United States General Accounting Office

GAO Testimony

Before the Subcommittee on General Oversight and

Investigations, Committee on Banking and Financial

Services, House of Representatives

For Release on Delivery

Expected at

1:00 p.m.

on Wednesday

April 1, 1998

MONEY LAUNDERING

FinCEN’s Law Enforcement

Support, Regulatory, and

International Roles

Statement of Norman J. Rabkin

Director, Administration of Justice Issues

General Government Division

GAO/T-GGD-98-83

Summary 

Money Laundering: FinCEN’s Law

Enforcement Support, Regulatory, and

International Roles

The Financial Crimes Enforcement Network (FinCEN) was established in

1990 to support law enforcement agencies by analyzing and coordinating

financial intelligence information to combat money laundering. This

Subcommittee has asked GAO to review aspects of FinCEN’s law

enforcement role; its regulatory role, including the processing of civil

penalties for Bank Secrecy Act (BSA) violations; and its international role.

In supporting law enforcement, FinCEN has issued fewer analytical

products in recent years. A primary reason FinCEN officials gave for this

change is that FinCEN’s staffing levels have remained fairly constant (at

about 160 staff), while its overall mission has expanded. Also, FinCEN has

been encouraging and training other federal, state, and local law

enforcement agencies to access and analyze source data directly either

through FinCEN resources or their own. Federal and state officials GAO

interviewed indicated general satisfaction with FinCEN’s products and

services. Most nonusers told GAO that they rely on in-house capabilities or

use intelligence or analytical support centers other than FinCEN.

GAO’s recent report on FinCEN’s regulatory role concluded that FinCEN needs

to better communicate its regulatory priorities and time lines, particularly

regarding regulations authorized or required by the Money Laundering

Suppression Act (MLSA) of 1994. FinCEN did not meet any of the three

statutory deadlines imposed by the 1994 act, and final regulations for

several provisions of the act are still pending. The intended law

enforcement benefits of the MLSA amendments cannot be fully achieved

until all of the regulations are implemented.

In 1992, GAO reported that Treasury was taking about 21 months, on

average, to process civil penalty referrals for BSA violations. Since then, the

average has grown to about 3 years, according to FinCEN data. GAO is

working with FinCEN to identify reasons for the increase in processing time.

FinCEN’s principal international efforts include (1) working with

international organizations to promote the development of effective

anti-money laundering controls; and (2) helping other nations establish

financial intelligence units, which serve as the central focal points for

these countries’ anti-money laundering efforts. FinCEN’s Office of

International Programs is the agency’s second largest organizational

component.

This hearing provides an excellent opportunity to focus on FinCEN’s future

directions. Relevant questions include: (1) Has FinCEN appropriately

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Summary 

Money Laundering: FinCEN’s Law

Enforcement Support, Regulatory, and

International Roles

defined and given proper priority to its missions? and (2) Does FinCEN have

adequate resources to carry out its missions? The Results Act provides a

framework for assessing FinCEN’s operations and its ability to meet

congressional expectations.

Page 2 GAO/T-GGD-98-83
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Money Laundering: FinCEN’s Law

Enforcement Support, Regulatory, and

International Roles

Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today to discuss the various anti-money laundering1

 roles of the Treasury Department’s Financial Crimes Enforcement

Network (FinCEN). My statement will outline both the results of recently

completed work2

 and preliminary results of ongoing work that we have

undertaken at the request of this Subcommittee.

Treasury describes FinCEN as a network that links the law enforcement,

financial, and regulatory communities to make the prevention, detection,

and prosecution of money laundering more effective. Created in 1990,

FinCEN’s original mission centered on providing direct support to law

enforcement agencies that investigate money laundering and other

financial crimes. For example, to support an investigation of drug

trafficking, FinCEN accessed various computerized databases to identify

and analyze financial transactions that might indicate how the proceeds of

crime were concealed. Such support still remains FinCEN’s primary mission

even though, over time, the agency’s responsibilities have become more

multifaceted. For example, in May 1994, Treasury significantly expanded

FinCEN’s role, giving it responsibility for

• promulgating regulations under the Bank Secrecy Act (BSA),3

• evaluating violations of BSA requirements and recommending appropriate

civil penalties, and

• leading Treasury’s efforts to combat money laundering domestically and

internationally.

As its responsibilities increased, FinCEN’s staffing levels have remained

fairly constant. For example, FinCEN had 156 staff on board in fiscal year

1992 and 162 staff on board in fiscal year 1997.4 FinCEN’s fiscal year 1998

budget is about $24 million.

Last year, the Subcommittee asked us to review certain aspects of FinCEN’s

operations, with particular emphasis on (1) the trends in, and usefulness

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, tax evasion, prostitution, and

embezzlement.

2

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

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

3

Public Law 91-508, 84 Stat. 1114 (1970).

4

See appendix I for more details on FinCEN’s organization.

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of, products and services provided by FinCEN to the law enforcement

community; (2) the process for developing and issuing BSA regulations;

(3) FinCEN’s efforts in assessing civil penalties for BSA violations; and (4) the

role FinCEN plays in promoting international awareness of money

laundering. We have completed our work and issued a report on the

second topic—i.e., FinCEN’s regulatory process—and our work on the other

three topics is still ongoing. For all four topics, I will now briefly

summarize the results of our work to date, beginning with our current

work on FinCEN’s law enforcement support role.

FinCEN’s Law

Enforcement Support

Role Is Evolving

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

services it provides to the law enforcement community. From 1990 to

1992, FinCEN provided primarily two types of support: (1) tactical support,

which included information and leads in direct support of law

enforcement investigations; and (2) strategic support, which included

analysis and reports on more broadly scoped topics related to money

laundering. In 1993, FinCEN initiated its artificial intelligence system, which

provides computerized analyses of financial data to identify individuals

and businesses possibly involved in financial crimes. In 1994, to leverage

its resources in aiding law enforcement investigative efforts, FinCEN

developed two self-help programs. One is a “platform” concept whereby

designated employees of other federal agencies can visit FinCEN to access

databases and conduct research to support their respective agency’s

investigations. The other is Project Gateway, which provides designated

state and local law enforcement officials with direct, on-line access to BSA

financial data.

To determine the trends in the quantities of support provided by FinCEN

from 1990 to 1997, we obtained and analyzed FinCEN workload documents

and relevant information from FinCEN’s computerized databases.5

 Our

preliminary analysis of FinCEN data indicate that in recent years, FinCEN has

issued fewer tactical, strategic, and artificial intelligence products. A

primary reason FinCEN officials gave for this change is that FinCEN’s staffing

levels have remained fairly constant over the years, while its overall

mission has expanded. Consequently, FinCEN chose to dedicate fewer staff

to generate these products. Also, FinCEN has encouraged, trained, and

increasingly relied on agencies to use self-help programs to conduct

research and analysis for cases that do not require FinCEN’s expertise.

5

We did not independently verify the workload data provided by FinCEN.

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Because of reductions in tactical staff, beginning in 1995, FinCEN decided to

stop accepting certain types of requests that do not directly support law

enforcement functions (e.g., requests involving background checks for

employment or security clearance purposes). FinCEN also decided to

self-initiate fewer products—particularly regarding strategic support and

artificial intelligence analyses—because fewer staff supported these

activities and because agencies reportedly often did not take any action as

a result of the products provided.

At the Subcommittee’s request, we surveyed representative samples of

federal and state agency officials to obtain their perceptions about the

usefulness of the tactical support they received from FinCEN.

6

 Over

90 percent of the federal respondents said that, overall, the case-specific

products they received from FinCEN were useful. State responses were

similar to the federal responses. 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, FinCEN’s records showed that some 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 to

March 1997. To determine the reasons why this support was not requested,

we surveyed 129 Treasury and Justice field offices 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 1 or no requests for FinCEN’s tactical support from April 1996 to

March 1997. Survey results generally did not indicate dissatisfaction with

FinCEN’s products. Rather, survey respondents cited other reasons for their

limited use of FinCEN. These reasons included reliance on in-house

capabilities and the availability of intelligence or analytical support

centers other than FinCEN. However, we found that some federal officials

we surveyed were not aware of the various products and services offered

by FinCEN and that FinCEN has neither developed nor widely disseminated

guidelines specifying 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 created a new strategic

6

We surveyed by mail statistical samples of federal and state agency officials who requested tactical

support from April 1996 through March 1997 and to whom FinCEN had responded before August 1997.

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office that plans to help agencies improve their money-laundering

detection and prevention programs. This office will also provide

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

Also, FinCEN has initiated efforts to “partner” with the law enforcement

community to provide strategic and artificial intelligence products that are

more useful to the relevant agencies.

To determine the usefulness of FinCEN’s self-help programs, we conducted

(1) in-person or telephone interviews with officials from three of the four

agencies that most frequently used platforms in 1997 and (2) telephone

interviews with officials from the four states that made the most Gateway

queries in 1997. According to the federal and state officials we

interviewed, these self-help programs are useful to agencies in combating

money laundering and other financial crimes. FinCEN data show that an

increasing number of federal and state agencies are using these self-help

mechanisms. FinCEN data also show an increase in the number of times

FinCEN used Project Gateway to alert an agency that another agency had an

interest in the same investigative subject.

Currently, we are in the process of finalizing our work on FinCEN’s law

enforcement support role, and we expect to issue the Subcommittee a

report later this spring.

FinCEN Needs to

Better Communicate

Regulatory Priorities

and Time Lines

In September 1994, Congress enacted major legislation, the Money

Laundering Suppression Act of 1994 (MLSA).7

 This act authorized or

required the promulgation of significant new BSA regulations. BSA

regulations form the core element of Treasury’s programs to prevent and

detect money laundering. Several weeks ago, we issued the Subcommittee

a report on the results of our review of FinCEN’s regulatory role.8

 We

reported that FinCEN’s process for developing and issuing BSA regulations

was generally designed to reflect standardized procedures set forth in the

Administrative Procedure Act. In addition, we reported that FinCEN used a

partnering approach to actively seek input from the law enforcement,

regulatory, and financial services communities.

FinCEN did not meet any of the three statutory deadlines imposed by the

1994 act. We believe that Congress’ inclusion of statutory deadlines with

7

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

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

8

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

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

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respect to the MLSA provisions shows that it intended that those initiatives

be completed in a timely manner. Further, at the time of our review, final

regulations to implement several provisions of the 1994 act were still

pending. Specifically, we reported that FinCEN had not issued final

regulations regarding card clubs,9

 foreign bank drafts, registration of

money services businesses, discretionary exemptions from filing currency

transaction reports, and delegation of civil penalty authority.

Unquestionably, the intended law enforcement benefits of the MLSA

amendments cannot be fully achieved until all of the regulations are

implemented.

We concluded that FinCEN needs to better communicate its regulatory

priorities and time lines, particularly regarding regulations authorized or

required by the MLSA. In commenting on a draft of our report, the Director,

FinCEN, said he believed that his agency had adequately communicated its

rulemaking agenda to the appropriate congressional committees. From

our perspective, however, information was not uniformly or routinely

communicated by FinCEN to all interested congressional parties. Because of

the ad hoc approach FinCEN used in communicating the progress it had

made in meeting regulatory initiatives, congressional committees were not

in a good position to assess FinCEN’s regulatory program, including the

agency’s prioritization of regulatory initiatives, the time lines for issuing

final regulations, and the allocation of resources necessary for completing

these initiatives. Thus, we continue to believe that FinCEN needs to

systematically and periodically keep the appropriate congressional

committees informed about its plans, priorities, target dates, and

accomplishments concerning these important statutory directives.

Civil Penalty Referrals

Not Processed in a

Timely Manner

When the MLSA is implemented, one of its provisions may lighten FinCEN’s

responsibilities by delegating authority to impose civil penalties for BSA

violations to the appropriate federal banking regulatory agencies. The

purpose of this delegation is to increase efficiency by allowing these

agencies to impose civil penalties directly, rather than referring violations

to FinCEN. However, FinCEN’s current strategic plan indicates that such

delegation may not occur before the year 2002.

FinCEN receives civil penalty referrals from various sources, including the

Internal Revenue Service; the federal banking regulatory agencies (e.g.,

Federal Deposit Insurance Corporation); and other entities. FinCEN’s role in

9

On January 13, 1998, a final rule for card clubs was published in the Federal Register. The new

regulation takes effect on August 1, 1998. Generally, card clubs are establishments that offer facilities

for gaming by customers who bet against one another rather than against the establishment.

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International Roles

addressing these referrals is to evaluate the circumstances of each referral

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

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

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

Director, FinCEN, makes the final decisions.

Historically, civil penalty cases have not been processed in a timely

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

analyzed Treasury’s case inventories between 1985 and 1991.10 Our

ongoing work, which is analyzing case inventory data provided by FinCEN

for 1992 through 1997, suggests that the problem is growing worse.11

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

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

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

7-year period); and the other 218 cases were closed during 1992 through

1997 (a 6-year period).

For the first period, 1985 through 1991, Treasury’s data indicated that the

average processing time to close a case was 1.77 years. The range of

processing times for the 430 closed cases was from 4 days to 6.44 years.

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

more recent period, 1992 through 1997. Specifically, the average

processing time to close a case was 3.02 years. And the range of

processing times for the 218 cases closed during this period was from 8

days to 10.14 years.12

Also, the Treasury and FinCEN data indicated that during 1985 through 1991,

162 (or 38 percent) of the 430 cases were closed in less than 1 year. In

contrast, during 1992 through 1997, 40 (or 18 percent) of the 218 cases

were closed in less than 1 year.13 As of December 31, 1997, FinCEN’s

inventory of open cases totaled 133. The average age of the cases in this

year-end inventory was 2.7 years, and the range of ages was from 16 days

to 7.7 years.

10Money Laundering: Treasury Civil Case Processing of Bank Secrecy Act Violations (GAO/GGD-92-46,

Feb. 6, 1992).

11We did not independently verify the case inventory data provided by FinCEN.

12See table II.2 in appendix II.

13See table II.3 in appendix II.

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International Roles

We are working with FinCEN to determine the reasons for the increase in

processing times in recent years. However, we note that except for

Treasury’s delegation of civil penalty authority to FinCEN in May 1994, there

has been no change in the policies and procedures for processing civil

penalty referrals since our 1992 report. Presently, civil penalty referrals are

processed by FinCEN’s Office of Compliance and Regulatory Enforcement

(OCRE). According to FinCEN, in processing civil penalty referrals, OCRE staff

follow the same policies and procedures that existed before the 1994

delegation. Also, the number of staff processing civil penalty referrals has

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

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

Office of Financial Enforcement—the unit previously responsible for

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

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

penalty referrals on a full-time or exclusive basis; rather, the staff are also

involved in other mission functions and responsibilities. FinCEN officials

told us that subject to budget and policy considerations, the agency plans

to expand the staffing level of OCRE.

Treasury Delegated an

International

Leadership Role to

FinCEN in 1994

According to the Treasury and FinCEN officials we contacted, the authority

for FinCEN’s international role derives from a May 1994 memorandum from

Treasury’s Assistant Secretary for Enforcement,14 who delegated to FinCEN

the functions of Treasury’s Office of Financial Enforcement. These

functions, in addition to regulatory or BSA-related matters, include

responsibilities for combating money laundering domestically and

internationally. For example, under the terms of Treasury guidance15

incorporated by reference in the May 1994 delegation memorandum,

FinCEN was to be responsible for coordinating with foreign governmental

agencies—as well as with other federal, state, and local agencies—on

issues and initiatives regarding money laundering. Our work to date shows

that other federal agencies—such as Justice Department components and

the Office of National Drug Control Policy—have favorable impressions

about how FinCEN carries out its international role. For example, the

Justice Department officials we interviewed commented that FinCEN is

providing a valuable service in promoting international awareness of

money laundering and helping to develop counter measures.

FinCEN’s principal international efforts, according to the agency’s current

strategic plan, will continue to focus on initiatives under five topics:

14The Assistant Secretary for Enforcement was later named the Under Secretary for Enforcement.

15Treasury Directive 27-03, January 19, 1993.

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• The Financial Action Task Force (FATF) was created in 1989 and is

comprised of 26 countries, the European Commission, and the Gulf

Cooperation Council. A main purpose of FATF is to promote the

development of effective anti-money laundering controls. According to

FinCEN officials, in functioning as the lead agency for coordinating the U.S.

role within FATF, FinCEN heads the U.S. delegation; serves as a member of

the FATF Steering Group; and coordinates the U.S. responses to FATF

mandates in cooperation with the Departments of Treasury, Justice, and

State and with law enforcement and regulatory agencies. According to its

strategic plan, FinCEN has also provided support to development of

FATF-type organizations in other areas of the world (i.e., the Caribbean,

Asia, and Africa).

• Financial intelligence units (FIUs) are FinCEN’s counterparts abroad. FinCEN

has helped establish these units, which serve as the central focal points for

other countries’ anti-money laundering efforts. As of June 1997, FIUs had

been established in 27 other countries.16 According to FinCEN’s strategic

plan, FinCEN hopes to support the development of 25 new FIUs within the

next 5 years. Some of the existing units are referred to as the Egmont

Group. This group, according to FinCEN officials, is able to share

information through a secure web site developed under FinCEN’s

leadership.

• The International Criminal Police Organization’s (Interpol) purpose is to

facilitate information sharing and coordination worldwide in criminal

investigative matters. FinCEN provides database support for Interpol requests

and, at the request of the Secretary General of Interpol, has also been

leading a study called “Project Eastwash” to examine the factors that

affect money laundering in 15 countries in Eastern Europe and the former

Soviet Union.

• FinCEN is also engaged in efforts related to helping countries of the Western

Hemisphere take steps to combat money laundering. According to FinCEN,

these efforts focus on countries that participated in the Summit of the

Americas held in Miami in 1994. FinCEN, together with Treasury and other

agencies, is offering coordinated training and assistance to these

countries. According to FinCEN’s strategic plan, this assistance is beginning

to take effect in that at least 25 of the 34 Summit countries have taken

positive steps toward passing, amending, or drafting anti-money

laundering legislation or issuing related regulations.

• FinCEN has also participated in the anti-money laundering efforts of the

United Nations.

16See appendix III for more detailed information on the financial intelligence units.

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FinCEN’s Office of International Programs is the agency’s second largest

organizational component. As such, FinCEN’s international efforts have

commanded significant resource and time commitments. For example,

FinCEN’s current strategic plan mentions that “FinCEN representatives have

visited five continents and more than 50 countries in the past three years

urging these countries to take the money laundering threat seriously and

adopt effective anti-money laundering measures.” In addition, the strategic

plan anticipates that FinCEN will participate in multiple international

conferences annually through 2002.

In response to a specific request, FinCEN recently provided the

Subcommittee detailed data about the domestic and international travel

taken by the FinCEN Director and staff that accompanied him during the

period June 10, 1994, through March 2, 1997. Our analysis of the data17

show that during this period, the FinCEN Director and accompanying staff

made 61 total trips—30 to domestic locations, 29 to foreign locations, and

2 with both domestic and foreign destinations—and that the travel costs

for the 61 trips totaled about $465,000.18 According to FinCEN, much of this

travel was directly associated with efforts involving three topics—FATF,

the Egmont Group, and Interpol. Regarding the first topic, FinCEN noted that

FATF is headquartered in Paris and holds four meetings there annually.

Let me now close by presenting some observations regarding future

challenges and issues that confront FinCEN in its various roles.

Future Challenges

That Confront

FinCEN

Since its inception in 1990, FinCEN’s original mission has evolved far

beyond a law enforcement support role. According to its strategic plan,

FinCEN has an “incredible breadth of responsibility” that encompasses law

enforcement support, regulatory development, and international

leadership roles. On one hand, our work indicates that FinCEN justifiably

can claim accomplishments in all three areas. On the other hand, our work

also shows that the breadth of these responsibilities has presented

challenges for FinCEN in setting priorities and allocating its finite resources

to meet expectations or goals.

This hearing provides an excellent opportunity for congressional

stakeholders to focus a dialogue on FinCEN’s various roles and the related

17We did not independently verify the travel data received, nor do we know that the data represent all

travel made by FinCEN international staff during the period covered.

18More detailed travel data are presented in appendix IV.

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challenges that may continue to confront the agency in the future. For

example, relevant questions that may need to be periodically revisited

include the following:

• Given FinCEN’s size and breadth of responsibilities, are the agency’s

resources appropriate?

• Is it desirable for FinCEN to have multiple roles, i.e., law enforcement

support, regulatory development, and international leadership roles? Also,

how well does FinCEN handle these roles?

• If multiple roles are desirable, how should FinCEN prioritize its resources

among these roles? For example, should domestic responsibilities,

including the need to promulgate BSA regulations, or international

initiatives have a higher priority?

• Has the availability of other intelligence or analytical support centers

affected FinCEN’s customer base and the importance of the agency’s

original mission?

• Given this availability, along with FinCEN’s evolution to encompass other

responsibilities, should FinCEN still have a tactical support role? Or, should

FinCEN’s future responsibilities be oriented exclusively to the policy

development and the coordination activities associated with a leadership

role in domestic and international anti-money laundering efforts?

Whatever may be the future role or roles of FinCEN, this Subcommittee will

have a continuing interest in evaluating whether FinCEN’s actions are

producing the outcomes expected. In this regard, the Results Act19 offers

an excellent framework for assessing FinCEN’s operations and its ability to

meet congressional expectations. Along these lines, FinCEN’s current

performance measures appear to be mainly activity based. That is, the

measures reflect mostly what FinCEN plans to do with its resources (e.g.,

number of customers trained) rather than what it plans to achieve with its

resources (e.g., percent reduction in money laundering activities).

To prepare for results-based performance measurement, FinCEN’s

overriding objective over the next few years—as articulated in its strategic

plan—will be the development of a methodology for measuring the

magnitude of money laundering. FinCEN anticipates that such quantification

will provide a basis for assessing the results of anti-money laundering

efforts and, in turn, for setting priorities and allocating resources.

19Government Performance and Results Act of 1993, Public Law 103-62, 107 Stat. 285 (1993).

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This concludes my prepared statement, Mr. Chairman. I would be pleased

to answer any questions you or other members of the Subcommittee may

have.

Page 13 GAO/T-GGD-98-83
Appendix I 

FinCEN Organizational Structure and

On-Board Staffing

Figure I.1: FinCEN Organization Chart and On-Board Staffing (as of Dec. 1997)

Executive Assistant

Counselor

Director

Deputy Director

 (10)

A

Associate Director

Management

(14)

Personnel

Budget

Logistics

Training

Legal Counsel

Security

a

B

Artificial Intelligence

 Development

FinCEN Database

Network

Compliance and

Regulatory 

Enforcement

(10)

Information

Technology

(19)

Communications

(11)

International

Programs

(26)

International Support

 and Technical 

Assistance

Customer Compliance

Service

Congressional/

Public Affairs

Regional/Country

Desks

Regulatory

Coordination

Telecommunications Communication

Services

International

Organizations

a

Indicates a reporting relationship between the designated offices

or functions.

Thirteen offices report directly to the Office of the Director

( ) Numbers in parentheses represent the total number of 

on-board staff for the principal office and its components. 

Office of the Director, FinCEN

Page 14 GAO/T-GGD-98-83
Appendix I 

FinCEN Organizational Structure and

On-Board Staffing

Associate Director

Program Development

(11)

Program

Development

Liaisons

A

B

Research/Analysis

(18)

Laboratory

Analysis

Data Systems

Support

(14)

Gateway

Suspicious Activity

Reporting System

Statistician/

Economist

Program

Enhancement

Platforms

Investigative

Support

(31)

Operations Center

Case Triage/

Investigative Liaison

a

Note: As of December 7, 1997, FinCEN had 162 total staff on board.

aAbout 10 staff in FinCEN's Offices of Legal Counsel, Program Development, and Compliance

and Regulatory Enforcement promulgate regulations.

Source: FinCEN.

Page 15 GAO/T-GGD-98-83
Appendix II 

BSA Civil Penalty Statistics

Table II.1: BSA Civil Penalty Annual Workload, 1985 Through 1997

Case workload

Calendar year

Beginning

inventory

Referrals

received

Annual

workloada Cases closedb

Ending

inventoryc

Cases closed as a

percentage of

annual workload

1985 3 101 104 11 93 11%

1986 93 137 230 73 157 32

1987 157 111 268 77 191 29

1988 191 47 238 59 179 25

1989 179 75 254 59 195 23

1990 195 65 260 103 157 40

1991 157 27 184 48 136 26

1992 136 67 203 82 121 40

1993 121 27 148 39 109 26

1994 109 30 139 39 100 28

1995 100 32 132 29 103 22

1996 103 25 128 10 118 8

1997 118 34 152 19 133 13

Total 778 648

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

during the year.

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

present processing time statistics.

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

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

Page 16 GAO/T-GGD-98-83
Appendix II 

BSA Civil Penalty Statistics

Table II.2: Average and Range of

Processing Times for the 648 Civil

Penalty Cases That Were Closed

During 1985 Through 1997

Cases closed

Calendar year Number

Average time to

close case

(in years) Range of time to close case

1985 11 0.45 83 days to 260 days

1986 73 0.57 5 days to 1.51 years

1987 77 1.00 9 days to 2.69 years

1988 59 1.49 4 days to 3.69 years

1989 59 2.25 56 days to 4.92 years

1990 103 2.87 38 days to 5.31 years

1991 48 2.55 138 days to 6.44 years

Subtotal for

1985-1991

430 1.77 4 days to 6.44 years

1992 82 2.72 8 days to 7.26 years

1993 39 2.60 28 days to 7.64 years

1994 39 3.26 108 days to 6.88 years

1995 29 3.16 41 days to 6.81 years

1996 10 3.57 65 days to 8.65 years

1997 19 4.23 1.31 years to 10.14 years

Subtotal for

1992-1997

218 3.02 8 days to 10.14 years

Overall 648 2.19 4 days to 10.14 years

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

Table II.3: Processing Times (by Time Period) for the 648 Civil Penalty Cases That Were Closed During Calendar Years 1985

Through 1997

1985 - 1991 1992-1997 1985-1997

Processing time

Number of

cases closed Percent

Number of

cases closed Percent

Number of

cases closed Percent

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

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

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

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

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

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

6 years or over 1 0 16 7 17 3

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

aDetails do not add to 100 percent due to rounding.

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

Page 17 GAO/T-GGD-98-83
Appendix II 

BSA Civil Penalty Statistics

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

Closed During Calendar Years 1985 Through 1997

Processing time for

cases closed

Processing time for

cases closed

Processing time for

cases closed

1985 - 1991 1992-1997 1985-1997

Action taken on

cases closed Number

Average

(in years) Range Number

Average

(in years) Range Number

Average

(in years) Range

No contact made 147 2.09 12 days

to 5.36

years

65 2.73 17 days

to 7.64

years

212 2.36 12 days

to 7.64

years

Warning letter sent 235 1.69 5 days

to 6.44

years

95 2.94 8 days

to 10.14

years

330 2.05 5 days

to 10.14

years

Penalty assessed 48 1.18 4 days

to 4.58

years

58 3.22 41 days

to 8.65

years

106 2.30 4 days

to 8.65

years

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

Page 18 GAO/T-GGD-98-83
Appendix III 

Financial Intelligence Units and the Egmont

Group

Financial globalization, coupled with the rapid pace of technology, has

created a borderless marketplace for money launderers. FinCEN hopes to

counter this challenge by developing and fostering multilateral and

bilateral initiatives aimed at reducing the number of countries that are not

cooperatively engaged in the fight against money laundering. A principal

effort FinCEN has undertaken in this regard is to facilitate the establishment

of financial intelligence units (FIUs). The FIUs serve as the central focal

point for countries’ anti-money laundering efforts.

Under FinCEN’s leadership, a core group of FIUs met for the first time in

Brussels in 1995 and created an organization known as the Egmont Group.

This group serves as an international network to foster improved

communication and interaction among FIUs in such areas as information

sharing and training coordination. At its November 1996 meeting, Egmont

Group members agreed on the definition of an FIU to facilitate the

establishment of new units by setting a minimum standard. According to

the Egmont Group, an FIU is defined as “a central, national agency

responsible for receiving (and, as permitted, requesting), analyzing and

disseminating to the competent authorities, disclosures of financial

information: (i) concerning suspected proceeds of crime, or (ii) required

by national legislation or regulation, in order to counter money

laundering.”

The effort to improve communication among FIUs has been furthered by

FinCEN’s development of a secure web site.1 This web site permits members

of the Egmont Group to access information on FIUs, money laundering

trends, financial analysis tools, and technological developments. The web

site is not accessible to the public; therefore, members are able to share

this information in a protected environment.

According to FinCEN, as of June 24, 1997, 28 countries had FIUs meeting the

Egmont definition. These countries are: Aruba, Australia, Austria, Belgium,

Chile, Czech Republic, Denmark, France, Guernsey, Hong Kong, Hungary,

Iceland, Ireland, Isle of Man, Italy, Luxembourg, Mexico, Monaco,

Netherlands, New Zealand, Norway, Panama, Slovakia, Slovenia, Spain,

Sweden, the United Kingdom, and the United States. FinCEN is committed

to the expansion of FIUs around the world. For example, one of FinCEN’s

1

According to FinCEN officials, the web site currently connects 14 Egmont Group countries, as

follows: Aruba, Australia, Austria, Belgium, Czech Republic, France, Monaco, the Netherlands,

Slovakia, Slovenia, Spain, Sweden, United Kingdom, and the United States.

Page 19 GAO/T-GGD-98-83
Appendix III 

Financial Intelligence Units and the Egmont

Group

performance measure goals is to support the development of 25 new FIUs

within the next 5 years.2

2

FIUs in the following countries are being considered for recognition as meeting the Egmont Group

FIU definition: Cayman Islands, Cyprus, Croatia, Finland, Greece, Jersey, Netherlands Antilles,

Paraguay, Portugal, Switzerland, Taiwan, and Turkey.

Page 20 GAO/T-GGD-98-83
Appendix IV 

Domestic and International Travel of the

FinCEN Director and His Staff

In response to a specific request, FinCEN recently provided the

Subcommittee on General Oversight and Investigations, House Committee

on Banking and Financial Services, detailed data about the domestic and

international travel taken by the FinCEN Director and staff that

accompanied him during the period June 10, 1994, through March 2, 1997.

Our analysis of the data1

 show that during this period, the FinCEN Director

and accompanying staff took 61 trips, covering a total of 215 work days2

and costing $464,809. Of the 61 trips, 30 were to domestic destinations, 29

were to international destinations, and 2 were to both a domestic and an

international destination. The number of people on the 30 trips to

domestic destinations ranged from only 1 person (the FinCEN Director) to

as many as 60 FinCEN staff. The travel costs for the domestic trips totaled

$189,000.3

 The number of people on the 29 trips to international

destinations ranged from 1 person (the FinCEN Director) to as many as 11

FinCEN staff. The travel costs for the international travel totaled $275,809.

Tables IV.1, IV.2, and IV.3 below provide further details.

1

We did not independently verify the travel data received, nor do we know that the data represent all

travel made by FinCEN international staff during the period covered.

2

The 215 travel work days represent 31.6 percent of the total work days during the period June 10,

1994, through March 2, 1997.

3

Because costs could not be broken out by destination, the costs for the two trips that had both

domestic and international destinations were included in the domestic travel totals.

Page 21 GAO/T-GGD-98-83
Appendix IV 

Domestic and International Travel of the

FinCEN Director and His Staff

Table IV.1: Data on Number of Trips,

Travel Days, Work Days, and Costs

Spent on Domestic and International

Trips, by Purpose Category, Taken by

the FinCEN Director and Staff Who

Accompanied Him During the Period

June 10, 1994, Through March 2, 1997

Purpose of travel

Number of

trips

Total travel

days

Travel work

daysa Costsb

Financial Action Task Force/

Financial Intelligence Unit

coordination

16 117 79 $158,408

Asia Pacific Group on 

Money Laundering

1 9 5 22,964

Caribbean Financial Action

Task Force

3 12 10 14,977

International Criminal Police

Organization

7 55 42 92,290

Management and

interagency coordination

12 43 37 85,705

Regulatory meetings and

conferences

19 42 37 71,233

Summit of the Americas 3 8 5 19,232

Totals 61 286 215 $464,809

aWe identified work days by excluding weekend days and federal holidays, although FinCEN staff

may have worked on some of these days.

bAll costs have been rounded to the nearest whole dollar.

Source: Summary of data presented in tables IV.2 and IV.3.

Table IV.2: Domestic and International

Travel Days, Work Days, and Costs

Spent on Travel for the FinCEN

Director and Staff Who Accompanied

Him During the Period June 10, 1994,

Through March 2, 1997

Purpose/type of travel

Number of

trips

Total travel

days

Total work

daysa Costsb

Financial Action Task Force/Financial Intelligence Unit coordination

Domestic 1 2 1 $1,125

International 15 115 78 157,283

Total: 16 117 79 $158,408

Asia Pacific Group on Money Laundering

Domestic 0 0 0 0

International 1 9 5 22,964

Total: 1 9 5 $22,964

Caribbean Financial Action Task Force

Domestic 0 0 0 0

International 3 12 10 14,977

Total: 3 12 10 $14,977

International Criminal Police Organization (Interpol)

Domestic 2 14 11 35,281

International 5 41 31 57,008

Total: 7 55 42 $92,290c

(continued)

Page 22 GAO/T-GGD-98-83
Appendix IV 

Domestic and International Travel of the

FinCEN Director and His Staff

Purpose/type of travel

Number of

trips

Total travel

days

Total work

daysa Costsb

Management and interagency coordination

Domestic 10d 30 27 82,293

International 2 13 10 3,412

Total: 12 43 37 $85,705

Regulatory meetings and conferences

Domestic 17 30 29 68,398

International 2 12 8 2,835

Total: 19 42 37 $71,233

Summit of the Americas

Domestic 2e 3 2 1,903

International 1 5 3 17,329

Total: 3 8 5 $19,232

Totals for all trips

Domestic 32f 79 70 189,000

International 29 207 145 275,809

Total: 61 286 215 $464,809

aWe identified work days by excluding weekend days and federal holidays, although FinCEN staff

may have worked on some of these days.

bAll costs have been rounded to the nearest whole dollar.

cThe section total does not equal the sum of the two subtotals due to rounding.

dOne trip in this category had a destination in Florida, as well as Puerto Rico. Because Puerto

Rico is a commonwealth of the United States and because costs could not be broken out

separately, the trip, all travel days, and costs for this trip are included in the domestic travel totals.

eOne trip in this category included both a domestic and an international destination. Because

costs were not broken out by destination, we included the trip and total travel costs under the

domestic travel totals. Further, because the trip lasted 2 days and 2 destinations were listed, 1

day was assigned to the domestic destination and 1 day to the international destination in our

totals.

f

The domestic trip totals include 2 trips in which there was both a domestic and an international

destination. Thus, there were 29 trips with domestic destinations and 2 trips with both a domestic

and an international destination.

Source: Summary of data presented in table IV.3.

Page 23 GAO/T-GGD-98-83
Appendix IV 

Domestic and International Travel of the

FinCEN Director and His Staff

Table IV.3: Data on the Dates, Destinations, and Purposes of Travel for the FinCEN Director and Staff Who Accompanied

Him During the Period June 10, 1994, Through March 2, 1997

Destinations

Dates of travel International Domestic Number of staff Total costsa

Financial Action Task Force/Financial Intelligence Unit coordination

6/10/94 –6/19/94 Paris & Lyon, France 1 $2,758

9/10/94 –9/15/94 Paris, France; and Frankfurt,

Germany

1 $3,535

11/14/94 –11/18/94 Paris, France 2 $4,584

1/7/95 –1/13/95 Paris & Lyon, France 4 $8,333

6/3/95 –6/8/95 The Hague, the Netherlands 4 $7,157

6/8/95 –6/11/95 Brussels, Belgium 11 $24,811

9/9/95 –9/22/95 Cambridge & Swindon, England;

and Paris, France

8 $9,488

11/25/95 –11/29/95 Paris, France 4 $12,084

1/25/96 –2/3/96 Paris, France 8 $18,359

5/3/96 –5/12/96 Sydney & Canberra, Australia 1 $8,621

5/28/96 –6/1/96 Paris, France; and Amsterdam,

the Netherlands

1 $2,238

9/7/96 –9/19/96 Cambridge, England; Guernsey;

and Paris, France

5 $14,404

10/29/96 –11/2/96 Moscow, Russia 1 $3,616

11/17/96 –11/24/96 Paris, France; and Rome, Italy 11 $25,842

12/6/96 –12/7/96 New York, NY 4 $1,125

2/1/97 –2/8/97 Paris & Lyon, France 6 $11,455

Asia Pacific Group on Money Laundering

2/22/97 –3/2/97 Bangkok, Thailand; and

Manila,the Philippines

4 $22,964

Caribbean Financial Action Task Force

5/23/95 –5/25/95 Port of Spain, Trinidad 4 $4,854

10/8/96 –10/11/96 Costa Rica 4 $7,876

1/8/97 –1/12/97 Cayman Islands 2 $2,246

International Criminal Police Organization (Interpol)

9/26/94 –10/6/94 Rome, Italy 2 $8,680

10/23/94 –10/26/94 Lyon, France 3 $5,079

4/23/95 –4/28/95 Phoenix, AZ 13 $11,419

5/8/95 –5/18/95 The Hague, the Netherlands;

Ljubljana, Slovenia; Lyon, France;

and Hinckley, England

6 $11,248

10/2/95 –10/10/95 Beijing, China 3 $22,258

4/17/96 –4/24/96 San Francisco, CA 14 $23,862

(continued)

Page 24 GAO/T-GGD-98-83
Appendix IV 

Domestic and International Travel of the

FinCEN Director and His Staff

Destinations

Dates of travel International Domestic Number of staff Total costsa

10/23/96 –10/28/96 Turkey 2 $9,743

Management and interagency coordination

6/27/94 –7/6/94 Berlin,Germany; Bratislava,

Slovakia; Prague, Czech

Republic; Budapest, Hungary;

Krakow, Auschwitz, & Warsaw,

Poland; Vilnius, Lithuania; Kiev,

Ukraine; and Moscow, Russia

1 $2,441

7/28/94 –7/29/94 Annapolis, MD 45 $7,104

8/8/94 –8/10/94 Mexico City, Mexico 1 $971

10/15/94 –10/20/94 Albuquerque, NM 8 $9,701

1/19/95 –1/20/95 Charlottesville, VA 43 $8,779

7/12/95 –7/14/95 Shepherdstown, WV 60 $12,883

10/16/95 –10/18/95 Miami, FL 12 $13,441

10/25/95 –10/26/95 New Hampshire 5 $3,523

2/15/96 –2/16/96 Annapolis, MD 56 $8,606

2/21/96 –2/23/96 Puerto Ricob Miami, FL 4 $3,730

8/20/96 –8/24/96 Sacramento, CA 2 $1,796

1/16/97 –1/17/97 Annapolis, MD 60 $12,730

Regulatory meetings and conferences

4/2/95 –4/4/95 New Orleans, LA 12 $10,269

4/6/95 –4/7/95 Portland, ME 10 $4,990

4/18/95 –4/18/95 Atlanta, GA 11 $6,962

6/20/95 –6/21/95 Portland, ME 3 $896

7/27/95 –7/28/95 Newark, NJ; and New York, NY 5 $1,726

9/7/95 –9/7/95 Detroit, MI 4 $1,766

9/26/95 –9/27/95 New York, NY 21 $10,147

12/12/95 –12/14/95 Phoenix, AZ 16 $15,939

2/8/96 –2/8/96 New York, NY 5 $909

2/26/96 –2/27/96 Las Vegas, NV 3 $1,274

3/5/96 –3/7/96 San Francisco, CA 3 $3,485

3/18/96 –3/18/96 Orlando, FL 2 $1,164

3/28/96 –3/29/96 New York, NY; and Boston, MA 4 $1,826

4/4/96 –4/4/96 Orlando, FL 7 $4,567

5/1/96 –5/2/96 Windsor, Canada 2 $1,321

6/4/96 –6/4/96 Detroit, MI 2 $989

6/29/96 –7/9/96 London, England 1 $1,514

8/7/96 –8/7/96 New York, NY 2 $683

10/15/96 –10/16/96 Athens, OH 1 $807

(continued)

Page 25 GAO/T-GGD-98-83
Appendix IV 

Domestic and International Travel of the

FinCEN Director and His Staff

Destinations

Dates of travel International Domestic Number of staff Total costsa

Summit of the Americas

11/30/95 –12/3/95 Buenos Aires, Argentina 6 $17,329

5/14/96 –5/15/96 Jamaicac Ft. Lauderdale, FL 2 $1,313

5/17/96 –5/18/96 New Orleans, LA 1 $590

aAll costs have been rounded to the nearest whole dollar.

bBecause costs could not be broken out separately, all travel costs for this trip are included in the

domestic totals.

cBecause costs could not be broken out separately, all travel costs for this trip are included in the

domestic totals.

Source: Data provided by FinCEN to the Subcommittee on General Oversight & Investigations,

House Committee on Banking & Financial Services.

(182046) Page 26 GAO/T-GGD-98-83
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