United States General Accounting Office

GAO Report to the Chairman and Ranking

Minority Member, Subcommittee on

General Oversight and Investigations,

House Committee on Banking and

Financial Services

June 1998 MONEY

LAUNDERING

FinCEN’s Law

Enforcement Support

Role Is Evolving

GAO/GGD-98-117

GAO United States

General Accounting Office

Washington, D.C. 20548

General Government Division

B-277990 

June 19, 1998

The Honorable Spencer T. Bachus

Chairman

The Honorable Bernard Sanders

Ranking Minority Member

Subcommittee on General Oversight

 and Investigations

Committee on Banking and Financial Services

House of Representatives

The Honorable Maxine Waters

House of Representatives

Although the magnitude of money laundering is unknown, law

enforcement officials have estimated that between $100 billion and

$300 billion in U.S. currency is laundered each year.1

 Money laundering

provides the fuel for drug dealers, terrorists, arms dealers, and other

criminals to operate and expand their activities, which can have

devastating social and economic consequences. In your March 24, 1997,

letter, you asked us to study the regulatory, international, and law

enforcement support roles of the Financial Crimes Enforcement Network

(FinCEN), a Treasury Department organization established in April 1990 to

help combat money laundering and other financial crimes. In

February 1998, we reported on FinCEN’s regulatory role, i.e., the agency’s

progress in promulgating Bank Secrecy Act (BSA) regulations.2

 Also, at an

April 1998 hearing held by the Subcommittee, we presented information

on FinCEN’s various roles, including its efforts to administer civil penalties

for BSA violations.3

This report focuses on FinCEN’s products and services in support of law

enforcement. Specifically, this report discusses (1) trends in the types and

quantities of products and services provided by FinCEN to the law

enforcement community; (2) the extent to which FinCEN’s products and

services have been considered useful by the law enforcement community

in identifying, developing, or prosecuting money laundering and other

1

Money laundering, in general, is the disguising or concealing of illicit income to make it appear

legitimate. U.S. criminal anti-money laundering law encompasses the money generated from numerous

different crimes—e.g., drug trafficking, murder for hire, racketeering, prostitution, and embezzlement.

2

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

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

3

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

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

Page 1 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
B-277990 

financial crime cases; (3) the extent to which FinCEN evaluates the states’

compliance with applicable controls over access to and use of information

when state law enforcement officials directly access FinCEN’s resources;

and (4) FinCEN’s efforts to provide Internal Revenue Service (IRS) Form

8300 information (Report of Cash Payments Over $10,000 Received in a

Trade or Business)4 to the law enforcement community.

To determine the trends in and usefulness of FinCEN’s products and

services, we focused on five principal types of support provided by FinCEN:

• Tactical support is designed to provide law enforcement officials with

leads and other information on individuals, organizations, or activities

currently under investigation. Such support can help law enforcement

officials locate individuals, determine asset ownership for

seizure/forfeiture purposes, and establish links among individuals,

businesses, and assets.

• Strategic support is designed to provide federal and state law enforcement

officials with intelligence analysis and reports on more broadly scoped

topics, such as emerging trends, patterns, and issues associated with

money laundering and other financial crimes. Examples of strategic

support include (1) the analysis of currency flows to and from federal

banks and (2) the assessment of the level of threat in a geographic area to

support state-level anti-money laundering legislative efforts.

• Artificial intelligence support is designed to use a computer-based system

that groups or links currency transaction reports5

 to identify individuals,

businesses, and bank accounts possibly involved in money laundering and

other financial crimes.

• On-site tactical self-help (called a “platform concept”) is designed to

provide employees of other federal agencies with direct access to FinCEN’s

resources (e.g., BSA financial database and commercial databases) to

conduct their own research and analysis.

• Off-site tactical self-help (called “Project Gateway”) is designed to provide

designated state and local law enforcement officials with direct, on-line

access to financial records filed under BSA. These designated officials

conduct on-line inquiries for other law enforcement agencies in the state.

4

Under the Internal Revenue Code, any person who receives more than $10,000 in cash in one

transaction (or two or more related transactions) in the course of trade or business generally must file

an information return (IRS Form 8300) with IRS specifying the name, address, and taxpayer

identification number of the person from whom the cash was received and the amount of cash

received.

5

Financial institutions and certain types of businesses must file a currency transaction report with IRS

for each deposit, withdrawal, exchange, or other payment or transfer by, through, or to such financial

institutions or businesses that involves more than $10,000 in currency.

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In conducting our study, we analyzed data showing the number of requests

for and/or issuances of each of FinCEN’s principal types of products and

services. To assess the usefulness of FinCEN’s tactical support, we surveyed

by mail a stratified, statistical sample of 352 federal officials and a simple

random sample of 95 state officials who requested tactical support from

April 1996 to March 1997 and to whom FinCEN had responded before

August 1997. The officials sampled were representative of the universe of

requesters in 31 federal agencies and 15 states. To obtain information

about the usefulness of FinCEN’s other products and services (i.e., strategic,

artificial intelligence, platform concept, and Project Gateway), we

(1) distributed surveys to or conducted interviews with the main federal

and state agency users of these products and services and (2) interviewed

FinCEN officials. For these other products and services, the federal and

state agency users we contacted were not representative samples of the

universe of users.

Also, to determine why some federal agencies’ field offices, High Intensity

Drug Trafficking Areas (HIDTA),6

 and some states requested little or no

tactical support from FinCEN, we surveyed (1) selected Treasury and

Justice agency field offices and (2) each HIDTA. We also interviewed

officials from selected states that requested little or no support from

FinCEN. As part of these inquiries, we ascertained what other (non-FinCEN)

sources of data and analysis are used. However, it was beyond the scope

of our study to evaluate or compare the capabilities or costs related to

FinCEN and non-FinCEN sources.

Further, to determine what controls are in place when FinCEN provides

other federal and state agencies with direct access to databases through

the platform concept and Project Gateway, we interviewed FinCEN officials

and reviewed program documentation. However, we did not audit or test

the effectiveness of these controls.

Finally, to determine FinCEN’s efforts to provide IRS Form 8300 information

to the law enforcement community, we interviewed officials from the

Treasury Department, FinCEN, and IRS headquarters, and reviewed

correspondence between FinCEN and IRS headquarters.

6

HIDTAs are regions designated by the Office of National Drug Control Policy as having critical drug

trafficking problems that have a harmful impact on other areas of the United States. HIDTA task forces

consisting of federal, state, and local law enforcement agencies are engaged in drug control activities.

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We performed our work from August 1997 to March 1998, in accordance

with generally accepted government auditing standards. Appendix I

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

We requested comments on a draft of this report from the Department of

the Treasury, FinCEN, and the Department of Justice. Their comments are

discussed near the end of this letter, and FinCEN’s written comments can be

found in appendix VI.

Results in Brief Since its inception in 1990, FinCEN has expanded the types of products and

services it provides to the law enforcement community. In recent years,

FinCEN has issued fewer tactical, strategic, and artificial intelligence

products and has encouraged, trained, and increasingly relied on federal

agencies to use the platform concept and state and local agencies to use

Project Gateway to support cases that do not require FinCEN’s expertise.

For example, while the number of requests for FinCEN’s tactical support

decreased from 7,817 in calendar year 1995 to 4,878 in 1997, the number of

state queries for BSA financial data via Project Gateway increased from

35,608 in fiscal year 1995 to 57,663 in fiscal year 1997.7

According to FinCEN, one significant reason for the decrease in the number

of products issued was that FinCEN’s staffing levels have remained fairly

constant over the years, while its overall mission has expanded to include

(1) responsibility for promulgating BSA regulations and (2) a leadership

role in international efforts to combat money laundering. Consequently,

FinCEN chose to dedicate fewer staff to generate tactical, strategic, and

artificial intelligence products.

Respondents to the surveys we sent to officials from 31 federal agencies

and 15 states indicated that FinCEN’s tactical products have been useful.

For example, we estimated that 97 percent of all federal requesters from

the 31 agencies found that, overall, the case-specific products they

received from FinCEN were useful. The survey results indicated that FinCEN’s

tactical products assisted law enforcement investigations in various ways,

such as providing investigative leads or listing assets not previously

identified.

Further, officials we contacted from selected federal field offices, states,

and HIDTAs that had requested few or no tactical products from FinCEN

7

FinCEN’s records and reports on support provided to the law enforcement community contain either

calendar year or fiscal year data, depending on the type of product or service.

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generally did not indicate dissatisfaction with FinCEN. Rather, they cited

other reasons—such as reliance on in-house capabilities and the

availability of intelligence or analytical support centers other than

FinCEN—for their limited use of FinCEN. However, we found that some

federal respondents were not aware of the various products and services

offered by FinCEN and that FinCEN has neither developed nor widely

disseminated general criteria or guidelines on when law enforcement

officials should request FinCEN’s support.

In response to feedback from the law enforcement community, FinCEN

began taking steps in 1997 to improve the usefulness of its strategic and

artificial intelligence products. For example, FinCEN has (1) created a new

strategic office that plans to help agencies improve their money-laundering

detection and prevention programs, while providing case-specific support

to the law enforcement and regulatory communities and (2) initiated

efforts to “partner” with the law enforcement community to provide

strategic and artificial intelligence products that are more useful to the

relevant agencies.

Also, according to the federal and state officials we interviewed, the

platform concept and Project Gateway are useful tools for helping

agencies combat money laundering and other financial crimes. FinCEN data

show that an increasing number of federal, state, and local agencies are

using these self-help mechanisms to support their investigations.

While Project Gateway is designed to enhance the capabilities of state and

local law enforcement agencies, this technological advancement increases

the potential risk that sensitive information could be inappropriately

accessed, used, or disclosed. Although FinCEN has established policies and

procedures designed to limit access to and use of information obtained

through the Gateway system, it has not evaluated the states’ compliance

with these controls. Because of the sensitivity of the data available, it is

important that the system be used only for legitimate purposes.

In an effort to enhance its investigative support, FinCEN is seeking IRS

approval to provide IRS Form 8300 information to federal, state, and local

law enforcement officials. From a law enforcement perspective, these

forms can be instrumental in tracing cash payments by drug traffickers

and other criminals for luxury cars, jewelry, and other expensive items. In

1997, IRS initiated a process for law enforcement and regulatory agencies

to access Form 8300 information directly from IRS. However, several issues

Page 5 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
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must still be resolved before FinCEN can obtain approval from IRS to

disseminate this information.

Background FinCEN is a relatively small agency with a fiscal year 1997 budget of about

$23 million and an onboard staffing level (as of December 1997) of 162

employees. FinCEN does not initiate or carry out any investigations on its

own. Rather, by serving as a central source for financial intelligence

information and analysis, FinCEN supports the investigative and prosecutive

efforts of numerous law enforcement authorities. These include federal

agencies, such as the Federal Bureau of Investigation (FBI), the Drug

Enforcement Administration (DEA), IRS, and the Customs Service; state

police departments and attorney general offices; local police departments

and district attorney offices; and others, including applicable foreign

authorities.

In supporting these law enforcement entities, FinCEN administers the

largest financial transaction reporting system in the world, which is based

on recordkeeping and reporting requirements mandated or authorized

under the BSA, as amended. To supplement the BSA-related financial

database, FinCEN procures access to a variety of commercially maintained

databases, such as Autotrack and Lexis/Nexis, which can be used to locate

individuals, determine asset ownership, and establish links among

individuals, businesses, and assets. Moreover, through specific written

agreements, FinCEN can access the investigative-case databases of various

federal law enforcement agencies (e.g., DEA and the Customs Service).

Further, FinCEN maintains an internal database of the cases or requests it

has supported and the related products it has generated. This internal

database enables FinCEN to help law enforcement agencies coordinate their

efforts. Appendix II contains additional information about the databases

used by FinCEN.

Using these financial, commercial, and law enforcement databases, FinCEN

provides five principal types of support. Historically, tactical support in

response to law enforcement requests for data and analysis has been a

mainstay of FinCEN’s various products and services. Tactical products can

be database extracts on a single subject or detailed, in-depth analyses of

the financial aspects of major criminal organizations. According to a FinCEN

official, routine requests for tactical support are handled on a first-come,

first-served basis, with federal, state, and local requests treated equally.

The official added that FinCEN can respond to tactical requests requiring

immediate attention (e.g., terrorism cases) within 24 hours and sometimes

Page 6 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
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as quickly as 2 to 3 hours. At times, FinCEN may also provide off-site

support to investigative teams or task forces working complex cases.

Further, FinCEN provides tactical support to assist other types of cases,

including classified, terrorism, and grand-jury investigations.

As the name implies, rather than focusing on individual cases, FinCEN’s

strategic support is designed to provide federal and state law enforcement

officials with intelligence analyses and reports on longer term or more

broadly scoped topics. An example is the analysis of trends, patterns, and

fluctuations in currency flows to and from Federal Reserve banks to

determine any money-laundering implications. Also, as part of its strategic

efforts, FinCEN has developed a “case lab” unit to assist law enforcement

agencies in addressing large-scale money-laundering activity, such as that

conducted by drug cartels. According to FinCEN’s Strategic Plan

(1997-2002), the agency’s overriding objective over the next few years will

be to construct a viable model for determining the magnitude of money

laundering.

FinCEN’s artificial intelligence support is designed to help identify subjects

(i.e., individuals and businesses) possibly involved in money laundering

and other types of financial crimes. This support relies on computerized

technology designed to identify suspicious transactions by reviewing and

correlating (i.e., grouping or linking) currency transaction reports required

by the BSA. FinCEN has used this technology to self-generate investigative

leads as well as to respond to specific requests. In the former instances,

FinCEN’s policy is to forward its results to the appropriate law enforcement

agency for consideration.

A fourth type of support is on-site tactical self-help (called a “platform

concept”), whereby FinCEN encourages and trains agents and analysts from

federal law enforcement and regulatory agencies to access the BSA

financial database and commercial databases (accessible at FinCEN) to

conduct their own research and analysis. FinCEN provides office space and

database access for these personnel, who use FinCEN resources on a full- or

part-time basis and work only on cases for their respective agencies. Most

platform users do not have direct access to law enforcement databases or

suspicious activity reports.8

 A FinCEN official explained that (1) interagency

agreements usually prohibit platform users from accessing law

enforcement databases and (2) most federal agencies that use suspicious

8

Suspicious activity reports, in general, must be filed by banks and other depository institutions when

they know, suspect, or have reason to suspect that a crime has occurred or that a transaction is

suspicious.

Page 7 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
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activity reports have their own access to the reports. When requested, a

FinCEN employee will check these databases for platform users.

Finally, the fifth type of support is off-site tactical self-help (called “Project

Gateway”)—a joint effort between FinCEN and the IRS Detroit Computing

Center, which receives and processes financial information reported under

the BSA (e.g., currency transaction reports). Using custom-designed

software, designated state and local law enforcement officials have direct,

on-line electronic access to BSA records, including suspicious activity

reports. These designated officials also conduct Gateway queries for other

law enforcement agencies in their state and can also request information

from the Autotrack commercial database. According to a FinCEN official,

Gateway users have direct access to suspicious activity reports primarily

because state and local law enforcement agencies do not have their own

access to the reports. Further, through Gateway, FinCEN can “alert” or

notify one agency that another agency has or had an interest in the same

investigative subject (individual or entity).9

 Each state’s access to Gateway

is free of charge (except for telephone charges).

FinCEN Has Issued Fewer

Reports While Agencies

Have Increased Their

Direct Use of the Platform

Concept and Project

Gateway

While the types of products and services offered by FinCEN have expanded,

the volume of tactical, strategic, and artificial intelligence reports has

decreased over the past several years. While the reasons for the decreases

varied, one significant factor cited by FinCEN was that it assigned fewer

staff to support these activities. Since 1995, law enforcement officials have

increased their use of FinCEN’s platform concept and Project Gateway to

conduct their own research and analysis.

Tactical Support Requests

May Have Peaked in 1995

FinCEN has been providing tactical support to the law enforcement

community since the agency was established in 1990. As figure 1 shows,

the volume of law enforcement requests to FinCEN for tactical support

increased significantly from calendar year 1991—the first full year of

operation—to 1995. However, from calendar year 1995 to 1997, the volume

of requests decreased by approximately 38 percent.

9

Gateway electronically captures the information gathered on incoming inquiries and automatically

compares this information with prior and subsequent queries from Gateway users. In addition,

Gateway users can ask FinCEN to match new subjects against other law enforcement databases to

identify potential parallel investigations.

Page 8 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
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Figure 1: Requests to FinCEN for

Tactical Support, 1991-1997

Source: FinCEN.

According to a FinCEN official, one primary reason for the decrease in the

number of tactical requests was that, in recent years, FinCEN stopped

accepting certain types of requests—such as requests involving

background checks for employment or security clearance purposes—that

did not directly support law enforcement functions. For example, FinCEN

stopped supporting certain IRS and U.S. Postal Inspection Service

investigations in 1996.10 As a result, FinCEN’s 1997 workload was reduced by

approximately 3,300 cases. The official told us that FinCEN’s expertise is not

needed to conduct these types of inquiries and that, as a result, FinCEN has

made efforts to encourage agencies to conduct these types of research on

their own or by using FinCEN’s platform concept or Project Gateway, as

applicable.

10The IRS casework consisted of background investigations, and the U.S. Postal Inspection Service

casework involved investigations of individuals on workman’s compensation to determine if they were

earning income from other sources.

Page 9 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
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The official told us that FinCEN stopped accepting certain types of requests

to compensate for reductions in staff assigned to provide tactical support.

As figure 2 shows, from October 1994 to October 1997, the total number of

staff (federal and contractor) responding to requests for tactical

investigative support decreased from 77 to 40. Of this total, the number of

federal staff (i.e., FinCEN employees and detailees from other agencies)

decreased from 53 to 19.

Figure 2: Number of Federal and

Contractor Staff Responding to

Agency Requests for Tactical Support,

October 1994 to October 1997

Source: FinCEN.

According to the FinCEN official, although the agency’s overall staff levels

have remained fairly constant over the years, many tactical staff have been

reassigned to support FinCEN’s expanded mission, which includes

(1) responsibility for promulgating BSA regulations and (2) a leadership

role in international efforts to combat money laundering.11 The official

11As of December 1997, 36 (22 percent) of FinCEN’s 162 onboard staff were assigned to regulatory or

international efforts.

Page 10 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
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also told us that several tactical staff were reassigned in March 1997 to

support FinCEN’s new Office of Research and Analysis.

According to FinCEN officials, FinCEN also began to contact requesters in

1995 to determine specifically what type of data and analysis was needed.

These contacts included determining which databases had already been

researched (outside of FinCEN), which databases FinCEN should research,

and what type of report should be provided (e.g., a database extract or an

analytical report). The officials told us that, before 1995, FinCEN’s tactical

support staff would generally research all of the financial, commercial,

and law enforcement databases the agency could access.

Further, over the past 2 years, an increasing number of tactical reports

consisted of database extracts versus reports that contained detailed

analysis. According to FinCEN officials, the percentage of tactical products

that contained detailed analysis decreased from approximately 25 percent

in calendar year 1996 to about 10 percent during calendar year 1997.

According to FinCEN’s Strategic Plan (1997-2002), the agency intends to

provide better tactical support to its customers by increasing the number

of FinCEN analysts capable of performing complex research and analysis.

Number of Strategic

Reports Decreased

Significantly

As with tactical support, FinCEN has been providing strategic support to the

law enforcement community since 1990. As shown in figure 3, the volume

of strategic reports issued by FinCEN has decreased from a high of 23 in

1992 to 1 in 1997.12

12In addition to reports, FinCEN generates other strategic products, such as responses to inquiries

requiring research and analysis and information developed for educational or training purposes. Until

1994, FinCEN also prepared quarterly publications entitled FinCEN Updates (for law enforcement

staff) and FinCEN Trends (for regulatory and banking institutions). These publications contained

articles and statistical summaries dealing with money laundering and currency reporting.

Page 11 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
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Figure 3: Strategic Reports Issued by

FinCEN, 1990-1997

Source: GAO analysis of FinCEN data.

According to a FinCEN official, fewer strategic reports were generated in

recent years because (1) FinCEN assigned fewer staff to support strategic

projects and (2) the products often did not provide the type of information

law enforcement officials needed to do their work.

To increase its emphasis on strategic support and to improve the

usefulness of strategic products, FinCEN created a new Office of Research

and Analysis in March 1997. Although FinCEN initially planned to staff this

office with 23 analysts, only 14 staff were on board as of November 1997.

Before this reorganization, FinCEN’s Strategic Analysis Division had five to

seven analysts performing strategic analysis. Additional perspectives

about the usefulness of FinCEN’s strategic products and initiatives are

discussed later in this report.

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Fewer Artificial

Intelligence Reports

Provided

Since March 1993, FinCEN has been using its artificial intelligence targeting

system to help the law enforcement community identify subjects possibly

involved in money laundering and other financial crimes. As shown in

table 1, the volume of products generated by FinCEN from artificial

intelligence analyses has decreased significantly over the past 2 fiscal

years.

Table 1: Products Generated by

FinCEN From Artificial Intelligence

Analyses, 1993-1997 Fiscal year Number of products

Number of subjects

identified

1993a 27 276

1994 75 403

1995 372 946

1996 129 2,092

1997 40 140

aMarch to September 1993.

Source: GAO analysis of FinCEN data.

FinCEN officials provided several reasons for the decrease in artificial

intelligence products. First, they said the artificial intelligence system was

redesigned for fiscal year 1996 to focus on more complex cases, which

they defined by the number of subjects per case. FinCEN data indicated

there was an average of 2.5 subjects per case in fiscal year 1995 versus an

average of 16.2 subjects per case in fiscal year 1996. Second, they said that

the majority of the artificial intelligence products generated in fiscal years

1993 to 1995 were self-initiated, and that FinCEN self-initiated very few

artificial intelligence products in fiscal years 1996 and 1997, in part

because federal law enforcement agencies reportedly did not take any

action on many of the former products. Third, they said that FinCEN

reduced the number of full-time analysts working on artificial intelligence

cases from three in fiscal year 1995 to the equivalent of one-half full-time

analyst in fiscal year 1997. In an effort to increase the number and

usefulness of investigative leads and products generated, FinCEN assigned

three full-time staff to support artificial intelligence cases in early fiscal

year 1998.

Federal Agencies Have

Increased Their Use of

FinCEN’s Platform

Concept

In an effort to expand the availability and use of its tactical support

resources, FinCEN developed the platform concept in 1994, offering

employees of federal law enforcement agencies space at FinCEN and access

to BSA financial data and commercial databases so they could conduct

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their own research and analysis. As table 2 shows, law enforcement

agencies have increased their use of platforms. As of April 1998, 51

personnel representing 31 agencies were using platforms on a full- or

part-time basis at FinCEN.

Table 2: Use of FinCEN Platforms,

1995-1997

Calendar year Number of agencies

Number of cases

supported

1995 5 575

1996 15 779

1997 28 1,477

Source: GAO analysis of FinCEN data.

According to data provided by FinCEN, platform users supported 1,477

investigative cases during fiscal year 1997. These data show that the most

frequent platform users during this period were the Defense Criminal

Investigative Service; the Capitol Police; the Bureau of Alcohol, Tobacco

and Firearms; and the Washington/Baltimore HIDTA.

States Have Increased

Their Use of Project

Gateway

Also in 1994, FinCEN initiated Project Gateway to provide state and local

law enforcement agencies with remote access to BSA financial data. In

1997, FinCEN expanded Gateway’s remote research capability by providing

states with (1) access to suspicious activity reports to support ongoing

investigations; (2) the capability to identify potential subjects (i.e., new

leads) by proactively searching BSA records, including currency

transaction reports and suspicious activity reports (generated within the

users’ own state); and (3) access to information from one commercial

database (i.e., Autotrack) via Gateway’s bulletin board system.

As shown in figure 4, the states’ use of Gateway has steadily increased

since 1995—the first full year when all 50 states had access. According to

FinCEN data, the most frequent Gateway users during fiscal year 1997 were

California, Illinois, Pennsylvania, and Texas. Wyoming was the only state

that did not use Gateway during this period.

Page 14 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
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Figure 4: Use of Project Gateway

Source: GAO analysis of FinCEN data.

According to FinCEN’s records, the 57,663 Gateway queries in fiscal year

1997 supported 3,327 law enforcement cases. Approximately 84 percent of

the BSA reports reviewed during these queries were currency transaction

reports. Also, 21 states made a total of 3,440 automated queries of

Autotrack during fiscal year 1997.

Further, the number of times FinCEN used Gateway to alert or notify one

agency that another agency had an interest in the same investigative

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subject (individual or entity) increased from 356 in fiscal year 1996 to 920

in fiscal year 1997.

Overall, FinCEN’s

Products and Services

Were Considered

Useful

Responses to the surveys we sent to officials from 31 federal agencies and

15 states indicated that FinCEN’s tactical products have been useful in

identifying, developing, and prosecuting cases involving money laundering

and other financial crimes. Also, FinCEN has taken steps to address

concerns with and improve the usefulness of its strategic and artificial

intelligence products, such as attempting to “partner” with the law

enforcement community in developing these products. Further, according

to the federal and state officials we interviewed, the platform concept and

Project Gateway are excellent tools for helping agencies combat money

laundering and other financial crimes.

Over 95 Percent of Tactical

Support Users Surveyed

Found the Products Useful

To assess the usefulness of FinCEN’s tactical support, we surveyed by mail a

stratified, statistical sample of 352 officials from 31 federal agencies and a

simple random sample of 95 officials from 15 states who requested tactical

support from April 1996 through March 1997 and to whom FinCEN had

responded before August 1997.13 Based on the results of these surveys, we

estimated that 97 percent of all requesters from the 31 federal agencies

found that, overall, all types of products they received (i.e., database

extracts, analytical reports, and responses to expedited requests) were

useful in supporting their investigations. Similarly, we estimated that

98 percent of the requesters from the 15 states found that, overall, the

products they received were useful.14

The survey results indicated that FinCEN’s tactical products assisted law

enforcement investigations in various ways. As shown in figure 5, we

estimated that the majority of the requesters from the 31 federal agencies

found that the tactical products (1) verified or confirmed information

already known, (2) saved them time and money, (3) provided investigative

leads that were previously unknown, or (4) identified assets that were

13Appendix I contains additional information about our sampling methodology. The federal and state

surveys are presented in appendixes III and IV, respectively.

14Because the mail survey results for federal officials came from a sample of 352 officials out of a

universe of 2,379 officials in 31 agencies and the survey results for state officials came from a sample

of 95 officials out of a universe of 504 officials in 15 states, all results for both surveys are subject to

sampling errors, along with other potential sources of errors associated with surveys, such as

nonresponses and question misinterpretation. All percentage estimates for the survey of federal

officials have 95-percent confidence intervals of no more than plus or minus 10 percentage points. All

percentage estimates for the survey of state officials have 95-percent confidence intervals of no more

than plus or minus 13 percentage points.

Page 16 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
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previously unknown. We also estimated that the majority of the requesters

from the 15 states found that the tactical products assisted their

investigations in various ways (see app. IV for additional details on state

responses).

Figure 5: Specific Ways in Which Federal Users Said That FinCEN’s Tactical Products Assisted Their Investigations

Note: Respondents were asked to check “Yes,” “No,” or “Too soon to know” for each category

(e.g., “Saved time and money”). The total number of estimated responses for each category (i.e.,

“n”) does not equal 2,379 because some respondents did not provide answers (see app. III,

question 5).

Source: GAO survey of federal law enforcement officials who requested tactical support from

April 1996 through March 1997 and received a response before August 1997.

Page 17 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
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Additionally, on the basis of the survey responses, we estimated that

84 percent of the federal officials received products that responded to

their requests in a complete and thorough manner. We estimated that

another 14 percent found that some, but not all, of the products addressed

their requests in a complete and thorough manner.15 Also, we estimated

that 81 percent of the federal officials found the products to be “very”

(29 percent) or “somewhat” (52 percent) timely,16 and an estimated

97 percent would “definitely” (78 percent) or “probably” (19 percent)

request tactical support from FinCEN in the future.17

Although we estimated that 81 percent of the requesters from the 31

federal agencies found FinCEN’s tactical products timely, the most frequent

comment or suggestion regarding how FinCEN’s tactical products could be

improved concerned the timeliness of responses. We estimated that

17 percent of the federal officials who received tactical products would

suggest that FinCEN should respond to requests in a more timely manner.

Although the number of requests received by FinCEN decreased during

fiscal year 1997 and FinCEN has taken steps to better focus the scope of

each request, the average turnaround time—i.e., the number of calendar

days from when a request is received at FinCEN to the day the product is

mailed to the requester—for routine requests increased to 2 to 3 months

during most of fiscal year 1997.

According to a FinCEN official, the primary reason for this lengthy

turnaround time was because many staff responding to tactical requests

were reassigned in March 1997 to support FinCEN’s new Office of Research

and Analysis. Consequently, the number of FinCEN staff supporting tactical

requests decreased from 19 in October 1996 to as few as 7 during the

summer of 1997 before increasing back to 19 in October 1997.

The official told us the average turnaround time for routine requests was

reduced to about 3 weeks in September 1997—about 6 months after the

sample period used for our questionnaire—by authorizing overtime and

temporarily having more staff do casework. He noted that FinCEN had 22

tactical staff on board as of February 1998, which should help prevent

backlogs and adverse turnaround times in the future. He added that FinCEN

has also authorized overtime to address any backlogs that may occur.

15See appendix III, question 8.

16See appendix III, question 6.

17See appendix III, question 9.

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FinCEN Is Seeking to

Improve Strategic Support

According to a FinCEN official, the feedback FinCEN received from the law

enforcement community indicated that many of the strategic reports

FinCEN issued from 1990 to 1996 were of limited use to law enforcement

agencies, regulators, and banking institutions. He noted that many law

enforcement officials told FinCEN the reports were informative but that

many of the reports were not effective or useful in supporting investigative

efforts and, some of them did little more than repackage what law

enforcement officials had previously reported to FinCEN. The official also

told us that, in the past, FinCEN had not taken an active partnership role

with law enforcement agencies, regulators, and financial institutions to

help make the products more useful to them.

In response to law enforcement’s observations regarding the usefulness of

FinCEN’s strategic products, FinCEN reorganized and reallocated its

resources in March 1997 to create a new Office of Research and Analysis.

This office plans to generate products that help agencies improve their

money-laundering detection and prevention programs, while providing

case-specific support to the law enforcement and regulatory communities.

For example, according to a FinCEN official, since mid-1997, FinCEN has

analyzed suspicious activity reports and provided selected federal field

offices with target lists of potential suspects. He added that this office also

intends to take an active partnership role with law enforcement agencies,

regulators, and financial institutions in developing future strategic

products.

To assess the usefulness of strategic products, we interviewed officials

who received state-specific money-laundering threat assessment reports in

1996 or 1997—Georgia (April 1996), Louisiana (April 1996), and Florida

(June 1997).18 Generally, FinCEN’s threat assessment reports focus on

specific industries, businesses, financial entities, and geographic locations

exhibiting unusual currency movements that may be indicative of

money-laundering activity.

According to officials from Georgia and Louisiana, the threat assessment

reports FinCEN prepared for their states were informative but, at the time of

our review, had resulted in limited or no investigative actions. However,

according to a Louisiana state official, FinCEN’s 1996 report contributed to

the state enacting comprehensive money-laundering legislation and

expanding its statutory wiretap authority.

18These threat assessments were three of the four strategic reports FinCEN issued from January 1996

through December 1997 (see table 2). The fourth report addressed emerging cyberpayment technology

and its potential use in criminal activities.

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The June 1997 South Florida Money Laundering Threat Assessment—a

joint effort between FinCEN and the South Florida HIDTA Task Force—was

the first partnership effort and first report issued by the Office of Research

and Analysis. According to a HIDTA official in Florida, as of January 1998,

this report had not led to any new investigations. However, he told us the

report provides information that will help the law enforcement community

in the region reallocate its resources. He added that the partnership

meetings associated with the report have been useful in bringing together

officials from the law enforcement, regulatory, and banking communities

to discuss money-laundering issues.

Respondents Found

Artificial Intelligence

Products Useful

To assess the usefulness of FinCEN’s artificial intelligence products, we

attempted to contact 24 law enforcement officials who, according to

FinCEN’s records, received the 85 artificial intelligence reports FinCEN

generated from April 1996 to March 1997. The 13 officials we eventually

were able to contact received 51 (60 percent) of the 85 artificial

intelligence products.19 The 51 products supported 15 separate cases.20

According to these officials, the information contained in FinCEN’s artificial

intelligence products was useful in various ways. For example, in

reference to the 15 cases, the products identified potential subjects that

were previously unknown (9 cases), provided investigative leads that were

previously unknown (11 cases), identified assets that were previously

unknown (6 cases), and verified or confirmed information already known

(12 cases).

According to the 13 officials, the information contained in the artificial

intelligence products led to five preliminary investigations, and three new

cases were opened. One official told us the artificial intelligence analyses

compiled by FinCEN provided several investigative leads, which indicated

criminal activity involving people and/or businesses located nationally and

internationally. Three of the officials told us they did not use the products

at all. Overall, 12 of the 13 officials indicated they would definitely or

probably request additional products in the future.

19Of the 13 officials, 6 requested the products to both obtain information and leads on subjects already

under investigation and identify potential subjects, previously unknown, who may have been involved

in money laundering or other financial crimes. Of the remaining seven officials, two requested the

products to obtain information and leads on subjects already under investigation, three others

requested them to identify potential subjects, and the final two did not indicate a reason why.

20Two of the 13 officials received artificial intelligence products that were used to support 2 separate

and unrelated cases.

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In an effort to provide artificial intelligence products that are more useful

to the relevant agencies, FinCEN is attempting to “partner” with the law

enforcement community. For example, in November 1997, FinCEN analysts

began working directly with agents from U.S. Customs Service field offices

to help them generate, understand, and use artificial intelligence products.

According to a FinCEN official, the agency intends to provide continuing

support and updates to these agents. This initiative has not been in effect a

sufficient period of time to assess its usefulness.

Access to Platforms Was

Useful to Federal

Investigative Agencies

Contacted

As shown earlier in table 2, both the number of agencies using platforms

and the number of cases supported increased significantly from 1995 to

1997. To assess the usefulness of FinCEN’s platform concept, we

interviewed officials from three agencies that were among the top four

user agencies in 1997—the Defense Criminal Investigative Service; the

Bureau of Alcohol, Tobacco and Firearms; and the Washington/Baltimore

HIDTA. According to FinCEN’s records, these agencies accounted for 971

(66 percent) of the 1,477 investigative cases that were supported by

platforms in 1997.

According to these officials, access to financial and commercial databases

using FinCEN’s platforms is an important and useful tool in helping their

respective agencies initiate cases and conduct investigations. For example,

a Defense Criminal Investigative Service analyst told us she uses a

platform to support every new case initiated by the agency and, at the

request of field offices, prepares detailed research reports. The analyst

commented that she would like FinCEN to provide access to additional

sources of data, such as suspicious activity reports and law enforcement

databases via platforms. Also, an official from the Washington/Baltimore

HIDTA told us that use of platforms is the HIDTA’s primary means for

obtaining commercial data. The official noted that having access to

platforms has enabled analysts to respond to requests for information in a

timely manner.

According to a FinCEN official, providing agencies with access to financial

and commercial data via platforms should allow FinCEN to focus its efforts

on more complicated cases that require FinCEN’s expertise and analytical

support.

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Direct Access to Gateway

Was Useful to State

Investigative Agencies

Contacted

As shown earlier in figure 4, 49 states used the Gateway system in fiscal

year 1997 to make a total of 57,663 queries for BSA financial data. To assess

the usefulness of the Gateway system, we interviewed the state

coordinator21 for each of the four states that made the most Gateway

queries in fiscal year 1997—California, Illinois, Pennsylvania, and Texas.

According FinCEN data, these states made 22,876 (or 40 percent) of the total

57,663 Gateway queries during this period.

According to these officials, remote access to BSA financial data via the

Gateway system is useful for helping their states combat money

laundering and other financial crimes. The officials also told us Gateway’s

expanded capabilities were useful, including (1) remote access to

commercial data and (2) proactive searches of BSA financial records,

including currency transaction reports and suspicious activity reports, to

generate targets in their state for possible money laundering and other

financial crimes investigations.

In August 1997, FinCEN began providing additional agencies in some states

with direct access to the Gateway system. According to FinCEN’s records,

310 state law enforcement officials had Gateway user accounts as of the

end of fiscal year 1997. Also, selected law enforcement officials from DEA

have been granted access to Gateway. According to a FinCEN official, other

federal agencies can join Project Gateway if they agree to (1) identify the

case file under which Gateway queries are run, (2) reasonably share case

information with other agencies, and (3) execute appropriate legal

agreements. He added that the case information is needed to help FinCEN

assist Gateway users in coordinating their investigative efforts.

According to a FinCEN official, in 1998, the agency intends to expand

Gateway’s capabilities to include additional commercial databases and,

when available, data on money services businesses.22

21The state coordinator is an employee of the state agency named in a letter of agreement (regarding

Gateway access) between FinCEN and the state. This employee is the state’s principal representative

for the Gateway program and is responsible for coordinating all Gateway-query requests for all using

agencies in the state.

22Under FinCEN’s proposed definition, money services businesses would include money transmitters,

currency dealers or exchangers, check cashers, and issuers of traveler’s checks and money orders.

Under a provision of the Money Laundering Suppression Act of 1994, these entities are to be registered

with the Treasury Department.

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Some Federal Field

Offices, States, and

HIDTAs Said They

Use Alternative

Sources of

Information

Our analysis of FinCEN’s records revealed that some federal field offices,

states, and HIDTAs requested little or no tactical support from FinCEN during

the period we reviewed, April 1996 to March 1997. To determine the

reasons why this support was not requested, we surveyed the U.S.

investigative units of 129 Treasury and Justice field offices23 and each of

the 22 HIDTAs that had been designated as of December 1997. We also

interviewed officials from 9 of the 10 states that, according to FinCEN’s

records, made either one or no requests for FinCEN’s tactical support from

April 1996 to March 1997. In summary, respondents from many of the

federal field offices, states, and HIDTAs surveyed said they have in-house

capabilities or use sources other than FinCEN for tactical support. Also,

respondents from some federal field offices said that agents and

investigators are not aware of the products and services offered by FinCEN.

Many Agencies Contacted

Said They Have In-House

Capabilities or Use

Sources Other Than

FinCEN

From our surveys and interviews, the most frequently mentioned reason

why many of the federal field offices, states, and HIDTAs requested few, if

any, tactical products from FinCEN was the availability and use of in-house

capabilities and sources other than FinCEN for financial, commercial, and

law enforcement data and analysis. Dissatisfaction with FinCEN’s tactical

products was rarely cited as a reason for the limited use of FinCEN.

Of the IRS, Customs, FBI, and DEA field offices that responded to our survey,

6 percent noted that they did not request FinCEN’s tactical support “over the

past year.” An additional 42 percent noted that they requested tactical

support 5 times or fewer during this period (see app. V, question 1). Table

3 shows the various reasons why FinCEN was not the primary source for

financial, commercial, or law enforcement data or analysis for the federal

field offices.

23See appendix V for a copy of the survey, which was sent to all of the U.S. investigative units of the

IRS (33 offices), the U.S. Customs Service (20 offices), the FBI (56 offices), and the DEA (20 offices).

Page 23 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
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Table 3: Reasons Many of the Federal

Field Offices Surveyed Said They

Requested Little or No Tactical

Support From FinCEN

Number of Treasury

offices

Number of Justice

offices

Responses IRS Customs FBI DEA

Total

responses

We have all or most of

the capabilities we

need in- house.

23 16 38 14 91

It is easier to access

the data or get

analytical support from

other sources.

17 7 22 11 57

Other sources provide

more comprehensive

data or analysis than

FinCEN.

2 3 5 4 14

Other sources are more

timely than FinCEN.

19 9 28 12 68

We are not aware of the

products and services

provided by FinCEN.

8 5 8 7 28

Total field offices

responding

31 17 51 17 116

Source: GAO survey of Treasury and Justice field offices (see app. V, question 6).

Also, according to the survey responses, the IRS and Customs investigative

field offices had direct access to BSA financial databases, while the FBI and

DEA offices primarily used grand jury subpoenas to obtain financial data.

Almost all of the field offices noted they had access to one or more

commercial databases. Most of the offices also indicated they had access

to a variety of sources for law enforcement information outside of FinCEN,

such as the National Crime Information Center and the National Law

Enforcement Telecommunications System. Also, several offices noted

their office and/or agency had staff and other resources to provide

analytical support for money laundering and other financial crime

investigations.

Several offices indicated that they had access to intelligence or

investigative support centers (other than FinCEN) that provide financial,

commercial, and/or law enforcement data and analysis. These sources

include, for example, the FBI’s Savannah (Georgia) and Butte (Montana)

Information Technology Centers, the South Florida Investigative Support

Center (part of the South Florida HIDTA), the National Drug Intelligence

Center (Johnstown, Pennsylvania), and the El Paso Intelligence Center (El

Paso, Texas).

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In commenting on a draft of this report, Department of Justice officials

noted that while many agencies have in-house capabilities or use sources

other than FinCEN for financial, commercial, and law enforcement data and

analysis, FinCEN still plays an important role in facilitating the sharing of

financial information and is a leader in the financial database field.

Officials we interviewed from the nine states that made either one or no

requests for FinCEN’s tactical support from April 1996 to March 1997 cited

several reasons for not requesting more support. These reasons include

(1) the lack of authority to conduct investigations into money laundering;

(2) the lack of resources to pursue financial crimes; and (3) the use of

other sources of information, such as FinCEN’s Gateway system and direct

access to commercial databases.

Sixteen of the 22 HIDTAs surveyed responded to our questionnaire. Survey

results showed that 4 of the 16 respondents were designated as HIDTAs in

1997 and had not performed the type of money laundering or financial

crime investigations that FinCEN supports. Of the 12 HIDTAs that were

performing such investigations, 8 noted that (1) the HIDTA had all or most

of the capabilities it needed in-house or (2) it was easier to access data or

get analytical support from other sources. Of these 10 respondents, 6

noted that other sources were more timely than FinCEN and 2 (of the

6) indicated that the HIDTA was not aware of the products and services

provided by FinCEN.

Some Potential Users Said

They Were Not Aware of

FinCEN’s Products and

Services

Our survey responses and interviews indicated another reason for the

limited use of FinCEN’s tactical support. That is, many agents and

investigators located in federal field offices were not aware of the

products and services offered by FinCEN. For example, as shown in table 3,

28 (24 percent) of the 116 federal field offices that responded to our survey

noted that their agents and investigators were not aware of FinCEN’s

products and services.

FinCEN officials told us the agency has informed federal and state officials

about its products and services on several occasions. For example, in

mid-1996, FinCEN initiated a three-phased approach to inform and obtain

feedback from Treasury Department officials. The three phases were

(1) telephone surveys; (2) on-site visits with U.S. Customs Service; Bureau

of Alcohol, Tobacco and Firearms; and IRS field offices in six cities and the

U.S. Customs Service in a seventh city; and (3) training on how to use

FinCEN resources at events such as Special-Agent-in-Charge meetings,

Page 25 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
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internal training, and new agent training. One Treasury Department

component, the U.S. Secret Service, declined FinCEN’s offer to participate in

the outreach program. FinCEN followed this effort with telephone or fax

surveys to approximately 100 officials from other federal agencies.

According to FinCEN’s records, the agency’s tactical staff also provided

information about FinCEN at meetings, training events, or conferences 51

times in fiscal year 1996 and 48 times in fiscal year 1997. This included

presentations to or meetings with state police departments, other

intelligence centers (e.g., the El Paso Intelligence Center and the National

Drug Intelligence Center), and federal agencies’ asset forfeiture personnel.

Also, according to FinCEN’s records, from February to October 1997, FinCEN

officials visited 24 states to brief state officials about FinCEN’s support.

FinCEN drew several conclusions from its 1996 efforts to inform and obtain

feedback from federal agency officials about its products and services.

Specifically, FinCEN concluded that it should seriously consider

(1) providing potential requesters with a one-page summary of FinCEN’s

capabilities, missions, and programs and (2) advising potential customers

about the capabilities of new or enhanced commercial and law

enforcement databases.

In March 1998, FinCEN updated its site on the Internet to include

information on the types of support it provides to the law enforcement

community and to offer viewers the opportunity to send comments or

questions via electronic mail. Also, in his April 1, 1998, statement before

the House Banking and Financial Services’ Subcommittee on General

Oversight and Investigation, the Treasury Assistant Secretary

(Enforcement) said that FinCEN will work to further communicate its

capabilities to its potential customers.

While FinCEN has taken several actions to better ensure that potential

customers are aware of the availability of FinCEN’s various products and

services, it has not developed written criteria or guidance specifying the

types of cases that FinCEN can best support. According to a FinCEN official,

tactical support is generally best suited for (1) cases that involve large

criminal organizations, are of significance to the jurisdiction, or require

expert financial analysis and (2) cases where support is not available from

in-house sources (e.g., requests for BSA data). The official told us that for

cases or investigations that do not require FinCEN’s expertise or analysis,

other sources of data and analysis can be used, including FinCEN platform

concept and Project Gateway. He also mentioned that FinCEN staff are

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available to train agencies to use their own resources to conduct research

and analysis. The FinCEN official added that, to his knowledge, FinCEN has

never turned down a request to support an ongoing law enforcement

investigation that required FinCEN’s capabilities.

Key Controls Over

Gateway Not

Routinely Evaluated

FinCEN has established several controls to reduce the risk of unauthorized

access to and use of sensitive information obtained via Project Gateway.24

As a primary set of controls, FinCEN has established policies and

procedures that states are to follow in accessing and using Gateway

information. However, FinCEN has not evaluated the states’ compliance

with these controls. Although FinCEN has taken some steps to review

Gateway queries, this review does not include a direct assessment of the

states’ controls over Gateway information.

Gateway Access to

Sensitive Information

Makes Evaluating Controls

Important

FinCEN’s Gateway system provides designated state and local agency

officials with direct, on-line access to sensitive BSA information. For

example, these officials have direct access to currency transaction reports

that reflect transactions with financial institutions that exceed $10,000.

Gateway users also have direct access to suspicious activity reports that

are filed by banks and other depository institutions when they know,

suspect, or have reason to suspect that a crime has occurred or that a

transaction is suspicious.

Security management of the Gateway system is a joint effort between the

IRS Detroit Computing Center and FinCEN. The Detroit Computing Center is

responsible for ensuring that the host system that contains the BSA data is

secured to the level required by the Treasury Department’s policy for

systems that process sensitive data. The Center’s Project Gateway Users

Guide specifies additional access controls to BSA information, including

(1) password requirements and (2) disconnecting users from the Gateway

host computer after 5 minutes of inactivity. The Center also records

Gateway user activity and provides this information to FinCEN.

FinCEN’s Gateway Security Plan specifies additional controls designed to

ensure that BSA information and other sensitive data, including information

and data transmitted to FinCEN and the Detroit Computing Center from the

states, are safeguarded or protected appropriately by Gateway users.

Among other things, this plan presents policies and procedures that

designated state officials are to follow in (1) verifying requesters’ validity

24It was beyond the scope of our study to evaluate or test these controls.

Page 27 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
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and identity, (2) determining that requests are made pursuant to bona fide

criminal investigations or other authorized purposes, and (3) maintaining

records of Gateway requests.

A basic internal control objective for any management information system

is to protect data and programs from unauthorized access, modification,

and disclosure. Organizations can help protect their data by establishing

controls to prevent unauthorized access and by monitoring the access

activities of individuals to help identify any significant problems and deter

individuals from inappropriate and unauthorized activities. According to

our recent study of information security management best practices,25

evaluating the effectiveness of controls and preparing summary reports for

management attention are important elements in ensuring that controls

are operating as intended.

States’ Compliance With

Controls Not Evaluated

FinCEN has not evaluated the states’ compliance with specified policies and

procedures designed to control access to and use of information obtained

through the Gateway system. The Gateway Security Plan contains

provisions for FinCEN officials to inspect states’ records, including FinCEN

staff visits to the states, to determine if the Gateway system and the BSA

data have been misused. However, although Project Gateway has been

operational since 1994, FinCEN had not inspected any states’ records,

scheduled any FinCEN staff visits to the states, or developed any audit plans

for on-site evaluations of the states’ compliance with applicable policies

and procedures, as of May 1998.

However, FinCEN has taken some steps—based on limited sampling and

self-reporting questionnaires—to determine if selected Gateway cases

were done for official purposes and were requested by authorized

individuals. That is, in October 1997, FinCEN screened fiscal year 1997 user

data recorded by the IRS Detroit Computing Center to identify cases that

appeared to be irregular, such as those requested by agencies that do not

usually conduct criminal investigations. In doing so, FinCEN identified 76

cases from 23 states that appeared to be irregular. To obtain more

information about these 76 cases, and 98 additional cases that were

randomly selected from 39 states, FinCEN distributed questionnaires to

applicable state and local agency officials. Nine agencies did not respond

to the questionnaires.

25Executive Guide: Information Security Management—Learning From Leading Organizations

(GAO/AIMD-98-21, Nov. 1997 Exposure Draft).

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According to FinCEN’s audit report dated May 15, 1998, the self-reporting

questionnaires indicated that the Gateway cases sampled, for which

responses were received, were made in connection with a criminal

investigation and were requested by an authorized law enforcement

official. However, the audit report indicated that 13 agencies did not

follow the proper procedures for redissemination of Gateway information.

According to a FinCEN official, while they proved useful, the self-reporting

questionnaires do not constitute a direct assessment of state and local

compliance with controls over Gateway information.

FinCEN and IRS plan to increase security of the Gateway

telecommunications network by January 1999. Even with these

improvements, control over access to BSA information at state locations

will still largely depend on the states’ verification that individual user

requests for information have been properly authorized. Therefore,

evaluating the states’ compliance with applicable policies and procedures

will remain an important element in ensuring that controls are operating

as intended.

IRS Form 8300

Information Not

Accessible Through

FinCEN

In an effort to enhance its investigative support, FinCEN is seeking approval

from IRS to provide IRS Form 8300 information (Report of Cash Payments

Over $10,000 Received in a Trade or Business) to the law enforcement

community. Several federal and state law enforcement officials we

interviewed also told us FinCEN could enhance its investigative assistance

by providing access to selected information from these forms. Although IRS

has taken steps to implement 1996 legislation authorizing the Secretary of

the Treasury to disclose Form 8300 information to federal, state, and local

agencies,26 several issues must still be resolved before FinCEN can obtain

approval from IRS to disseminate this information.

Section 6050I of the Internal Revenue Code, in general, requires any

person engaged in a trade or business (other than financial institutions

required to report under the BSA) who receives more than $10,000 in cash,

in a single transaction or a series of related transactions, to file a report

with the Secretary of the Treasury. The Secretary of the Treasury requires

this report to be filed on an IRS Form 8300. The form provides a paper trail

that can help identify assets acquired with illegal funds, as well as help

identify a lifestyle that is not commensurate with an individual’s known

sources of legitimate income.

26The act, entitled the “Taxpayer Bill of Rights 2,” P.L. 104-168, 110 Stat. 1452 (1996), amended section

6103 of the Internal Revenue Code.

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The Form 8300 is designed to identify cash transactions in excess of

$10,000 between retail merchants (e.g., automobile dealers, boat dealers,

furriers, etc.) and their customers, much like the BSA currency transaction

report is designed to identify deposits, withdrawals, exchanges, or other

payments in excess of $10,000 between financial institutions and their

customers. The Form 8300 and currency transaction report provide very

similar information (e.g., name, address, Social Security number, and

amount of the transaction).

The Form 8300 was originally created and is still used to assist IRS in

identifying individuals who might be attempting to evade taxes. Given that

the requirement for filing the Form 8300 is contained in the Internal

Revenue Code, Form 8300 information is tax return information and, as

such, is confidential and may not be disclosed to any persons or used in

any manner not authorized by the Internal Revenue Code. Authorized

disclosures of Form 8300 information are subject to the procedural and

recordkeeping requirements of Internal Revenue Code section 6103. For

example, section 6103(p)(4)(E) requires recipient agencies to file a report

with the Secretary of the Treasury that describes the procedures

established and utilized by the agency for ensuring the confidentiality of

returns or return information. IRS requires that agencies requesting return

information, such as Form 8300 information, file a “Safeguard Procedures

Report,” and that the report be approved by IRS.

27

In comparison, the currency transaction report and other BSA information

are used to target large currency transactions that may be suspicious,

support investigative cases, assist in tax examination and collection, and

support other law enforcement functions. Under FinCEN’s authority and

oversight, Treasury agencies (i.e., Customs Service; IRS; Secret Service; and

the Bureau of Alcohol, Tobacco and Firearms) have direct, on-line access

to BSA information. If they are jointly working a case, law enforcement

agencies outside of Treasury can access this information from one of the

Treasury agencies. For other law enforcement agencies, FinCEN is the

official contact point within Treasury to request BSA information. Also,

designated state and local officials have direct, on-line access to BSA

information via Project Gateway. These officials conduct Gateway queries

for other law enforcement agencies in the state.

27IRS requires that Safeguard Procedures Reports contain information on, among other things, the

agency official authorized to request Form 8300 information; the anticipated need for and use of the

information; the location, storage, and disposal of the data; limiting access to the data; and computer

security.

Page 30 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
B-277990 

According to FinCEN, agencies may receive BSA information directly from

FinCEN or via Project Gateway only after they have clearly specified the

purpose of their request, and after the identity and authority of the

requester have been confirmed by FinCEN or a designated state official.

FinCEN regulations provide that BSA information shall be received in

confidence and shall not be disclosed to any person except for official

purposes relating to the investigation, proceeding, or matter in connection

with the information.

Law Enforcement Use of

Form 8300 Information

Although originally intended primarily to assist IRS for tax administration

purposes, Form 8300 information is also used to support law enforcement

investigations. The Anti-Drug Abuse Act28 of 1988 provided a special

temporary rule permitting IRS to disclose these information returns to

other federal agencies for the purpose of administering statutes not related

to tax administration. The special rule, originally set to expire in 1990, was

extended 2 years and then expired in 1992.

Our earlier work addressed the usefulness of Form 8300 information. In

1991, for example, we reported on the usefulness of Form 8300

information in conducting investigations of tax evasion and other criminal

activity, such as money laundering.29 We reported that law enforcement

officials believed that Form 8300 information could be instrumental in

tracing cash payments by drug traffickers and other criminals for luxury

cars, jewelry, and other expensive items.

In 1992, we reported that federal law enforcement officials regarded Form

8300 information as extremely useful and a critical complement to BSA

reports.30 We noted that, in an attempt to obtain Form 8300 information,

several states required that copies of the form also be filed with the state.

We recommended to Congress that (1) the temporary and soon-to-expire

authority of the Secretary of the Treasury to disclose Form 8300

information filed under section 6050I of the Internal Revenue Code be

made permanent and (2) the Secretary of the Treasury be allowed to

disclose these returns to state law enforcement agencies. The IRS

supported this recommendation and noted that, if the disclosure

28P.L. 100-690, 102 Stat. 4181 (1988).

29Money Laundering: The Use of Cash Transaction Reports by Federal Law Enforcement Agencies

(GAO/GGD-91-125, Sept. 25, 1991).

30Money Laundering: State Efforts to Fight It Are Increasing but More Federal Help Is Needed

(GAO/GGD-93-1, Oct. 15, 1992).

Page 31 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
B-277990 

provisions were amended, IRS would work closely with the Treasury

Department to provide access to the states.

In 1996, the act entitled the Taxpayer Bill of Rights 2 reinstated, on a

permanent basis, the Secretary of the Treasury’s authority to disclose

Form 8300 information to other federal agencies. The Secretary was

further authorized to disclose Form 8300 information to state, local, and

foreign agencies. The 1996 Act provided, in general, that any such

disclosure is to be made on the same basis, and subject to the same

conditions, as apply to disclosures of information on BSA currency

transaction reports. However, the 1996 Act also required, in general, that

such disclosures of Form 8300 information be subject to the disclosure

and safeguard policies and guidelines under section 6103(p) of the Internal

Revenue Code. Consequently, according to an IRS official, Form 8300

information must be controlled like other IRS tax return information.

According to an IRS headquarters official, in May 1997, IRS initiated a

process for federal, state, local, and non-U.S. law enforcement agencies

and regulatory agencies to access Form 8300 information directly from IRS.

The official told us that, before being permitted to obtain Form 8300

information, the requesting agency must file and IRS headquarters must

approve a Safeguard Procedures Report that specifies how the agency

plans to comply with applicable safeguard requirements. The IRS official

added that, after an agency’s plan is approved, it can request Form 8300

information as needed from any IRS Criminal Investigation Division field

office.

The IRS official explained that Safeguard Procedures Reports are approved

on an agency-by-agency basis. That is, one approved report covers all

requests from the respective federal agency, such as the U.S. Customs

Service or the FBI. A separate report is required for each state and local

agency (e.g., police department and district attorney’s office). The official

noted that, as of February 1998, five federal and two state law enforcement

agencies had been approved to obtain Form 8300 information from IRS

Criminal Investigation Division field offices.

Several Issues Must Still

Be Resolved Before

FinCEN Can Obtain

Approval to Disseminate

Form 8300 Information

Although IRS has taken measures to provide Form 8300 information to law

enforcement agencies, several issues must still be resolved before FinCEN

can obtain approval from IRS to directly disseminate this information or

provide it to state and local agencies via Project Gateway.

Page 32 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
B-277990 

Two days after the passage of the 1996 Act that authorized the Secretary of

the Treasury to disclose Form 8300 information to other agencies,

including law enforcement agencies, FinCEN issued a news release

commenting, in part, substantially as follows:

• With the passage of this law, FinCEN anticipates being able to make the

highly useful Form 8300 information available as part of its support to

both federal and state law enforcement. Specifically, FinCEN anticipates

being granted authority to (1) provide Form 8300 information quickly and

easily to federal law enforcement agencies that do not have direct access

to this information and (2) provide Form 8300 information directly on-line

to state law enforcement through its Project Gateway.

FinCEN and IRS officials began discussing FinCEN’s dissemination of Form

8300 information soon after passage of the 1996 Act. In June 1997, FinCEN

and IRS officials met to discuss the difficulties IRS’ proposed operating rules

for disseminating Form 8300 information (as outlined in the Safeguard

Procedures Report) would create for FinCEN programs. According to a

FinCEN official, this meeting was followed by a September 11, 1997,

memorandum from FinCEN’s Director to the Acting Commissioner of IRS, in

which FinCEN noted that the particular safeguard procedures identified as

appropriate by IRS (1) were virtually impossible for law enforcement

agencies to satisfy efficiently and (2) appear to subject Form 8300

information to the same safeguards as information generated by individual

or corporate tax returns. The official noted that the memorandum

proposed a high-level meeting to determine if the issues could be resolved.

Although FinCEN has not yet been granted approval by IRS to disseminate

Form 8300 information, an IRS administrative action regarding such

dissemination is presently under consideration by Treasury. According to

an IRS official, in October 1997, IRS proposed to Treasury that certain IRS

implementing regulations be modified to allow FinCEN to act on behalf of

the IRS Commissioner to disseminate Form 8300 information.31 The IRS

official noted, however, that such dissemination would still be subject to

IRS disclosure and safeguard policies and guidelines that implement

section 6103 of the Internal Revenue Code. According to a Treasury

official, Treasury plans to consider the IRS proposal in late 1998.

Regarding Project Gateway, a FinCEN official called our attention to a

September 22, 1997, memorandum from FinCEN’s Office of Legal Counsel to

31IRS regulations provide, in general, that the Commissioner of Internal Revenue may authorize

another federal agency, to which returns and return information have been disclosed by the IRS, to

further disclose such returns and return information to certain other agencies.

Page 33 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
B-277990 

the IRS Office of Disclosure, in which FinCEN explained its position as to

why Gateway’s existing security procedures (for electronic disclosure of

BSA information to state authorities) could be read to satisfy most of the

safeguard procedures IRS was requiring for disseminating Form 8300

information. According to the official, the memorandum noted that IRS

procedures appeared to contemplate only manual dissemination and that

Project Gateway was apparently not considered when the procedures

were written by IRS. The official added that, in this memorandum, FinCEN

requested that IRS accept a certification by FinCEN with respect to all

recipients of electronically disseminated Form 8300 information rather

than apply IRS procedures to each recipient of such information.

At the time of our review, IRS had not issued a formal response to FinCEN’s

September 22, 1997, memorandum. However, in March 1998, an IRS official

told us that FinCEN would not be granted approval to use Project Gateway,

as it currently operates, to provide state and local agencies with Form

8300 information. The official explained that (1) the current Gateway

system does not meet Treasury Department requirements for systems that

handle sensitive information and (2) IRS regulations do not allow for the

type of redisclosures that would occur with Gateway. That is, authorized

Gateway users would not be permitted to act as conduits or middlemen in

providing Form 8300 information to other state and local agencies. The

official added that, even without these barriers, IRS regulations would not

allow FinCEN to certify safeguard procedures on behalf of all recipient

agencies. Rather, each agency that requested Form 8300 information via

Project Gateway would be required to file a Safeguard Procedures Report.

In summary, there are several issues that must be resolved before FinCEN

can disseminate Form 8300 information or provide it to state and local

agencies via Project Gateway. At this point, it is not clear if these issues

can be resolved administratively among FinCEN, IRS, and Treasury or if

Congress may need to revisit these issues in the future.

Conclusions Over the years, FinCEN has faced a challenge of defining its support role in

providing the law enforcement community with value-added products and

services in a timely manner. In and of itself, this is a significant challenge,

and given the existence of various intelligence and investigative support

centers and other sources of information and financial analysis, it is likely

to be a continuing challenge. Also, compounding this challenge, since its

inception in 1990, FinCEN’s staffing levels have remained fairly constant,

while its mission has expanded beyond its original law enforcement

Page 34 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
B-277990 

support role to include responsibility for promulgating BSA regulations and

assuming a leadership position in international efforts to combat money

laundering.

Nonetheless, to FinCEN’s credit, the agency has expanded its law

enforcement support role from providing tactical and strategic products to

include use of an artificial intelligence system and implementation of

self-help services (i.e., the platform concept and Project Gateway).

However, due in part to reallocations of staff to other mission functions,

the expansion of FinCEN’s line of products and services has, at times,

experienced some growing pains. These include, for example, occasional

backlogs and lengthy response times for routine tactical support requests

and reductions in the number of strategic and artificial intelligence

products generated.

Similarly, the expansion or evolution of FinCEN’s line of products and

services inherently entails some “role-definition” issues. To the extent

feasible, for instance, FinCEN considers its expertise best used to support

nonroutine cases or analytically intensive cases, which may include

tactical and strategic as well as artificial intelligence support. In recent

years, however, while users reported that all types of FinCEN’s tactical

support have been useful, an increasing number of FinCEN’s tactical reports

consisted of database extracts versus detailed analysis. And, the number

of analytical products FinCEN generated from strategic and artificial

intelligence analyses decreased due, in part, to users’ concerns about the

usefulness of these products.

To better focus its efforts and ensure usefulness, particularly regarding

strategic and artificial intelligence products, FinCEN has begun various

“partnering” arrangements with its customers. Also, to better ensure that

its tactical staff are available to support traditional law enforcement

needs, in 1995, FinCEN discontinued accepting requests for background and

regulatory investigations.

FinCEN is also taking steps to ensure that its tactical staff are used to

support complex or significant rather than routine cases. However, FinCEN

has not developed and disseminated general criteria or guidelines

concerning the types of cases that FinCEN can best support and the most

appropriate uses for FinCEN’s resources. We believe such guidance would

help FinCEN better utilize its tactical resources. In a similar vein, while

FinCEN had taken steps to inform the law enforcement community about its

support, some federal law enforcement officials said they were not aware

Page 35 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
B-277990 

of the various products and services offered by FinCEN. (FinCEN has since

taken additional steps to inform the law enforcement community about its

products and services.)

FinCEN’s efforts to promote self-help services have been well received by

the users of those services we interviewed. They commented very

favorably about the platform concept and Project Gateway. These

comments are corroborated by statistics showing that use of these

systems has steadily increased. In turn, however, the increased use of

these systems underscores the importance of FinCEN’s controls to ensure

that only authorized personnel access the systems and use them for

legitimate purposes. Because FinCEN has not evaluated states’ compliance

with Gateway security policies and procedures, it cannot be sure the

controls are working as intended. Periodically evaluating the states’

compliance with these controls and preparing summary reports to

management would help FinCEN identify improvements or deterioration in

control effectiveness, reassess the related risks, and take appropriate

action.

FinCEN and IRS have been unable to resolve administrative issues related to

FinCEN’s dissemination of IRS Form 8300 information. Law enforcement

officials believe this information can be useful in tracing cash payments by

drug traffickers and other criminals for luxury cars, jewelry, and other

expensive items. We recognize the long-standing concerns regarding the

protection of taxpayer information, although we note that the Form 8300

contains the same basic information as is contained in the currency

transaction report, which is more readily available to law enforcement. IRS

has initiated a process for law enforcement agencies to access Form 8300

information directly from IRS. However, regarding FinCEN’s dissemination of

Form 8300 information, additional issues must still be resolved to address

IRS’ and Congress’ concerns about protection of taxpayer information. In

addressing these issues, consideration must also be given to the value of

Form 8300 information to law enforcement efforts in reducing money

laundering. It is not clear if these issues can be resolved administratively

among FinCEN, IRS, and Treasury or if Congress may need to revisit these

issues in the future.

Recommendations to

the Secretary of the

Treasury

We recommend that the Secretary of the Treasury take action to identify

and resolve any administrative issues related to FinCEN’s dissemination of

Form 8300 information to the law enforcement community. If FinCEN is

given approval to disseminate Form 8300 information, we recommend

Page 36 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
B-277990 

that, prior to such dissemination, the Secretary ensure that sufficient

access and disclosure controls over FinCEN’s programs and systems are in

place and operating as intended. That is, these controls should be

sufficient to protect against unauthorized access to and disclosure of

sensitive information.

Recommendations to

the Acting Director,

FinCEN

We recommend that the Acting Director, FinCEN

• incorporate into the agency’s communications with potential customers

general criteria or guidance on the types of cases that FinCEN can best

support and the most appropriate uses of FinCEN’s capabilities. At a

minimum, for example, such criteria or guidance could be included in

information on FinCEN’s site on the Internet.

• develop and implement a program for on-site evaluations of the states’

compliance with control policies and procedures related to Project

Gateway. Such a program should include periodic testing of the controls

and summary reports for management attention.

Agency Comments

and Our Evaluation

We requested comments on a draft of this report from the Department of

the Treasury, FinCEN, and the Department of Justice. On May 29, 1998, the

Director of Treasury’s Office of Finance and Administration informed us,

via telephone, that the Department declined to provide comments on the

draft report or on the recommendation to the Secretary of the Treasury

related to FinCEN’s dissemination of IRS Form 8300 information.

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

comments (see app. VI). The Acting Director did not concur with our draft

report’s recommendation that FinCEN incorporate into the agency’s

communications with potential customers specific criteria or guidance on

the types of cases that FinCEN can best support and the most appropriate

uses of FinCEN’s capabilities. The Acting Director commented that specific

guidelines are impractical because (1) cases differ widely in circumstance

and detail and (2) guidelines may result in perceived limitations in the

inherent flexibility of FinCEN’s products and services. Also, the Acting

Director noted that a more effective and efficient way to communicate is

through the generalized meetings and other outreach efforts that FinCEN

conducts, although those efforts are already very ambitious for a small

agency like FinCEN.

Page 37 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
B-277990 

The intent of our draft recommendation was not that FinCEN develop or

communicate inflexible or rigid guidelines for its customers. Rather, given

the availability of various other intelligence and investigative support

centers that are alternate sources of financial, commercial, and law

enforcement data and analysis, we believe that FinCEN’s capabilities would

be most fully and appropriately utilized if the agency widely

communicates generally applicable criteria or guidance on the types of

cases that it can best support. For example, a FinCEN official told us that

tactical support is generally best suited for (1) cases that involve large

criminal organizations, are of significance to the jurisdiction, or require

expert financial analysis and (2) cases where support is not available from

in-house sources.

In our opinion, this kind of general guidance could be more widely

disseminated to the law enforcement community, at a minimum, by being

included in information on FinCEN’s site on the Internet. As previously

noted, FinCEN updated its Internet site in March 1998 to include information

on the types of support it provides to the law enforcement community.

However, the update did not include general criteria or guidance on the

types of cases that FinCEN can best support or on the most appropriate uses

of FinCEN’s capabilities. Accordingly, with some modifications to the

language in this report for clarification purposes, we are still

recommending that FinCEN better communicate to potential customers

general criteria or guidance on the types of cases that it can best support

and the most appropriate uses of its capabilities.

On the other hand, the Acting Director concurred with our

recommendation that FinCEN develop and implement a program for on-site

evaluations of the states’ compliance with control policies and procedures

related to Project Gateway. Toward this end, the Acting Director noted

that FinCEN had recently (1) reported on an early-1998 audit of Gateway use

and activity and (2) issued a comprehensive Gateway Coordinator’s

Handbook, which presents up-to-date rules, procedures, formats,

dissemination instructions, and warning notices.

Also, the Acting Director noted that FinCEN is beginning to develop

guidelines for FinCEN staff to use in reviewing the compliance of state

coordinators with policies and procedures. In the near future, according to

the Acting Director, FinCEN will (1) use these guidelines to conduct audits

in selected states and (2) share audit results with the state coordinators to

provide a lessons-learned approach.

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On May 8, 1998, we received written comments from Justice that indicated

that the draft was reviewed by representatives of the Criminal Division,

DEA, FBI, and the Executive Office for U.S. Attorneys. Generally, the

Department concurred with the substance of the draft report. Justice

provided technical comments and also made suggestions for possible

expansion of our discussion related to various topics in the draft report.

These technical comments and suggestions have been incorporated in this

report where appropriate.

We are sending copies of this report to the Chairmen and Ranking

Minority Members of the Senate Banking, Housing, and Urban Affairs

Committee; the Senate Finance Committee; the House Ways and Means

Committee; the Subcommittee on Treasury, Postal Service, General

Government, and Civil Service (Senate Appropriations Committee); and

the Subcommittee on Treasury, Postal Service, and General Government

(House Appropriations Committee); the Secretary of the Treasury; the

Acting Director, FinCEN; the Director, Office of Management and Budget;

the Attorney General; and other interested parties. Copies will also be

made available to others upon request.

The major contributors to this report are listed in appendix VII. If you or

your staffs have any questions about this report, please contact me on

(202) 512-8777.

Richard M. Stana

Associate Director

Administration of Justice Issues

Page 39 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Contents

Letter 1

Appendix I 

Objectives, Scope,

and Methodology

44

Scope and Methodology of Our Work Regarding Trends in the

Types and Quantities of Support Provided by FinCEN to the Law

Enforcement Community

45

Scope and Methodology of Our Work Regarding the Extent to

Which FinCEN’s Products and Services Have Been Useful to the

Law Enforcement Community

45

Scope and Methodology of Our Work Regarding the Extent to

Which FinCEN Evaluates the States’ Compliance With Applicable

Controls Over Project Gateway

50

Scope and Methodology of Our Work Regarding FinCEN Efforts

to Provide IRS Form 8300 Information to the Law Enforcement

Community

50

Appendix II 

Databases and Other

Information

Resources Used by

FinCEN

54

Financial Database 54

Commercial Databases 56

Law Enforcement Databases 58

Appendix III 

GAO Questionnaire:

Survey of Federal

Agency Officials

Regarding Support

Provided by FinCEN

59

Page 40 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Contents

Appendix IV 

Survey of State and

Local Law

Enforcement Officials

Regarding Support

Provided by FinCEN

63

Appendix V 

Use of the Financial

Crimes Enforcement

Network: Survey of

Justice and Treasury

Field Offices

67

Appendix VI 

Comments From

FinCEN

72

Appendix VII 

Major Contributors to

This Report

75

Tables Table 1: Products Generated by FinCEN From Artificial

Intelligence Analyses, 1993-1997

13

Table 2: Use of FinCEN Platforms, 1995-1997 14

Table 3: Reasons Many of the Federal Field Offices Surveyed Said

They Requested Little or No Tactical Support From FinCEN

24

Table I.1: Number of Federal Agency Requests for FinCEN

Tactical Support, April 1996-March 1997

51

Table I.2: Number of State Requests for FinCEN Tactical Support,

April 1996-March 1997

53

Table II.1: BSA Reports Used by FinCEN 55

Table II.2: Commercial Databases Used by FinCEN 56

Page 41 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Contents

Table II.3: Law Enforcement Databases Used by FinCEN,

November 1997

58

Figures Figure 1: Requests to FinCEN for Tactical Support, 1991-1997 9

Figure 2: Number of Federal and Contractor Staff Responding to

Agency Requests for Tactical Support, October 1994 to

October 1997

10

Figure 3: Strategic Reports Issued by FinCEN, 1990-1997 12

Figure 4: Use of Project Gateway 15

Figure 5: Specific Ways in Which Federal Users Said That

FinCEN’s Tactical Products Assisted Their Investigations

17

Abbreviations

BSA Bank Secrecy Act

DEA Drug Enforcement Administration

FBI Federal Bureau of Investigation

FinCEN Financial Crimes Enforcement Network

HIDTA High Intensity Drug Trafficking Area

IRS Internal Revenue Service

Page 42 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Page 43 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix I 

Objectives, Scope, and Methodology

This report focuses on the Financial Crimes Enforcement Network’s

(FinCEN) products and services in support of law enforcement. Specifically,

this report discusses (1) trends in the types and quantities of products and

services provided by FinCEN to the law enforcement community; (2) the

extent to which FinCEN’s products and services have been considered

useful by the law enforcement community in identifying, developing, or

prosecuting money laundering and other financial crime cases; (3) the

extent to which FinCEN evaluates the states’ compliance with applicable

controls over access to and use of information when state law

enforcement officials directly access FinCEN’s resources; and (4) FinCEN’s

efforts to obtain approval from the Internal Revenue Service (IRS) to

provide IRS Form 8300 information (Report of Cash Payments Over $10,000

Received in a Trade or Business)1 to the law enforcement community.

To determine the trends in and usefulness of FinCEN’s products and

services, we focused on five principal types of support provided by FinCEN:

(1) tactical products in support of agencies’ ongoing investigations;

(2) strategic products designed to address longer-term or more broadly

scoped topics; (3) artificial intelligence products designed to provide

investigative leads; (4) a “platform concept,” whereby federal agency

officials can access databases and do their own research using FinCEN

resources; and (5) “Project Gateway,” which provides state agencies with

remote, on-line access to financial and some commercial data. The scope

of our work did not include a review of the Suspicious Activity Reporting

System, which is administered by FinCEN.

1

Under the Internal Revenue Code, any person who receives more than $10,000 in cash in one

transaction (or two or more related transactions) in the course of trade or business generally must file

an information return (IRS Form 8300) with IRS specifying the name, address, and taxpayer

identification number of the person from whom the cash was received and the amount of cash

received.

Page 44 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix I 

Objectives, Scope, and Methodology

Scope and

Methodology of Our

Work Regarding

Trends in the Types

and Quantities of

Support Provided by

FinCEN to the Law

Enforcement

Community

To determine the trends in the types of support provided by FinCEN to the

law enforcement community, we obtained a description of FinCEN’s

primary products and services, including the date when each type of

product or service first became available. Also, to obtain an understanding

of the processes and purposes for each type of product or service, we

interviewed officials of FinCEN’s component offices. To determine the

trends in the quantities of support provided since 1990, including which

agencies requested which types of support, we obtained and analyzed

FinCEN workload documents and relevant information from FinCEN’s

computerized databases. Also, to ascertain reasons for the trends in

FinCEN’s support, we interviewed FinCEN officials, Treasury and Justice

headquarters’ officials, long-term agency detailees to FinCEN, and state

agency officials.

Scope and

Methodology of Our

Work Regarding the

Extent to Which

FinCEN’s Products

and Services Have

Been Useful to the

Law Enforcement

Community

FinCEN generates a variety of products and services to support many

different agencies or organizations. Therefore, to the extent practical, we

used mail surveys and in-person and telephone interviews to collect

information on the usefulness of the full range of FinCEN’s support. This

included support of money laundering and other financial crimes

investigations as well as support of regulatory or background checks for

employment, security clearance, and business or professional licensing

purposes. We surveyed or interviewed officials from

• the principal federal law enforcement agencies within the Treasury

Department (i.e., IRS; the Bureau of Alcohol, Tobacco and Firearms; the

Customs Service; and the Secret Service);

• the principal federal law enforcement agencies within the Justice

Department (i.e., the Federal Bureau of Investigation (FBI), the Marshals

Service, the Drug Enforcement Administration (DEA), U.S. Attorney

Offices, and the Immigration and Naturalization Service);

• other federal agencies that were high-volume requesters of FinCEN’s

products and services, such as the Postal Inspection Service, the

Department of Agriculture, the Air Force Office of Special Investigations,

and the Naval Criminal Investigative Service (see table I.1 at the end of this

app. for a complete list of the high-volume requesters we surveyed); and

• state requesters of FinCEN support.

During our inquiries, we obtained case-specific information (if available

and appropriate) as well as opinions, views, and anecdotal information

from managers and agents of the applicable agencies and organizations.

We focused on relatively recent support—that is, support generated since

Page 45 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix I 

Objectives, Scope, and Methodology

January 1996. We obtained opinions and views on support provided before

January 1996 but could not provide a statistically valid or meaningful

comparison of the usefulness of FinCEN today versus FinCEN in the past.

The following sections provide additional details regarding our scope and

methodology for determining the extent to which each of FinCEN’s five

principal types of products and services have been useful to the law

enforcement community in identifying, developing, investigating, or

prosecuting cases,

Tactical Support We focused on requests for tactical products that FinCEN received or logged

in during the 12-month period from April 1996 through March 1997 and

responded to before August 1997. To obtain general or broad-based

indications of the usefulness of FinCEN’s full range or types of tactical

support, we surveyed by mail a stratified, statistical sample of 352 federal

agency officials who requested various tactical work products (i.e.,

database extracts, analytical reports, and expedited reports).2

 The 352

federal officials were selected from 2,379 officials in 31 agencies that,

according to FinCEN’s records, made 4,409 (95 percent) of the 4,626 total

federal requests for FinCEN’s tactical support during the 12-month period

(see table I.1 at the end of this app.). We did not survey officials from the

34 agencies that made the remaining 217 (5 percent) federal tactical

requests because of time constraints and the logistics involved in

coordinating surveys with these agencies.

We received usable responses from 251 (71 percent) of the 352 federal

officials. The responses were weighted to represent the 2,379 federal

officials who made the 4,409 requests for tactical support during the

survey period. Unless otherwise noted, the estimates of percentages from

this sample in the report have 95-percent confidence intervals of no more

than plus or minus 10 percentage points.

Also, we surveyed by mail a simple random sample of 95 state agency

officials who requested FinCEN’s tactical support during the 12-month

period.3

 The 95 state officials were from 15 states that made 18 or more

requests in the period. According to FinCEN’s records, these 15 states made

813 (75 percent) of the 1,077 total requests made through all state

coordinators for FinCEN tactical support during the 12-month period (see

table I.2 at the end of this app.). State coordinators were able to identify

2

See appendix III for a copy of the questionnaire.

3

See appendix IV for a copy of the questionnaire.

Page 46 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix I 

Objectives, Scope, and Methodology

504 requesters of FinCEN’s tactical support in these 15 states. We randomly

selected 95 users for our survey. After making at least 2 attempts to

contact nonrespondents by telephone, we received usable responses from

54 (57 percent) of the 95 state officials. The percentage estimates from this

sample in the report have 95-percent confidence intervals of no more than

plus or minus 13 percentage points and are projectable to all of the

requesters in the 15 states.

Further, to obtain additional perspectives on the usefulness of FinCEN’s

tactical support, we conducted in-person or telephone interviews with

(1) officials from the FBI and the Bureau of Alcohol, Tobacco and Firearms

who were on detail to FinCEN at the time of our review and (2) senior FinCEN

officials responsible for overseeing tactical support.

In addition to these surveys and interviews, we determined why some

federal and state agencies and offices submitted few if any requests for

FinCEN’s tactical support. Based on our review of FinCEN’s records, we

determined that many federal field offices, states, and High Intensity Drug

Trafficking Areas (HIDTA) requested little or no tactical support from FinCEN

during the period we reviewed, April 1996 through March 1997. To

determine the reasons why:

• We surveyed by mail all U.S. field offices of the IRS (33 offices), the U.S.

Customs Service (20 offices), the FBI (56 offices), and the DEA (20 offices)

(see app. V for a copy of the questionnaire). Of the total 129 field offices,

we received responses from 116 (90 percent).

• Also, we interviewed officials from 9 of the 10 states that, according to

FinCEN’s records, made either one or no requests for FinCEN’s tactical

support from April 1, 1996, through March 31, 1997.4

• Further, we surveyed all 22 HIDTAs that had been designated by the Office

of National Drug Control Policy at the time of our review to determine the

extent to which FinCEN products are used to support their money

laundering and other financial crimes investigations. We received

responses from 16 HIDTAs. We did not project these responses to the 22

HIDTAs.

In our mail surveys and interviews, we ascertained what other (non-FinCEN)

sources of financial, commercial, and/or law enforcement information and

analyses are used by the federal field offices, state agencies, and HIDTAs.

4

The tenth state—South Dakota—did not respond to our telephone inquiries.

Page 47 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix I 

Objectives, Scope, and Methodology

Further, to determine how FinCEN informed the law enforcement

community about the availability of FinCEN’s products and services, we

(1) reviewed the results of FinCEN’s May 1996 outreach efforts, which were

designed to obtain feedback from federal law enforcement agencies;

(2) reviewed FinCEN’s records of participation at meetings, training events,

and conferences at the federal and state levels; and (3) interviewed FinCEN

officials.

Strategic Support To determine the usefulness of FinCEN’s strategic support, we conducted

telephone interviews with law enforcement officials who received or used

three of the four strategic products FinCEN prepared from January 1996

through December 1997 (i.e., the Louisiana, Georgia, and South Florida

money-laundering threat assessments).5

 Also, we interviewed senior FinCEN

officials about changes in strategic support, including how the newly

formed Office of Research and Analysis was functioning.

Artificial Intelligence

Support

To determine the usefulness of FinCEN’s artificial intelligence products, we

attempted to survey by mail all federal and state law enforcement officials

identified in FinCEN’s database as having received artificial intelligence

products from April 1996 through March 1997. First, we determined that

FinCEN had provided 85 artificial intelligence products during this period.

Next, we attempted to locate and survey the end user for each product. We

identified and mailed a survey questionnaire to 13 officials who were end

users for 51, or 60 percent, of the 85 products.6

 If more than one product

was associated with the same investigative effort, we requested that only

one questionnaire be completed for the associated products. We received

responses from all 13 officials.7

Further, we reviewed FinCEN data to determine the extent to which FinCEN

self-initiated artificial intelligence products (versus products requested by

law enforcement agencies). We also interviewed FinCEN officials to

ascertain reasons for variations in the number of self-initiated products

5

The fourth report addressed emerging cyberpayment technology and its potential use in criminal

activities.

6

According to FinCEN’s records, 12 individuals requested the remaining 34 artificial intelligence

products. We contacted by telephone 8 of the 12 requesters who told us they could not readily identify

the person(s) who eventually used the products. We made at least two attempts to contact the other

four individuals by telephone.

7

Two of the 13 officials received artificial intelligence products that were used to support 2 separate

and unrelated cases. Therefore, we received a total of 15 questionnaires.

Page 48 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix I 

Objectives, Scope, and Methodology

over the years, including the extent to which the self-initiated products

were used by the law enforcement community.

Platform Concept We conducted in-person or telephone interviews with officials from three

agencies that, according to FinCEN officials, were frequent platform

users—the Washington/Baltimore HIDTA; the Bureau of Alcohol, Tobacco

and Firearms; and the Defense Criminal Investigative Service. According

to FinCEN’s year-end records, the three agencies we contacted were among

the four agencies that most frequently used platforms in 1997.8

 The three

agencies accounted for 971 (66 percent) of the 1,477 investigative cases

that were supported by platforms in 1997. We asked these officials about

their use of platforms, including the number and type of cases they

support, the databases they access, and their views about the usefulness of

the platform concept.

Project Gateway We conducted telephone interviews with officials9

 from the four states

that made the most Gateway queries in fiscal year 1997—California,

Illinois, Pennsylvania, and Texas. These 4 states made 22,876 (40 percent)

of the total 57,663 Gateway queries in fiscal year 1997. We also interviewed

officials from two states—Montana and Wyoming—that used Gateway

fewer than 50 times in fiscal year 1997 to determine reasons for the low

use. We interviewed FinCEN officials to determine future Gateway plans and

to identify efforts to provide Gateway access for non-Treasury federal

agencies.

8

The Capitol Police was the fourth agency.

9

The state officials we interviewed were responsible for coordinating the respective state’s requests for

access to Bank Secrecy Act data via Gateway.

Page 49 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix I 

Objectives, Scope, and Methodology

Scope and

Methodology of Our

Work Regarding the

Extent to Which

FinCEN Evaluates the

States’ Compliance

With Applicable

Controls Over Project

Gateway

To determine how FinCEN controls access to and use of information

obtained via Project Gateway, we (1) interviewed FinCEN officials and

Gateway users and (2) reviewed FinCEN’s Gateway Security Plan (July

1996) and the IRS Detroit Computing Center’s Project Gateway Users Guide

(May 1997). Also, we interviewed FinCEN officials to determine the extent

to which FinCEN had evaluated the states’ compliance with applicable

controls over access to and use of information obtained via Project

Gateway. It was beyond the scope of our study to audit or test the controls

or safeguards FinCEN maintains over Project Gateway.

Scope and

Methodology of Our

Work Regarding

FinCEN Efforts to

Provide IRS Form

8300 Information to

the Law Enforcement

Community

To determine the potential usefulness of IRS Form 8300 information for law

enforcement purposes, we reviewed previous GAO reports and interviewed

federal and state law enforcement officials. To determine what disclosure

and safeguard requirements apply to the dissemination of Form 8300

information and Bank Secrecy Act data, we (1) reviewed applicable

provisions in the 1996 act that authorized the use of Form 8300

information for law enforcement purposes, (2) interviewed IRS officials

and reviewed applicable sections of the Internal Revenue Code, and

(3) interviewed FinCEN officials and reviewed applicable documentation.

Also, to determine how IRS currently makes Form 8300 information

available to federal, state, local, and non-U.S. law enforcement agencies,

we (1) interviewed IRS officials and (2) reviewed safeguard and reporting

requirements contained in IRS’ guidance for completing a Safeguard

Procedures Report. To determine the status of FinCEN’s efforts to obtain

approval from IRS to provide IRS Form 8300 to the law enforcement

community, we interviewed FinCEN, IRS, and Treasury Department officials.

Page 50 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix I 

Objectives, Scope, and Methodology

Table I.1: Number of Federal Agency

Requests for FinCEN Tactical Support,

April 1996-March 1997 Agency

Number of

requests

Category

percent

Cumulative

percent

Justice agencies we surveyed

Federal Bureau of Investigation 662

U.S. Marshals Service 323

Drug Enforcement Administration 202

U.S. Attorneys 128

Immigration and Naturalization

Service

56

Department of Justice 26

Total for Justice agencies we

surveyed

1,397 30.2% 30.2%

Treasury agencies we surveyed

Internal Revenue Service 413

Bureau of Alcohol, Tobacco and

Firearms

341

U.S. Customs Service 216

U.S. Secret Service 34

Department of the Treasury 29

Total for Treasury agencies we

surveyed

1,033 22.3 52.5

Other federal agencies we surveyed

Central Intelligence Agency 508

Naval Criminal Investigative

Service

226

U.S. Postal Inspection Service 175

Department of Agriculture 168

Air Force Office of Special

Investigations

117

Department of Labor 98

Defense Criminal Investigative

Service

92

Small Business Administration 77

Federal Deposit Insurance

Corporation

74

Department of Housing and

Urban Development

60

Army Criminal Investigation

Command

58

Office of the Secretary of the Air

Force

53

(continued)

Page 51 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix I 

Objectives, Scope, and Methodology

Agency

Number of

requests

Category

percent

Cumulative

percent

Department of Health and

Human Services

47

Federal Trade Commission 41

Securities and Exchange

Commission

41

U.S. Probation and Parole Office 33

Department of Education 31

Railroad Retirement Board 30

Department of Commerce 27

Social Security Administration 23

Total for other federal

agencies we surveyed

1,979 42.8 95.3a

Federal agencies we did not survey

Department of Energy 19

Department of State 19

Environmental Protection Agency 17

U.S. Army (other)b 15

Department of the Interior 13

Veterans Administration 11

Food and Drug Administration 11

Office of the Comptroller of the

Currency

10

U.S. Information Agency 9

Government Printing Office 9

Fish and Wildlife Commission 8

Department of Transportation 8

National Aeronautics and Space

Administration

8

Nuclear Regulatory Commission 7

Office of Foreign Asset Control 7

U.S. Coast Guard 6

Various other agenciesc 40

Total for federal agencies we

did not survey

217 4.7

Grand total 4,626 100.0%

(Table notes on next page)

Page 52 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix I 

Objectives, Scope, and Methodology

aFor our survey questionnaire to federal agency officials (see app. III), we selected a sample from

the 31 agencies listed above; these agencies made 95 percent of the total federal requests for

tactical support during the survey period (April 1996-March 1997).

bAs listed earlier in this table, the only Army component we surveyed was the Army Criminal

Investigation Command.

cThis group of requesters includes a total of 18 agencies, each of which made 5 or fewer

requests for FinCEN tactical support during the survey period. For example, the Tennessee Valley

Authority made five requests, and the Federal Communications Commission made one request.

Source: Developed by GAO based on FinCEN data.

Table I.2: Number of State Requests

for FinCEN Tactical Support, April

1996-March 1997

Agency Number of requests Percent

States we surveyeda

Pennsylvania 124

California 115

New York 93

Ohio 86

Texas 59

Indiana 59

Arizona 46

Illinois 44

Michigan 36

Connecticut 32

North Carolina 32

New Mexico 25

Virginia 25

Colorado 19

Wisconsin 18

Total for states we

surveyed

813 75.5%

Other states we did not

surveyb

264 24.5

Grand total 1,077 100.0

aWe surveyed 15 states, each of which made 18 or more requests for FinCEN tactical support

during the period April 1996 to March 1997.

bThis group consists of 35 states (that made 264 total requests) and the District of Columbia (11

requests). Of the 35 states, 5 states made 1 request each, and 6 states, plus Puerto Rico, made

no requests.

Source: Developed by GAO based on FinCEN data.

Page 53 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix II 

Databases and Other Information Resources

Used by FinCEN

FinCEN’s information resources fall into four broad categories: financial,

commercial, and law enforcement databases, and its own internal

databases.

Financial Database The financial database consists of reports that are required to be filed

under the Bank Secrecy Act (BSA). These reports can be retrieved from

either the U.S. Customs Service’s computer center in Newington, Virginia,

or the Internal Revenue Service’s (IRS) Detroit Computing Center. Both

computer center systems are accessible on-line at FinCEN through either

the Treasury Enforcement Communications System or the Currency and

Banking Retrieval System. The financial database is available to bona fide

entities1

 for criminal, civil, regulatory, and foreign investigations.2 Table

II.1 describes the various BSA reports used by FinCEN.

1

Bona fide entities consist of federal, state, and local law enforcement agencies; regulatory agencies;

and foreign governments.

2

Foreign requests require written approval of the FinCEN Director.

Page 54 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix II 

Databases and Other Information Resources

Used by FinCEN

Table II.1: BSA Reports Used by

FinCEN BSA report Description

Currency Transaction Report (IRS Form

4789)

Filed by bank and nonbank financial

institutions reflecting cash transactions of

more than $10,000. The database contains

reports since 1983.

Currency Transaction Report by Casinos

(IRS Form 8362) and the Nevada Currency

Transaction Report by Casinos

Filed by casinos reflecting cash

transactions of more than $10,000. The

database contains reports since 1985.

Report of International Transportation of

Currency or Monetary Instruments (U.S.

Customs Service Form 4790)

Filed by persons carrying currency or

certain monetary instruments in aggregate

amounts of more than $10,000 into or out

of the United States. The database

contains reports since 1989.

Report of Foreign Bank and Financial

Accounts (Treasury Department Form

90-22.1)

Filed annually by U.S. persons with interest

in, or signature authority over, bank

securities or other financial accounts in a

foreign country, which exceed $10,000 in

total value at any time during a calendar

year. The database contains reports since

1985.

Suspicious Activity Report (Treasury

Department Form 90-22.47)

Filed by financial institutions which

determine that some activity is suspicious.a

The database contains reports since April

1996 and some incomplete history files

dating back to 1990.

aFinCEN regulations provide, for example, that a suspicious activity report shall be filed for a

transaction that has no business or apparent lawful purpose or that is not the sort in which the

particular customer would normally be expected to engage, and the bank knows of no

reasonable explanation for the transaction after examining the available facts, including the

background and possible purpose of the transaction.

Source: FinCEN.

There are some restrictions on the release of Currency Transaction

Reports, Currency Transaction Reports by Casinos, Reports of

International Transportation of Currency or Monetary Instruments, or

Reports of Foreign Bank and Financial Accounts. For example, FinCEN

regulations provide that such information made available to other

departments or agencies of the United States, any state or local

government, or any foreign government shall be received in confidence

and shall not be disclosed to any person except for official purposes

relating to the investigation, proceeding, or matter in connection with the

information. In addition, written approval must be obtained from the

FinCEN Director prior to releasing BSA data to foreign governments.

Page 55 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix II 

Databases and Other Information Resources

Used by FinCEN

Suspicious Activity Reports are only researched and disseminated for

designated user agencies3

 and certain state agency officials.

Commercial

Databases

FinCEN procures access to a variety of commercial databases that are used

to locate individuals, determine asset ownership, and establish links

between individuals, businesses, and assets. These databases encompass a

wide variety of demographic and census information, including corporate

ownership, nationwide telephone directories, real estate purchases, and

courthouse records. There are no restrictions on the release of

commercial information to bona fide entities for criminal, civil, regulatory,

and foreign investigations. Table II.2 describes the commercial databases

FinCEN had access to as of February 1998.4

Table II.2: Commercial Databases Used

by FinCEN Database Description

Autotrack 

Plus

Provides on-line access to public records from selected

states, with broad coverage of Florida and Texas (e.g.,

driver’s license number, motor vehicle registration,

corporation filings, and real estate ownership) and less

broad coverage of public records from New York, New

Hampshire, Oregon, and Washington. Also available is a

nationwide “National Dossier,” which compiles current

and former addresses, telephone numbers, and a listing

of neighbors.

CBI-Equifax One of the nation’s large credit bureau services. FinCEN,

by law, obtains only the “header” information from an

individual’s credit report, which comprises current and

former addresses, possibly a spouse’s name, and the

month and year of birth. FinCEN does not obtain any

information from the credit report relative to the credit

history or employment history of an individual.

CDB-InfoTek Provides access to on-line public records that can assist

in locating people and businesses, identifying and

verifying assets, exposing and controlling fraud, and

uncovering and verifying background information.

Dallas Computer Services 

National Inquiry System

Provides on-line access to names, dates of birth,

addresses, phone numbers, and driver’s license

information.

(continued)

3

At the time of our review, designated user agencies consisted of the Federal Deposit Insurance

Corporation, Federal Reserve, Comptroller of the Currency, National Credit Union Association, Office

of Thrift Supervision, Federal Bureau of Investigation, IRS-Criminal Investigation Division, U.S. Secret

Service, U.S. Customs Service-Office of Investigations, and Executive Office of the U.S. Attorneys or

U.S. Attorneys’ Offices.

4

According to a FinCEN official, the commercial databases FinCEN procures access to may vary each

year.

Page 56 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix II 

Databases and Other Information Resources

Used by FinCEN

Database Description

Dialog A gateway to over 450 databases that provide access to

millions of documents in the area of business news and

industry analysis from full-text trade journals, newspapers,

and news wires. Domestic and international company

directories are also available, many of which include

corporate financial statistics.

Dun and Bradstreet Provides access to business information from millions of

companies worldwide. For companies in the United

States, a complete business information report is

available, which includes a corporate history, financial

data, banking relationships, public record filings, and

biographical information on key officers. For international

companies, directory information includes the names of

up to 10 executives. All companies in the database are

identified by a unique number, which allows a complete

“corporate family tree” to be produced.

Information America One of the major providers of on-line public records,

providing access to the corporation and limited

partnership filings from most states; an asset locator that

searches real property records (including tax assessor

records and deed transfers) from over 30 states as well

as nationwide Federal Aviation Administration aircraft and

Coast Guard watercraft files; nationwide business

bankruptcy filings; a nationwide people finder service;

and an extensive file of liens and judgments from every

state.

Lexis-Nexis One of the major providers of on-line public records with

extensive files of real estate ownership and deed

transfers, state corporation and limited partnership filings,

personal and business bankruptcies, nationwide liens

and judgments, a nationwide person and business locator

file, and civil and criminal indices. The service also

provides full-text access to more than 2,300 information

sources from U.S. and overseas newspapers, magazines,

journals, newsletters, wire services, and broadcast

transcripts. A comprehensive company library provides

numerous files of U.S. company reports, international

company reports, bankruptcy filings, business

biographical reports, and Securities and Exchange

Commission filings.

National Association of

Securities Dealers

Provides biographical information on stock broker/dealer

businesses and individuals.

PhoneDisc A set of five CD-ROM discs providing a nationwide

telephone directory on both individuals and businesses.

This database contains only listed telephone numbers.

Source: FinCEN.

Page 57 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix II 

Databases and Other Information Resources

Used by FinCEN

Law Enforcement

Databases

Through written agreements outlining the details of database access,

dissemination authority, etc., FinCEN has access to some investigative

databases maintained by other law enforcement agencies. FinCEN provides

information from these law enforcement databases to bona fide entities

for domestic criminal investigations. Several queries of Treasury

Department’s system (see table II.3) are also available for domestic

regulatory and foreign investigations. Table II.3 describes the law

enforcement databases FinCEN had access to as of November 1997.

Table II.3: Law Enforcement Databases

Used by FinCEN, November 1997 Agency Descriptiona

Department of the Treasury The Treasury Enforcement Communications System is

administered by the U.S. Customs Service on behalf of a

consortium of over 25 federal agencies, for the purpose of

providing a broad scope of information for law

enforcement purposes. In addition to providing

information on U.S. Treasury law enforcement

investigations, it provides access to the National Crime

Information Center, the National Law Enforcement

Telecommunications Network, the Federal Aviation

Administration’s Private Aircraft records, and U.S. Custom

Service’s Automated Commercial Shippers record system

of import/export declarations and related international

shipping documents.

Drug Enforcement

Administration

The Narcotics and Dangerous Drugs Information System

database contains information on Drug Enforcement

Administration cases.

U.S. Postal Inspection Service The Inspection Service Database Information System is a

database of all current and closed Postal Inspection

Service criminal cases.

aAccording to a FinCEN official, FinCEN does not have access to all of the investigative case

information in the law enforcement databases, such as details on active cases.

Source: GAO analysis of FinCEN data.

FinCEN’s Internal

Databases

FinCEN uses its internal databases to index and track inquiries made on

individuals and businesses. This includes the results of the intelligence

reports prepared by FinCEN as well as information captured through

FinCEN’s platform and Gateway programs. These databases enable FinCEN to

“alert” or notify one agency that another agency has or had an interest in

the same investigative subject, which can help the agencies coordinate

their efforts.

Page 58 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix III 

GAO Questionnaire: Survey of Federal

Agency Officials Regarding Support

Provided by FinCEN

Page 59 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix III 

GAO Questionnaire: Survey of Federal

Agency Officials Regarding Support

Provided by FinCEN

Page 60 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix III 

GAO Questionnaire: Survey of Federal

Agency Officials Regarding Support

Provided by FinCEN

Page 61 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix III 

GAO Questionnaire: Survey of Federal

Agency Officials Regarding Support

Provided by FinCEN

Page 62 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix IV 

Survey of State and Local Law Enforcement

Officials Regarding Support Provided by

FinCEN

Page 63 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix IV 

Survey of State and Local Law Enforcement

Officials Regarding Support Provided by

FinCEN

Page 64 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix IV 

Survey of State and Local Law Enforcement

Officials Regarding Support Provided by

FinCEN

Page 65 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix IV 

Survey of State and Local Law Enforcement

Officials Regarding Support Provided by

FinCEN

Page 66 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix V 

Use of the Financial Crimes Enforcement

Network: Survey of Justice and Treasury

Field Offices

Page 67 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix V 

Use of the Financial Crimes Enforcement

Network: Survey of Justice and Treasury

Field Offices

Page 68 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix V 

Use of the Financial Crimes Enforcement

Network: Survey of Justice and Treasury

Field Offices

Page 69 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix V 

Use of the Financial Crimes Enforcement

Network: Survey of Justice and Treasury

Field Offices

Page 70 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix V 

Use of the Financial Crimes Enforcement

Network: Survey of Justice and Treasury

Field Offices

Page 71 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix VI 

Comments From FinCEN

Page 72 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix VI 

Comments From FinCEN

Page 73 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix VI 

Comments From FinCEN

Page 74 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
Appendix VII 

Major Contributors to This Report

General Government

Division, Washington,

D.C.

Danny R. Burton, Assistant Director

David P. Alexander, Senior Social Science Analyst

James M. Fields, Senior Social Science Analyst

Stuart M. Kaufman, Senior Social Science Analyst

Barry L. Reed, Senior Social Science Analyst

Office of the General

Counsel, Washington,

D.C.

Geoffrey R. Hamilton, Senior Attorney

Dallas Field Office R. Eric Erdman, Evaluator-in-Charge

Michael H. Harmond, Evaluator

(182040) Page 75 GAO/GGD-98-117 FinCEN’s Law Enforcement Support Role Is Evolving
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