suppression Act of 1994 (MLSA).

More specifically, as agreed with the Chairman’s office, we focused our

work on the following questions:

• How, if at all, has Treasury changed its policies and procedures for

processing civil penalty cases since 1992?

• Based upon workload and related statistics, what was Treasury’s

performance in processing civil penalty cases during calendar years 1992

through 1997?

• What is the status of FinCEN’s efforts to develop and issue a final regulation

delegating the authority to assess civil penalties for BSA violations to the

federal banking regulatory agencies, as required by the MLSA?

Preliminarily, in addressing the Chairman’s request, we reviewed our

February 1992 report and our subsequent congressional testimony in June

1992 before the Subcommittee on Oversight, House Committee on Ways

and Means.2

 Also, we reviewed a relevant 1990 report by Treasury’s

Inspector General.3

 In response to our inquiry, FinCEN officials told us that

our 1992 report and the Inspector General’s 1990 report were the only

previous studies conducted of BSA civil penalty processing.

To address the first question, we interviewed officials in FinCEN’s Office of

Compliance and Regulatory Enforcement (OCRE), and we reviewed

relevant documentation on policies and procedures (see app. II). Also, we

reviewed guidelines that Treasury issued to assist regulatory agencies in

determining which BSA violations warranted referral for possible

1

GAO/GGD-92-46. The report presented statistics covering calendar years 1985 through 1991, as of

October 24, 1991.

2

GAO/T-GGD-92-57.

3

Department of the Treasury, Office of the Inspector General, Audit Report on the Office of Financial

Enforcement’s Implementation of the Bank Secrecy Act (OIG 90-024), January 10, 1990.

Page 18 GAO/GGD-98-108 BSA Civil Penalty Case Processing
Appendix I 

Objectives, Scope, and Methodology

assessment of civil penalties.4 Further, we obtained information about the

number of OCRE staff involved in processing BSA civil penalty cases.

Regarding Treasury’s performance in processing BSA civil penalty cases,

we reviewed and compared data for two time periods covering a total of

13 years—(1) calendar years 1985 through 1991 and (2) calendar years

1992 through 1997. In so doing, we developed statistical tables showing

annual workload (i.e., beginning inventory plus referrals received), cases

closed, processing times, closures by type of action taken, penalty dollar

amounts, and referral sources (see app. III).

For the more recent (1992 through 1997) of the two time periods, we

selectively verified the data that FinCEN provided to us from its

computerized civil penalty tracking system. Specifically, we judgmentally

selected and reviewed 15 percent of the cases that were closed by type of

action taken in this time period. In our judgmental selections, we included

cases representing all three types of case-closure dispositions—(1) cases

closed with no contact, (2) cases closed with a letter of warning, and

(3) cases closed with a monetary penalty assessed. For each of the

selected cases, we reviewed OCRE’s hard copy case files to verify that

applicable data had been accurately input into the computerized civil

penalty tracking system. Further, we checked the accuracy of the specific

query statements that OCRE used in providing us requested data from the

computerized civil penalty tracking system. Our verification efforts found

three minor discrepancies in the data contained in FinCEN’s civil penalty

tracking system. The correction of these discrepancies did not change the

results of our analysis.

Also, according to FinCEN, a total of 16 cases during the period January 1,

1992, through March 27, 1998, were affected by expiration of the statute of

limitations. We did not independently verify this total nor did we analyze

these cases.

Regarding the last question (delegation of civil penalty authority), we

interviewed FinCEN officials to update the status of information presented

in our

4

U.S. Department of the Treasury, Office of Financial Enforcement, “Bank Secrecy Act Referral

Guidelines for Financial Institutions,” October 31, 1990. At the time of our review, FinCEN officials

told us that these guidelines were still applicable.

Page 19 GAO/GGD-98-108 BSA Civil Penalty Case Processing
Appendix I 

Objectives, Scope, and Methodology

• February 1998 report to the Subcommittee’s Chairman and Ranking

Minority Member5

 and

• April 1998 testimony at a hearing held by the Subcommittee.6

Also, we reviewed FinCEN’s multiyear strategic plan, which briefly

discusses the delegation issue.7

5

GAO/GGD-98-18.

6

GAO/T-GGD-98-83.

7

FinCEN, Strategic Plan, 1997 - 2002 (undated), pp. 28 and 36.

Page 20 GAO/GGD-98-108 BSA Civil Penalty Case Processing
Appendix II 

Procedures for Processing BSA Civil Penalty

Cases

In May 1994, Treasury’s Assistant Secretary for Enforcement delegated BSA

civil penalty authority to FinCEN. As a result, the Director of FinCEN is

responsible for assessing civil penalties for BSA violations by banks and by

certain nonbank financial institutions. Following is a description of the

process of identifying and assessing penalties for the violations.

FinCEN Receives BSA

Violation Referrals

From Various Sources

FinCEN does not conduct BSA compliance examinations at either banks or

nonbank financial institutions. Rather, such examinations are conducted

by the following agencies:

• Compliance examinations of “banks” are conducted by the five federal

bank supervisory or regulatory agencies: the Federal Deposit Insurance

Corporation (FDIC), the Board of Governors of the Federal Reserve System

(FRS), the Office of the Comptroller of the Currency (OCC), the Office of

Thrift Supervision (OTS), and the National Credit Union Administration

(NCUA).

• IRS’ Examination Division conducts compliance examinations of

nonbanks. This category includes casinos; money transmitters; check

cashers; currency exchangers; security brokers and dealers; issuers or

redeemers of money orders, traveler’s checks, and other similar

instruments; and individuals who attempt to evade the BSA’s reporting

requirements.

• Securities and Exchange Commission (SEC) conducts compliance

examinations of securities brokers and dealers.

If warranted by the results of their examinations, these agencies refer their

preliminary findings to FinCEN for appropriate action and disposition.

According to FinCEN officials, in addition to BSA violations referred by the

various federal agencies, FinCEN also initiates civil investigations based on

other sources, such as (1) voluntary disclosures from financial institutions

or individuals; (2) formal advisories from IRS’ Detroit Computing Center,

which processes currency transaction reports and other BSA-related

information; and (3) reports of investigations from state and local law

enforcement agencies.

Each Referral Is

Reviewed by IRS for

Criminal Potential

Initially, before any administrative or civil enforcement action is taken,

FinCEN’s procedures call for sending each incoming matter to IRS’ Criminal

Investigation Division for review of criminal potential. According to

specified procedures, FinCEN should not proceed with evaluating a BSA civil

Page 21 GAO/GGD-98-108 BSA Civil Penalty Case Processing
Appendix II 

Procedures for Processing BSA Civil Penalty

Cases

penalty referral until IRS or a U.S. Attorney’s Office provides written

approval for such action. By agreement, IRS has 120 days to complete its

review of the matter.

FinCEN officials told us that FinCEN generally receives a clearance to proceed

within 30 days. Further, the officials noted that, in cases requiring special

or expeditious attention, FinCEN contacts a designated IRS official by

telephone to obtain clearance from the Criminal Investigation Division.

After FinCEN receives a clearance from IRS, the matter is assigned a formal

case number and given to a financial enforcement specialist within FinCEN’s

OCRE.

FinCEN Develops

Information to

Evaluate the Case

The duties of the financial enforcement specialist are to conduct a

preliminary review of the information presented in the referral and, if

needed, to contact other sources to develop further information on the

circumstances of the violation and/or the subject of the referral. According

to FinCEN, these sources may include one or more of the following:

• the law enforcement or regulatory agency that discovered and referred the

alleged BSA violations to FinCEN,

• any law enforcement or regulatory authority that has jurisdictional

concerns or relevant information on the subject,

• the financial institution’s primary regulator,

• IRS’ Detroit Computing Center (to obtain BSA records and background on

the subject),

• the local U.S. Attorney’s Office or IRS office, and

• the financial institution or person who is the subject of the alleged BSA

violations.

According to FinCEN, the financial enforcement specialist is to consider the

results of any internal or external audits, any corrective action taken, the

institution’s written compliance program and training and instructional

materials, and other information relevant to the questioned transactions.

Also, FinCEN noted that, to obtain a fuller perspective on the alleged BSA

violation, the specialist may ask for and review relevant information that

goes beyond just the specific transactions cited in the referral. That is, the

specialist may review other account and transaction activity information

regarding the subject institution or individual.

Page 22 GAO/GGD-98-108 BSA Civil Penalty Case Processing
Appendix II 

Procedures for Processing BSA Civil Penalty

Cases

Disposition of Cases On the basis of the information in the referral and that developed by OCRE,

the financial enforcement specialist is to recommend a course of civil or

administrative action to the Assistant Director, OCRE, who reviews and

decides whether to approve the recommended action. The case is

disposed of with one or a combination of the following administrative or

civil actions.

• The federal regulator may issue a cease and desist order or other sanction.

• The subject financial institution may make corrections to any deficient BSA

systems and/or backfile any delinquent BSA reports.

• FinCEN may close the case without further action or contact with the

subject institution or individual.

• FinCEN may issue a letter of warning.

• FinCEN may assess a civil monetary penalty.

FinCEN officials told us that, if a civil monetary penalty seems appropriate,

FinCEN grants the subject institution or individual an opportunity to dispute

the allegations and offer a defense of the alleged actions. The officials

added that financial institutions and individuals are encouraged to submit

any available mitigating evidence in advance of BSA case settlement

negotiations with FinCEN. Also, the officials noted that FinCEN’s final

disposition of a BSA case, including the dollar amount of the civil penalty,

is to be determined by considering the following factors:

• the severity, volume, and longevity of the BSA violations;

• the subject’s overall BSA compliance program;

• self discovery and acknowledgment of the BSA violations to Treasury

versus external discovery and notification;

• cooperation with FinCEN and other applicable agencies;

• prompt correction of the BSA deficiencies that caused the violations;

• the outcomes of any prior or subsequent BSA compliance examinations;

and

• any other valid aggravating or mitigating factors, including the subject’s

ability to pay the BSA penalty.

According to FinCEN officials, due to the complex nature of BSA cases,

FinCEN does not use rigid formulas to determine the appropriate BSA

penalty. Rather, all such decisions are to be made on a case-by-case basis

and are to reflect consideration of the factors presented above. Also,

FinCEN officials noted that the agency does not set timeliness goals for

processing civil penalty cases.

Page 23 GAO/GGD-98-108 BSA Civil Penalty Case Processing
Appendix II 

Procedures for Processing BSA Civil Penalty

Cases

According to FinCEN, if a subject refuses to settle the case, FinCEN formally

assesses the maximum BSA civil monetary penalty allowed by law for the

violations. The matter is then to be referred for internal legal review.

Thereafter, if deemed warranted, procedures call for FinCEN to submit the

matter to the Department of Justice’s Civil Division to seek collection of

the unpaid penalty. After FinCEN assesses a BSA civil penalty, the

government has 2 years to initiate collection litigation against the subject.

FinCEN officials told us that, to avoid litigation and exposure to the

maximum penalty allowed by law, subjects of a BSA action are almost

always amenable to settling their BSA liability with FinCEN.

Page 24 GAO/GGD-98-108 BSA Civil Penalty Case Processing
Appendix III 

Data on BSA Civil Penalty Cases

This appendix presents various tables of BSA penalty statistics for calendar

years 1985 through 1997. More specifically, the tables show annual

workload (i.e., beginning inventory plus referrals received) and cases

closed (table III.1); processing times (tables III.2, III.3, and III.4); closures

by type of action taken (table III.5); penalty dollar amounts (table III.6);

and referral sources (table III.7).

Table III.1: BSA Civil Penalty Annual Workload and Cases Closed, Calendar Years 1985 Through 1997

Case workload

Calendar year

Beginning

inventory

Referrals

received

Annual

workloada

Cases

closedb

Ending

inventoryc

Cases closed

as a percentage

of annual

workload

1985 3 101 104 11 93 11%

1986 93 137 230 73 157 32

1987 157 111 268 77 191 29

1988 191 47 238 59 179 25

1989 179 75 254 59 195 23

1990 195 65 260 103 157 40

1991 157 27 184 48 136 26

1992 136 67 203 82 121 40

1993 121 27 148 39 109 26

1994 109 30 139 39 100 28

1995 100 32 132 29 103 22

1996 103 25 128 10 118 8

1997 118 34 152 19 133 13

Total 778 648

aAnnual workload consists of beginning inventory (as of January 1) plus referrals received during

the year.

bFor the 648 cases that were closed during calendar years 1985-1997, tables III.2, III.3, and III.4

present processing time statistics. Table III.5 shows type of disposition for the closed cases, and

table III.6 shows penalty dollar amounts.

cEnding inventory (as of December 31) consists of annual workload minus cases closed.

Source: GAO analysis of data from FinCEN’s civil penalty tracking system.

Page 25 GAO/GGD-98-108 BSA Civil Penalty Case Processing
Appendix III 

Data on BSA Civil Penalty Cases

Table III.2: Average and Range of

Processing Times for the 648 Civil

Penalty Cases That Were Closed

During Calendar Years 1985 Through

1997

Cases closed

Calendar year Number

Average time to

close case

(in years)a

Range of time to

close case

1985 11 0.45 83 days to 260 days

1986 73 0.57 5 days to 1.51 years

1987 77 1.00 9 days to 2.69 years

1988 59 1.49 4 days to 3.69 years

1989 59 2.25 56 days to 4.92 years

1990 103 2.87 38 days to 5.31 years

1991 48 2.55 138 days to 6.44 years

Subtotal for

1985-1991

430 1.77 4 days to 6.44 years

1992 82 2.72 8 days to 7.26 years

1993 39 2.60 28 days to 7.64 years

1994 39 3.26 108 days to 6.88 years

1995 29 3.16 41 days to 6.81 years

1996 10 3.57 65 days to 8.65 years

1997 19 4.23 1.31 years to 10.14

years

Subtotal for

1992-1997

218 3.02 8 days to 10.14 years

Overall 648 2.19 4 days to 10.14 years

aThe median response times for the periods 1985-1991 and 1992-1997 were similar to the

average response times for these periods. For instance, the median response time for 1985-1991

was 1.34 years, and the median response time for 1992-1997 was 2.78 years.

Source: GAO analysis of data from FinCEN’s civil penalty tracking system.

Page 26 GAO/GGD-98-108 BSA Civil Penalty Case Processing
Appendix III 

Data on BSA Civil Penalty Cases

Table III.3: Processing Times (by Time Period) for the 648 Civil Penalty Cases That Were Closed During Calendar Years

1985 Through 1997

1985 through 1991 1992 through 1997 1985 through 1997

Processing time

Number of

cases closed Percent

Number of

cases closed Percent

Number of

cases closed Percent

Less than 1 year 162 38% 40 18% 202 31%

1 to less than 2 years 122 28 25 11 147 23

2 to less than 3 years 60 14 61 28 121 19

3 to less than 4 years 40 9 26 12 66 10

4 to less than 5 years 37 9 33 15 70 11

5 to less than 6 years 8 2 17 8 25 4

6 years or over 1 0 16 7 17 3

Total 430 100% 218 99%a 648 101%a

aPercentages do not add to 100 percent due to rounding.

Source: GAO analysis of data from FinCEN’s civil penalty tracking system.

Table III.4: Average and Range of Processing Times by Type of Action Taken for the 648 Civil Penalty Cases That Were

Closed During Calendar Years 1985 Through 1997

Processing time for

cases closed

Processing time for

cases closed

Processing time for

cases closed

1985 through 1991 1992 through 1997 1985 through 1997

Action taken on cases

closed Number

Average

(in years) Range Number

Average

(in years) Range Number

Average

(in years) Range

No contact made 147 2.09 12 days

to 5.36

years

65 2.73 17 days

to 7.64

years

212 2.36 12 days

to 7.64

years

Warning letter sent 235 1.69 5 days

to 6.44

years

95 2.94 8 days

to 10.14

years

330 2.05 5 days

to 10.14

years

Penalty assessed 48 1.18 4 days

to 4.58

years

58 3.22 41 days

to 8.65

years

106 2.30 4 days

to 8.65

years

Source: GAO analysis of data from FinCEN’s civil penalty tracking system.

Page 27 GAO/GGD-98-108 BSA Civil Penalty Case Processing
Appendix III 

Data on BSA Civil Penalty Cases

Table III.5: Closed Penalty Cases by

Type of Action Taken, Calendar Years

1985 Through 1997

Number of cases closed

Calendar year

No contact

made

Letter of

warning

issued

Penalty

assessed Total

1985 0 0 11 11

1986 4 56 13 73

1987 19 46 12 77

1988 14 40 5 59

1989 34 21 4 59

1990 46 55 2 103

1991 30 17 1 48

Subtotal for 1985-1991

Number 147 235 48 430

Percentage of cases

closed

34% 55% 11% 100%

1992 32 37 13 82

1993 9 17 13 39

1994 6 16 17 39

1995 6 14 9 29

1996 3 3 4 10

1997 9 8 2 19

Subtotal for 1992-1997

Number 65 95 58 218

Percentage of cases

closed

30% 44% 27% 101%a

Overall:

Number 212 330 106 648

Percentage of cases

closed

33% 51% 16% 100%

aPercentages do not add to 100 percent due to rounding.

Source: GAO analysis of data from FinCEN’s civil penalty tracking system.

Page 28 GAO/GGD-98-108 BSA Civil Penalty Case Processing
Appendix III 

Data on BSA Civil Penalty Cases

Table III.6: Average and Range of Penalty Dollar Amounts, Calendar Years 1985 Through 1997

Range of penalty dollar amount

Calendar year

Number of

cases closed

with penalty

assessed

Total penalty

dollar amount

Average dollar

amount per

penalty

Median dollar

amount per

penalty Lowest Highest

1985 11 $5,117,640 $465,240 $269,940 $121,750 $2,250,000

1986 13 9,274,160 713,397 220,000 3,000 4,750,000

1987 12 1,542,980 128,582 143,000 32,000 295,000

1988 5 3,287,000 657,400 95,000 22,000 3,010,000

1989 4 1,121,000 280,250 270,500 80,000 500,000

1990 2 378,000 189,000 189,000 10,000 368,000

1991 1 54,600 54,600 54,600 54,600 54,600

Subtotal for

1985-1991

48 $20,775,380 $432,820 $196,000 $3,000 $4,750,000

1992 13 $2,637,930 $202,918 $65,000 $5,000 $950,000

1993 13 2,315,389 178,107 80,000 15,000 1,182,639

1994 17 3,094,300 182,018 20,000 2,000 1,950,000

1995 9 405,600 45,067 20,000 600 115,000

1996 4 195,000 48,750 20,000 5,000 150,000

1997 2 188,000 94,000 94,000 88,000 100,000

Subtotal for

1992-1997

58 $8,836,219 $152,349 $50,000 $600 $1,950,000

Overall 106 $29,611,599 $279,355 $92,500 $600 $4,750,000

Source: GAO analysis of data from FinCEN’s civil penalty tracking system.

Page 29 GAO/GGD-98-108 BSA Civil Penalty Case Processing
Appendix III 

Data on BSA Civil Penalty Cases

Table III.7: Number of Civil Penalty Referrals by Source, Calendar Years 1985 Through 1997

Federal banking regulatory agencies Other entities

Sources of referrals

Calendar year FDIC FRS NCUA OCC OTS IRSa SEC Voluntaryb Otherc Total

1985 3 0 0 14 1 1 0 70 12 101

1986 0 0 0 73 0 0 0 36 28 137

1987 9 1 0 41 0 8 2 21 29 111

1988 3 1 0 8 0 12 4 6 13 47

1989 4 0 0 8 3 39 4 7 10 75

1990 3 0 0 7 4 39 1 5 6 65

1991 6 0 0 4 0 8 1 4 4 27

Subtotal for 1985-1991

Number 28 2 0 155 8 107 12 149 102 563

Percent 5.0% 0.4% 0% 27.5% 1.4% 19.0% 2.1% 26.5% 18.1% 100%

1992 10 2 0 13 3 17 0 16 6 67

1993 7 1 0 4 1 8 0 4 2 27

1994 12 0 0 2 1 8 0 3 4 30

1995 6 0 0 3 0 17 0 2 4 32

1996 5 0 0 1 0 18 0 0 1 25

1997 1 0 0 0 0 29 1 1 2 34

Subtotal for 1992-1997

Number 41 3 0 23 5 97 1 26 19 215

Percent 19.1% 1.4% 0% 10.7% 2.3% 45.1% 0.5% 12.1% 8.8% 100%

Overall:

Number 69 5 0 178 13 204 13 175 121 778

Percent 8.9% 0.6% 0% 22.9% 1.7% 26.2% 1.7% 22.5% 15.6% 100%

aIRS’ Examination Division conducts compliance examinations of nonbank financial institutions.

bVoluntary disclosures from financial institutions or individuals.

cThis category includes referrals from U.S. Attorney Offices, the Customs Service, and IRS’

Criminal Investigation Division. Also, according to FinCEN officials, the agency initiates civil

investigations based on other sources, such as reports of investigations from state and local law

enforcement agencies.

Source: GAO analysis of data from FinCEN’s civil penalty tracking system.

Page 30 GAO/GGD-98-108 BSA Civil Penalty Case Processing
Appendix IV 

Comments From the Financial Crimes

Enforcement Network

Page 31 GAO/GGD-98-108 BSA Civil Penalty Case Processing
Appendix IV 

Comments From the Financial Crimes

Enforcement Network

Page 32 GAO/GGD-98-108 BSA Civil Penalty Case Processing
Appendix V 

Major Contributors to This Report

General Government

Division, Washington,

D.C.

Danny R. Burton, Assistant Director

Patricia J. Scanlon, Evaluator-in-Charge

David P. Alexander, Senior Social Science Analyst

Michael H. Little, Communications Analyst

Office of the General

Counsel, Washington,

D.C.

Geoffrey R. Hamilton, Senior Attorney

(182053) Page 33 GAO/GGD-98-108 BSA Civil Penalty Case Processing
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