U.S. Department of the Treasury Financial Crimes Enforcement Network

Feasibility of a 

Cross-Border Electronic Funds 

Transfer Reporting System

under the 

Bank Secrecy Act

Prepared by the U.S. Department of the Treasury,

 Financial Crimes Enforcement Network

October 2006

iii

Table of Contents

1.0 Executive Summary ........................................................................... v

2.0 Acknowledgments .............................................................................. ix

3.0 Overview.............................................................................................. 1

3.1 Goals and Design of the Feasibility Study................................... 1

3.2 Background ................................................................................... 2

4.0 Data Reasonably Necessary to Identify Illicit Finance .................... 7

4.1 Individual targeting/research of known subjects......................... 9

4.2 Data Matching against Other Data Sources................................ 9

4.3 Link Analysis............................................................................... 10

5.0 Form, Manner, and Content of Reporting ....................................... 11

5.1 Collecting from the “First In/Last Out” Institution in the U.S. 12

5.2 Money Services Businesses as Collection Points....................... 14

5.3 Form ............................................................................................. 15

5.4 Manner ......................................................................................... 17

5.5 Content......................................................................................... 17

6.0 Technology Needed .......................................................................... 19

6.1 Concept of Operations ................................................................. 19

6.2 Rough Order of Magnitude Cost Estimates ............................... 21

7.0 Information Security Protections..................................................... 23

8.0 Conclusions and Recommendations................................................. 31

8.1 Project Risks ................................................................................ 31

8.2 Pre-Acquisition Planning ............................................................ 34

8.2.1 User Requirements Analysis .............................................. 35

8.2.2 Institutional Cost Analysis................................................. 35

8.2.3 Value Analysis..................................................................... 35

8.3 System Development and Deployment....................................... 36

U.S. Department of the Treasury Financial Crimes Enforcement Network
Appendix A – Financial Crimes Enforcement Network Programs ...... 37

Appendix B – Section 6302 .................................................................... 45

Appendix C – Funds Transfer Rule ....................................................... 47

Appendix D – Fundamentals of the Funds Transfer Process............... 55

Appendix E – Cross-Border Funds Transfer Reporting in 

 Canada and Australia......................................................................... 71

Appendix F – Potential Analytical Value of Cross-Border 

 Funds Transfer Reports...................................................................... 83

Appendix G – FinCEN Industry Survey and Responses .................... 111

Appendix H – Technical Alternatives Analysis................................... 139

Appendix I – BSA E-Filing Fact Sheet................................................ 155

Appendix J – Preliminary Work Breakdown Schedule ...................... 157

Appendix K – Rough Order of Magnitude Cost Estimates................. 159

Appendix L – Project Management and Information

 Technology Processes........................................................................ 165

Appendix M – Acronyms....................................................................... 171

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1.0 Executive Summary 

Section 6302 of the Intelligence Reform and Terrorism Prevention Act of 20041 amended the Bank Secrecy Act (BSA) to require the Secretary of 

the Treasury to prescribe regulations “requiring such financial institutions 

as the Secretary determines to be appropriate to report certain cross-border 

electronic transmittals of funds, if the Secretary determines that reporting 

of such transmittals is reasonably necessary to conduct the efforts of the 

Secretary against money laundering and terrorist financing.” Section 6302 

requires further that, prior to prescribing the regulations contemplated by the 

Intelligence Reform and Terrorism Prevention Act, the Secretary shall submit a 

report to Congress that:

identifies the information in cross-border electronic transmittals of 

funds that may be found in particular cases to be reasonably necessary 

to conduct the efforts of the Secretary to identify money laundering and 

terrorist financing, and outlines the criteria to be used by the Secretary 

to select the situations in which reporting under this subsection may be 

required;

outlines the appropriate form, manner, content, and frequency of filing of 

the reports that may be required under such regulations;

identifies the technology necessary for the Financial Crimes Enforcement

Network to receive, keep, exploit, protect the security of, and disseminate 

information from reports of cross-border electronic transmittals of funds 

to law enforcement and other entities engaged in efforts against money 

laundering and terrorist financing; and

discusses the information security protections required by the exercise of 

the Secretary's authority under this subsection.2

The Secretary of the Treasury submits this Feasibility Report in accordance 

with the above requirements. Based on extensive fieldwork and analysis of 

information and data, and as discussed in substantial detail in this Report, we 

have determined that: 

The basic information already obtained and maintained by U.S. financial 

institutions pursuant to the Funds Transfer Rule, including the $3,000 

recordkeeping threshold, provides sufficient basis for meaningful data 

analysis.3 

 Pub. L. No.108-458 (Dec. 17, 2004), codified at 31 U.S.C. § 5318(n). 

Section 6302 also provides that no regulations shall be prescribed until the Secretary certifies to 

Congress that FinCEN has the technical systems in place to effectively and efficiently receive, keep, 

exploit, protect the security of, and disseminate the reported information.

3 Section 6302 provides that information required to be reported under that section shall not exceed 

the information already required to be retained by financial institutions pursuant to section 21 of the 

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vi U.S. Department of the Treasury

Any reporting requirement should apply only to those U.S. 

institutions that exchange payment instructions directly with 

foreign institutions.

The $3,000 threshold should apply only to discrete transactions and 

not to the aggregated total value of multiple transactions conducted 

very closely to one another in time. 

 

Any reporting requirement should permit institutions to report either 

through a format prescribed by FinCEN, through the submission of 

certain pre-existing payment messages that contain the required data, 

or through an interactive online form for institutions that submit a 

low volume of such reports. The filing system should accommodate 

automated daily filing, periodic filing via manual upload, and discrete 

single report filing on an as-needed basis. 

FinCEN would implement a federated data warehouse architecture to 

receive, keep, exploit, protect the security of, and disseminate information 

submitted under any reporting requirement. FinCEN would implement 

a separate path for the processing, enhancement, and storage of report 

information and would provide a single point of entry for users to submit 

queries to all BSA data systems, including cross-border funds transfer 

information, in a way that is invisible to the user.

FinCEN would apply existing policies and procedures that comply 

with all applicable legal requirements, industry and government 

best practices, and the Department of the Treasury’s Information 

Technology Security Program Directive to every phase of the design 

and implementation of any system built to accommodate reporting of 

cross-border funds transfer data. Such compliance would be subject to 

certification. 

FinCEN also would impose strict limits on the use and redissemination of the data it provides to its law enforcement, 

regulatory, and foreign counterparts and strictly monitor those 

persons and organizations to which it grants access to the data. 

Cross-border funds transfer data would be technologically protected 

and secure and would only be available to FinCEN and the law 

enforcement and regulatory agencies authorized by law to access it.

Federal Deposit Insurance Act (12 U.S.C. § 1829b and regulations promulgated thereunder (31 C.F.R. § 

103.33(e) and (f) (the Funds Transfer Rule) and 31 C.F.R. § 103.33(g) (the Travel Rule)), unless:

the Board of Governors of the Federal Reserve System (Board) and the Secretary jointly determine that particular items of information are not currently required to be retained under those 

law and regulations; and

The Secretary determines, after consultation with the Board, that the reporting of such additional information is reasonably necessary to conduct the efforts of the Secretary to identify 

cross-border money laundering and terrorist financing.

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We conclude that, although construction of such a system is feasible, completion 

of such a system by December 2007 is not feasible. We estimate that the work 

would require approximately three and one-half years of effort. Further, we 

estimate that development and implementation of the proposed system would 

cost approximately $32.6 million.

Other Considerations

In the course of conducting this study, FinCEN has identified a number of 

questions not posed by Congress that will affect how to implement the statutory 

requirements. These issues are discussed more completely elsewhere in this 

Report.

A significant concern is the cost, both to U.S. financial institutions and to 

the government, of implementing the reporting requirement and building 

the technological systems to manage and support the reporting. Related to 

these concerns are questions about the government’s ability to use such data 

effectively. These concerns must be weighed carefully as we proceed.

Another concern is the potential effect that any reporting requirement could 

have on dollar-based payment systems such as: (1) a shift away from the U.S. 

dollar toward other currencies (i.e., the Euro) as the basis for international 

financial transactions; (2) the creation of mechanisms and facilities for clearing 

dollar-based transactions outside the United States; and (3) interference with 

the operation of the central payments systems. The U.S. has economic and 

national security interests in the continued viability and vitality of dollar-based 

payments and these possible outcomes must inform and guide the rulemaking 

process. 

Next Steps

We propose an incremental development and implementation process. If the 

concerns noted above or any as-yet unidentified issues would impede the project 

or cause it to be infeasible, this incremental approach provides the opportunity 

to alter or halt the effort before FinCEN or the U.S. financial services industry 

incurs significant costs. As discussed in greater detail in this Report, the first 

phase in this project will comprise:

Engaging with partners in the law enforcement, regulatory and 

intelligence communities to develop detailed user requirements to meet 

the most central needs of those who access BSA data. 

Engaging in a detailed discussion with representatives of the U.S. 

financial services industry, along with representatives of the major 

payment systems and members of the Canadian and Australian financial 

services industries. These discussions would focus on quantifying the 

cost the proposed requirement would impose on reporting institutions 

and the potential impact on the day-to-day operation of the payment 

systems. 

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viii U.S. Department of the Treasury

Engaging outside support to obtain and analyze a sizable sample of crossborder funds transfer data and exploring means of extracting value from 

the data, and identifying means to effectively and intelligently use the 

data to advance efforts to combat money laundering and illicit finance. 

Based on these efforts, FinCEN will create a development plan that incorporates 

a series of milestones and would permit pilot testing of different aspects of the 

reporting system. This incremental development approach will enable FinCEN 

to build the system in manageable stages and to test the system’s functionality 

at each stage before moving on to the next. 

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U.S. Department of the Treasury ix

2.0 Acknowledgments

The authors wish to thank all of those who contributed to this report. We would particularly like to thank our colleagues at the Board of Governors 

of the Federal Reserve System for their advice, feedback, and assistance. We 

would also like to thank the many representatives of the U.S. financial services 

industry and particularly, the members of the Bank Secrecy Act Advisory 

Group and its Cross-Border Funds Transfer Reporting Subcommittee for their 

input and guidance in the conduct of this study and the development of this 

report. We owe an enormous debt to Horst Intscher, Director of the Financial 

Transactions Reports and Analysis Centre (FINTRAC) in Canada, and to Neil 

Jensen, Director of the Australian Transaction Reports and Analysis Centre 

(AUSTRAC) in Australia, and all of our colleagues at both agencies who were so 

generous with their time and expertise and whose support and guidance were 

invaluable. We appreciate those members of the private sector who took the 

time and effort to respond to our Request for Information and thereby lent their 

technical expertise to the analysis of what such a system might look like. This 

study reflects the conclusions of FinCEN and does not purport to represent the 

positions of any of the persons, agencies, or other organizations that assisted us 

in our work. Nonetheless, we could not have completed this study without their 

very generous contributions.

We wish to thank specifically the following persons who offered their time and 

guidance in the conduct of this study.

Special Agent Steve Adelstein

Office of the Arizona Attorney General

Khaled Bitar

Financial Crimes Enforcement Network

Kevin Bleckley

Financial Crimes Enforcement Network

Allison Brown

Federal Trade Commission

Derek Bush 

Cleary Gottlieb Steen & Hamilton LLP

John Byrne 

Bank of America

Joe Cachey 

Western Union

Chris Clubb 

Board of Governors of the Federal 

Reserve System

Bill Conger 

BB&T

Alan Cox 

Financial Crimes Enforcement Network

Jennifer Craig

Florida Department of Law Enforcement

Lisa Dawson

Financial Crimes Enforcement Network

Donna Dohrman

Internal Revenue Service

Small Business/Self-Employed

Financial Crimes Enforcement Network
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William Doyle

New York State Attorney General’s Office

Linda Evans

Bureau of Alcohol, Tobacco, Firearms and 

Explosives

Brian Ferrell 

Financial Crimes Enforcement Network

Sean Forbush 

Federal Deposit Insurance Corporation

Joe Frank 

Bank of America

Doug Freedman 

Barclays Capital 

Special Agent Samuel Garcia

Bureau of Immigration and Customs 

Enforcement

Teresa Gatlin

Florida Department of Law Enforcement

Yvonne Gilbert

New York State Police

Richard Gottlieb

J.P. Morgan Chase & Co.

Tonita Harrington 

Conference of State Bank Supervisors 

Special Agent Robert Heng

Drug Enforcement Administration

Special Agent Shannon Hodges

Internal Revenue Service – Criminal

Investigations

Assistant Attorney General Cameron 

Holmes

Office of the Arizona Attorney General

Koko Ives 

Financial Crimes Enforcement Network

Christina Klinger

Financial Crimes Enforcement Network

Charles Klingman 

U.S. Department of the Treasury

Eric Kringel 

Financial Crimes Enforcement Network

Ezra Levine 

Howrey, LLP

Robert Long

Financial Crimes Enforcement Network

Jeremy Mandell 

Board of Governors of the Federal 

Reserve System

Debbie Matties

Federal Trade Commission

Kylin McCardle 

Financial Crimes Enforcement Network

Special Agent Wallace Merriman

U.S. Department of Housing and Urban 

Development 

Office of Inspector General

Tim Moran

Financial Crimes Enforcement Network

Bridget Neill 

Board of Governors of the Federal 

Reserve System

James Kent Owens 

Board of Governors of the Federal

Reserve System
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Cherrie Pesce

Financial Crimes Enforcement Network

James Price 

Bank of America 

Richard Reise 

American Bankers Association

Special Agent Ramon Rendon

U.S. Secret Service

Michael Rosenberg

Financial Crimes Enforcement Network

Jeff Ross 

U.S. Department of the Treasury

Rob Rowe 

Independent Community Bankers of America

Sergeant Pat Ryder

Nassau County (NY) Police Department

Racqel Self 

Financial Crimes Enforcement Network

Andrew Shankman

Financial Crimes Enforcement Network

Michael Shore

Federal Trade Commission

Deb Silberman

Financial Crimes Enforcement Network

Richard Small 

Citigroup

Christine Smith 

Empire Corporate Credit Union

Dan Stipano 

Office of the Comptroller of the Currency

Gary Sutton 

U.S. Department of the Treasury

Lilly Thomas

Credit Union National Association

Emily Tzang

Financial Crimes Enforcement Network

Nancy A. Viano

U.S. Department of Agriculture 

Office of Inspector General

Claude Walker 

U.S. Department of the Treasury 

David Ward

Financial Crimes Enforcement Network

Special Agent Laura Williams

Federal Bureau of Investigation

Suzanne Williams 

Board of Governors of the Federal Reserve 

System

Paul Wong 

Board of Governors of the Federal Reserve 

System

Catherine Woody 

Conference of State Bank Supervisors

Al Zarate 

Financial Crimes Enforcement Network

U.S. Department of the Treasury Financial Crimes Enforcement Network 

3.0 Overview

The Secretary of the Treasury has delegated his authority to administer the 

Bank Secrecy Act to the Financial Crimes Enforcement Network (FinCEN). 

Accordingly, FinCEN has responsibility to safeguard the U.S. financial system 

from the abuses of financial crime, including terrorist financing, money 

laundering, and other illicit activities. In order to fulfill its mission, FinCEN 

relies heavily on the use of BSA data, which is its primary and most important 

information asset. More than 200,000 financial institutions and money services 

businesses file over 15 million BSA forms or “reports” each year. Among other 

requirements, the BSA requires U.S. financial institutions to maintain certain 

records of funds transfers.

Section 6302 of the Intelligence Reform and Terrorism Prevention Act of 

2004 directs the Secretary of the Treasury to prescribe regulations to require 

the reporting to FinCEN of information about certain cross-border electronic 

transmittals of funds where the Secretary finds such reports are reasonably 

necessary to help detect and prevent the proceeds of financial crimes and 

terrorist financing from flowing across America’s borders.4 The Act requires 

the Secretary to issue these regulations by December of 2007. The Act further 

requires that, prior to any such regulations taking effect, the Secretary certify 

that the technical capability to receive, store, analyze, and disseminate 

the information is in place. The Act also requires that, in preparation for 

implementing the regulation and data collection system, the Treasury study and 

report to Congress the feasibility of implementing such regulations.

3.1 Goals and Design of the Feasibility Study

This report assesses:

What information in a funds transfer it is reasonably necessary to 

collect to conduct our efforts to identify money laundering and terrorist 

financing, and the situations in which reporting may be required; 

The value of such information in fulfilling our counter-terrorist financing 

and anti-money laundering missions; 

The form that any such reporting would take and the potential costs any 

such reporting requirement would impose on financial institutions; 

The feasibility of FinCEN receiving the reports and warehousing the 

data, and the resources (technical and human) that would be needed to 

implement the reporting requirement; and, 

Pub. L. No.108-458, Dec. 17, 2004; codified at 31 U.S.C. § 5318(n)

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The concerns relating to information security and privacy issues 

surrounding the reports collected.5

This report also identifies a number of issues that policy makers must consider, 

such as whether the potential value of requiring financial institutions to report 

information about cross-border funds transfers outweighs the potential costs 

of building the technology, the costs to financial institutions of implementing 

compliance processes, and the social costs related to privacy and security of the 

information.

Our development of this feasibility study included multiple approaches. An 

internal working group of employees drawn from all operational divisions 

of FinCEN coordinated efforts within the organization, managed contact 

with external stakeholders, hosted small workshops with law enforcement 

representatives, visited relevant U.S. and foreign government and private sector 

organizations, surveyed industry and governmental organizations, solicited 

input from private sector technology experts, and researched extensively. In 

addition, FinCEN formed a subcommittee of the Bank Secrecy Act Advisory 

Group6 including representatives from across the spectrum of U.S. financial 

services industry members, and governmental agencies. The subcommittee 

did not author or review this study, but provided expert assistance in the 

identification and analysis of relevant issues, recommendations about the focus 

of the study, and important contacts within the U.S. financial services industry. 

We also drew upon the experience of the Australian Transaction Reports and 

Analysis Centre (AUSTRAC) and the Financial Transactions Reports and 

Analysis Centre (FINTRAC), our counterpart financial intelligence units in 

Australia and Canada, both of which already collect cross border funds transfer 

information. 

3.2 Background 

The Financial Crimes Enforcement Network (FinCEN), a bureau within the 

Department of Treasury, is the United States’ financial intelligence unit 

(FIU). Our mission is to safeguard the U.S. financial system from the abuses of 

financial crime, including terrorist financing, money laundering, and other illicit 

activity. As administrator of the BSA, FinCEN is responsible for managing, 

analyzing, safeguarding, and appropriately sharing financial transaction 

5 See, Section 6302(n)(4) of the Intelligence Reform and Terrorism Prevention Act of 2004 (S.2845 P.L. 

108-458)

6 Congress established the Bank Secrecy Act Advisory Group (the “BSAAG”) in 1992 to enable the 

financial services industry and law enforcement to advise the Secretary of the Treasury on ways to 

enhance the usefulness of Bank Secrecy Act reports. Since 1994, the Advisory Group has served as a 

forum for industry, regulators, and law enforcement to communicate about how law enforcement uses 

Suspicious Activity Reports, Currency Transaction Reports, and other Bank Secrecy Act reports and 

how FinCEN can improve the reporting requirements to enhance their utility while minimizing the 

costs to financial institutions.

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information collected under the BSA and other authorities. FinCEN currently 

collects more than 15 million reports per year related to financial transactions 

conducted through or by U.S. financial institutions. FinCEN’s information 

technology systems integrate the collection, storage, analysis, and dissemination 

of the data to our Federal, State, and local partners as well as FinCEN’s 

international counterparts. 

Although the U.S. financial system remains susceptible to abuse by terrorist 

and criminal organizations to launder the proceeds of criminal activity and to 

facilitate illicit activity, U.S. Government efforts to increase transparency in the 

system make illicit financial activity more apparent to those agencies engaged 

in the effort to detect, prevent, and respond to financial crimes. As a result, 

it becomes significantly more difficult for those engaged in financial crimes to 

conduct business. As those illicit actors adapt to the increasingly transparent 

system, they must make additional and more complicated efforts to conceal their 

behavior and resort to slower, riskier, more expensive, and more cumbersome 

methods of raising and moving money.

As a result of the BSA regime, most money launderers, drug dealers, and high-level

fraudsters understand that trying to pump massive amounts of cash through a U.S. bank

is fraught with peril. As a result, they generally prefer instead to use other, less risky,

methods to move money—sending it in bulk across our porous borders, for example, or

through a less-regulated industry like money-transmitting services. If they do use banks,

they take care to structure smaller transactions among dozens of different accounts—less

risky, to be sure, but considerably slower and more costly.7

Every additional step or layer of complexity illicit actors must add to their 

schemes provides new opportunities for detection, and an increased risk to those 

who would abuse the financial system. Criminals who fear using the banking 

system do not have a ready and reliable alternative for moving large sums of 

money. To the extent that criminal transactions touch the formal financial 

system, there is the likelihood that those transactions will leave a trail that law 

enforcement officials can use to “follow the money” to link criminals to each other 

and to wider support networks.

The reports filed by financial institutions pursuant to the BSA focus largely on 

cash transactions and on transactions that are suspicious on their face. This 

approach has been very successful in creating a transparent financial system 

that is hostile to abuse by criminal actors. The value of transparency is twofold 

– it deters those who would use the financial system for illicit activity and 

promotes the detection of those who do so. 

7 Monograph on Terrorist Financing, National Commission on Terrorist Attacks Upon the United States. 

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As the financial system has evolved, criminals and terrorists have taken 

full advantage of new and technologically advanced means of moving and 

hiding their money. While the traditional Bank Secrecy Act reports still have 

significant utility in combating illicit finance, there is currently no Bank Secrecy 

Act report that provides the government insights into the complex network of 

relationships and financial activity that occurs once money is in the system. 

If a non-cash transaction does not raise the suspicions of a bank teller, the 

government may never become aware of it. As governments throughout the 

world strive to promote transparency in the financial system, the shortage of 

tools for detecting schemes that rely on these modern technological payment 

systems creates a potential blind spot in our efforts to protect the homeland and 

to combat financial crime. 

Presumably, if the records of currency transactions are supposed to be useful in detecting

criminal offenses, it is not immediately clear why records of at least some non-currency

transactions should not also be subject to analysis (i.e., if they are linked in some way

to suspicious cash activity, or for some other reason). Yet, while most non-currency

transactions are auditable in principle, they are rarely subject to some kind of audit--

either because the government lacks access to the information without individualized

suspicion or lacks the technical capacity to analyze the information it does collect.8

Electronic funds transfers are attractive to legitimate businesses because they 

generally provide a secure and trusted means of sending large amounts of money 

quickly. For those reasons, electronic funds transfers are also attractive to 

legitimate users as a means of sending small amounts of money quickly. These 

same features make electronic funds transfers equally attractive to illicit actors 

because electronic funds transfers allow them to spirit their money beyond the 

grasp and sometimes out of the sight of law enforcement. In addition, because 

electronic funds transfers need not involve the actual physical movement of 

currency, they are a relatively rapid, reliable, and secure method for transferring 

funds without the risks associated with large cash deposits or physical 

transportation of illicit monies. (Appendix D describes the fundamentals of the 

electronic funds transfer process).

Traditionally, experts describe three stages of money laundering:

Placement – introducing cash into the financial system or into legitimate 

commerce;

Layering – separating the money from its criminal origins by passing it 

through several financial transactions;

Integration – aggregating the funds with legitimately obtained money or 

providing a plausible explanation for its ownership.

8 Cuellar, Mariano-Florentino, Criminal Law: The Tenuous Relationship Between the Fight Against 

Money Laundering and the Disruption of Criminal Finance, The Journal of Criminal Law and 

Criminology 93:311, 426 (2003).

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The BSA reporting regime deals well with the placement stage. Some financial 

institutions file Currency Transaction Reports (CTRs) when a person conducts 

certain types of large currency transactions, others file Forms 8300 for large 

amounts of cash or monetary instruments received in a trade or business, and 

travelers entering the U.S. with more than $10,000 in currency must complete 

Currency and Monetary Instrument Reports (CMIRs).9 However, while 

these three reports address placement, due to their focus on currency-based 

transactions, they do not provide insights into the rapidly developing electronic 

aspects of financial transactions. These reports identify the physical movement 

of currency within the U.S. financial system. Electronic funds transfers, by 

contrast, represent an entirely different mode for the movement of money. 

The Suspicious Activity Report (SAR) provides some insight into the layering 

and integration stages by casting a light on transactions of any amount and 

type that financial institutions suspect are related to illicit activity or that 

are suspicious in that they do not appear to fit a known pattern of legitimate 

business activity. 

We have found that electronic funds transfers feature prominently in the 

layering stage of money laundering activity, which is not addressed in any of 

the reports currently filed if the transactions do not raise suspicions within the 

financial institution. 

The annual typologies reports of the FATF and a report published in 2000 by the Egmont

Group of Financial Intelligence Units describe recent cases that illustrate methods of

laundering and investigation. Given that these are simply reported cases, they do not

necessarily reflect the relative importance of different techniques. With that qualification, 

the FATF and Egmont Group reports can be used to develop a matrix matching 11

predicate crimes with 20 money-laundering methods. There were 223 cases available for

classification, and each case involved one or more offenses and methods of laundering, 

thus producing a total of 580 entries.

Three offense categories accounted for over 70 percent of entries: drugs 

(185), fraud (125), and other kinds of smuggling (92). The types of laundering 

methods were more evenly distributed – wire transfers were involved in 131 

cases (22 percent), but no other single method was involved in more than 75 

cases. For the three major offense categories, the observations were broadly 

distributed across methods.10

Complex electronic funds transfer schemes can deliberately obscure the audit 

trail and disguise the source and the destination of funds involved in money 

laundering and illicit finance. For example, a money launderer or illicit financier 

9 See http://www.fincen.gov/reg_bsaforms.html

10 Reuter and Truman, Chasing Dirty Money, The Fight Against Money Laundering, (Institute for 

International Economics) p. 32

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may simply transfer illicit funds through several different banks by means of 

multiple, structured transactions (i.e., in amounts below the applicable reporting 

thresholds) in order to blur the trail to the funds’ source. Alternatively, the 

perpetrator may make multiple transfers from myriad bank accounts, into which 

he or his accomplices have made structured deposits to avoid detection, to a 

single collecting account located abroad. In even these simple examples, the 

perpetrators have made the government’s task more daunting. First, detection 

of such schemes is exceedingly difficult. In these cases, unless a transaction 

exceeds the dollar thresholds for obtaining and maintaining customer and 

transaction information or filing Currency Transaction Reports (CTRs), or unless 

an institution otherwise identifies any part of the transaction as suspicious, 

the BSA recordkeeping and reporting regime would not necessarily capture the 

activity. Moreover, even assuming the government had a lead from an alternate 

source, obtaining the relevant information through subpoenas, warrants, letters 

rogatory, or other legal process is cumbersome and entails delays of weeks, 

months, or even years.11 

11 A “letter rogatory” is a means of obtaining assistance from foreign governments in absence of a treaty 

or executive agreement. In essence, a letter rogatory is a formal request from the courts of one country 

to the courts of another seeking assistance through the judicial processes in obtaining testimony or 

other evidence through the receiving nation’s judicial process.

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4.0 Data Reasonably Necessary to 

Identify Illicit Finance

FinCEN, acting jointly with the Board of Governors of the Federal Reserve 

System, has taken some steps to address the particular vulnerabilities to money 

laundering and other illicit uses of electronic funds transfers. The existing Bank 

Secrecy Act funds transfer regulation consists of two rules: the “Funds Transfer 

Rule” (issued jointly by the Board of Governors of the Federal Reserve System 

and FinCEN as required by Section 1829(b) of the Federal Deposit Insurance 

Act) and the “Travel Rule.”12 The recordkeeping rule generally requires 

institutions to collect and retain records of certain specified data regarding 

funds transfers of $3,000 or more that the institution processes.13 The travel 

rule requires financial institutions to include, to the extent feasible, information 

collected under the recordkeeping rule that will travel throughout the payment 

chain. Any record that a financial institution is required to maintain pursuant 

to the Funds Transfer rule "shall be submitted or made available to the 

Secretary [through his delegate, FinCEN] or the Board [of Governors of the 

Federal Reserve] upon request."14 

12 See 31 C.F.R. § 103.33 generally and 31 C.F.R. § 103.33(g) (travel rule). The Annunzio-Wylie AntiMoney Laundering Act of 1992 (Pub. L. No. 102-550, § 1515) required the Secretary and the Board 

to jointly issue regulations requiring insured depository institutions to maintain records of funds 

transfers. The Treasury – and not the Board – is authorized to issue regulations requiring nonbank 

financial institutions to maintain records of transmittals of funds. Accordingly, although the 

recordkeeping rule and travel rule are derived from separate rulemakings, they are promulgated in 

one regulation found at 31 C.F.R. § 103.33. The government has found certain categories of entities 

involved in the payment chain of wire transactions to pose a low threat of money laundering or 

terrorist financing and thus has excepted certain parties of the transaction from requirements of the 

current rules. Compliance with both the recordkeeping and travel rules is waived if both parties to the 

transaction are any of the following: (1) banks or brokers or dealers in securities or futures commission 

merchants or introducing brokers or their subsidiaries; (2) government entities; or (3) the transmitter 

and recipient are the same person and the transaction involves a single bank or broker-dealer. See 

31 C.F.R. § 103.33(e)(6) and (f)(6). In addition, “funds transfer” is defined under 31 C.F.R. § 103.11 to 

exclude all funds transfers governed by the Electronic Fund Transfer Act of 1978, as well as any other 

funds transfers that are made through an automated clearing house, an automated teller machine, or a 

point-of-sale system. Therefore, since such transfers are excluded from the “funds transfer” definition, 

they are exempt from the requirements of 103.33.

13 Earlier this year the Department of the Treasury and the Federal Reserve jointly issued an Advance 

Notice of Proposed Rulemaking announcing that they are reviewing and considering a reduction in the 

$3,000 threshold, particularly in light of international standards, and seeking comment on the potential 

benefits and burdens of any such reduction. 71 Fed. Reg. 35,564 (June 21, 2006) See Interpretive Note 

to FATF Special Recommendation VII (requiring countries to mandate that cross-border wire transfers 

contain accurate and meaningful originator information). Countries may adopt a de minimus threshold 

of no more than $1,000 or 1,000 Euros. Countries are expected to be in compliance with the Special 

Recommendation by December 2006.

14 See 12 U.S.C. § 1829b(b)(3)(C). Any information reported to Treasury or the Board in accordance with 

section 1829b(b)(3)(C) falls within an exception to the Right to Financial Privacy Act, 12 U.S.C. § 3401

et seq. See 12 U.S.C. § 3413(d) (excepting disclosures pursuant to Federal law or rule). Moreover, the 

Right to Financial Privacy Act does not apply to money transmitters. See 12 U.S.C. § 3401(1) (defining 

a "financial institution" for purposes of the Act's coverage to include banks and other depository 

institutions).

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In combination, these rules require U.S. financial institutions to obtain and 

maintain information about certain funds transfers that identifies, at a 

minimum:

the name and address of the originator;

the amount of the transfer;

the execution date of the transfer; 

any payment instructions received;

the name and address of the beneficiary (if available);

the account number of the beneficiary (if available); 

any other specific identifiers of the beneficiary (if available); and 

the beneficiary’s financial institution.15

Existing regulations make no distinction between domestic and international 

funds transfers; financial institutions must obtain and maintain the required 

information about all funds transfer transactions above the $3,000 threshold. 

Therefore, institutions reporting cross-border electronic funds transfers would 

need to segregate cross-border funds transfers from information about domestic 

funds transfers. Reporting institutions also would need to segregate crossborder funds transfers above the $3,000 threshold.

While the BSA does not require U.S. financial institutions to report to FinCEN 

the information they maintain about funds transfers, the data is available to 

FinCEN and to regulators to whom FinCEN has delegated BSA compliance 

examination authority through the examination process. Information about 

cross-border funds transfers also is available to law enforcement through normal 

administrative processes, information requests, subpoenas, or the 314(a) process 

(See appendix A). These processes can involve delays to access of information 

for days, weeks, months, or years. Because the Travel Rule is a recordkeeping 

requirement rather than a reporting requirement, information is not available 

to regulators and law enforcement on a real time basis. Therefore, as a practical 

matter, regulators, and law enforcement currently tend to seek access to this 

information only in connection with an existing investigation or in the course of 

a compliance examination.

15 Strictly speaking, the applicable rules use parallel but not identical language to describe the relevant 

transactions and the persons sending and receiving funds through different types of institutions (i.e., 

originator, transmitter, beneficiary, recipient, bank, and non-bank financial institutions). For purposes 

of simplicity, we describe the transaction as a funds transfer, the person initiating a funds transfer 

as an originator, the person receiving the funds as a beneficiary, and the parties’ bank or financial 

institution as a financial institution throughout.

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A reporting requirement would create a centralized database of this very basic 

cross-border electronic funds transfer information in a single format and link it 

with other highly relevant financial intelligence. Furthermore, this very basic 

information about such transfers provides both a source of information that 

can provide new leads standing alone and can potentially enhance the use and 

utility of current BSA data collected by FinCEN when combined with those 

other data sources. Among the ways in which FinCEN and its partners can 

exploit this data are individual searches for known subjects, data matching with 

other sources of lead information, and link analysis with other financial, law 

enforcement, and intelligence reporting. (Appendix F describes these and other 

potential avenues of exploiting this data).

4.1 Individual targeting/research of known subjects

Analysts and investigators researching specific identified subjects are likely to 

rely primarily on the capacity to search electronic funds transfer data for specific 

names or account numbers and receive results within seconds. This kind of 

query and reporting function allows analysts to construct a customized query in 

response to a specific need. Many commercial software tools provide the query 

and reporting capabilities for retrieving structured data. 

4.2 Data Matching against Other Data Sources

FinCEN currently uses a large number of databases to identify and analyze 

financial crimes. FinCEN information comes from four primary sources: 

the Bank Secrecy Act Database that contains SARs, CTRs, Currency and 

Monetary Instruments Reports, Foreign Bank Account Reports, and other 

reports; 

several databases of criminal reports sourced from, among others, 

the Immigration and Customs Enforcement’s TECS II system, the 

FBI’s National Criminal Information Center, the Drug Enforcement 

Administration’s Narcotics and Dangerous Drugs Information and NDIC 

Systems, the United States Secret Service database, and the United 

States Postal Inspection Service; 

FinCEN’s own database of investigations and queries conducted through 

FinCEN’s systems; and 

Commercial database services from organizations such as Dun & 

Bradstreet, LEXIS/NEXIS, and credit bureaus,16 as well as commercially 

available lists of “Politically Exposed Persons.”17

16 FinCEN only has access to credit bureau header information, not full credit reports. Header 

information typically consists of identifying information such as name, address, SSN, etc.

17 See https://www.world-check.com and http://www.worldcompliance.com. Many government agencies 

and financial institutions employ such lists for intelligence and risk management purposes respectively.

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In addition, FinCEN analysts have access to other lists and databases 

maintained by federal government agencies that they may use to cross-reference 

BSA data, or as the basis of a search of the data. These sources include the 

Office of Foreign Assets Control’s list of Specially Designated Nationals, the 

Social Security Administration’s Death Master File, and the State Department’s 

list of Designated Foreign Terrorist Organizations.

4.3 Link Analysis

Link analysis is a technique used to explore associations within a large collection 

of data of different types. Link analysis requires a variety of readily available 

data, some of which provide indicators of money laundering activity (i.e., 

SARs, law enforcement data, case files, etc.). In the case of financial data, the 

connections might include names, addresses, phone numbers, bank accounts, 

businesses, funds transfers, and cash deposits. Combining and linking these 

pieces of data from multiple sources adds layers of understanding to the 

behavior that the data represents.

Link analysis depends on the integration of one or more sets of data records. 

Within each data set, each record has several data fields containing information. 

These might be records of an individual (with fields of name, address, and phone 

number), bank account (account number, owner, bank), or business (name, 

owners’ names, board members, address). As noted, FinCEN already collects 

multiple Bank Secrecy Act reports, each containing specific data fields. While 

there are many differences between them, there are also many fields common 

to the various reports. Likewise, even the limited pieces of data necessary to 

a funds transfer message overlap some of the information collected in these 

reports. Link analysis looks for matching fields in each of these records. For 

example, two reports identifying two separate individuals but each associating 

its subject with the same phone number as the other, could indicate that two 

persons know each other well, or even live at the same address.

Link analysis is useful in financial investigations because it can integrate many 

disparate sources of information. As noted, with the exception of SARs, the 

individual reports that FinCEN currently receives, and even the records that 

might be available through cross-border funds transfer reporting, provide few 

indicators of suspicion. However, link analysis provides a way of combining 

these different records so that analysts can detect the patterns and relationships 

between the different sets of data. FinCEN employs link analysis to identify 

relationships between the various BSA reports it currently collects. 
U.S. Department of the Treasury Financial Crimes Enforcement Network 11

5.0 Form, Manner, and Content of

Reporting

Financial institutions may use standardized or proprietary or internal systems to handle all or part of an electronic funds transfer (i.e., between branches of 

the same institution). Proprietary systems pose a special challenge to designing 

a reporting system because of the wide range of potential message formats, 

communications protocols, and data structures involved. The primary challenge 

that arises in this context is that a reporting requirement would require that the 

U.S.-based institution implement processes for identifying and extracting crossborder funds transfer information from its proprietary communications systems.

The implementing regulation must take into account this kind of permutation 

in order to ensure that FinCEN collects cross-border transfers that follow this 

pattern.

Although myriad systems are available to U.S. financial institutions to process 

electronic funds transfers, cross-border funds transfers tend to flow through a 

small number of channels as they enter and leave the United States (i.e., Fedwire, 

CHIPS and SWIFT; see Appendix D).18 As institutions pass payment orders along 

through correspondents en route to their destination, those institutions’ systems 

convert the orders from the many available formats to one of only a few. At some 

point in the cross-border payment chain a single U.S. financial institution must 

communicate directly with a foreign financial institution.

18 Many in industry and government have raised the question of what changes, if any, the proposed 

collection system would require to the established funds transfer messaging systems (i.e., CHIPS, 

SWIFT, Fedwire). In its response to FinCEN’s industry survey issued in March 2006, the American 

Bankers Association stated that “Imposing a new requirement to include this type of information for 

all wire transfers would require substantial changes to US payment systems.” Such changes were not 

necessary to the implementation of the corresponding requirements in either Canada or Australia. It 

is the conclusion of this study that not only would no such change be required, but that if such a change 

were necessary in order to make such a system work, the system would not be feasible.
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5.1 Collecting from the “First In/Last Out” Institution 

in the U.S. 

The following graphic illustrates an incoming cross-border funds transfer 

transaction and identifies the “first in” U.S. bank (Pinstripe Bank) as the 

institution that must report the transfer. In this scenario, the originator, DYO 

Industries in China, is requesting their bank, Town Bank of Tianjin, to send a 

funds transfer to the beneficiary, John Smith in New York. The funds transfer 

flows through several intermediary correspondent banks along the way. 

The “first in” bank in the U.S. may serve as a correspondent in the overall 

transaction chain or it may be the beneficiary’s bank. Because the details 

contained in a funds transfer message’s optional fields may change or disappear 

along the chain, the “first in” bank may have the most complete information 

related to the transaction of any U.S. financial institution.

The following graphic illustrates an outgoing cross-border funds transfer 

transaction, and identifies the “last out” U.S. institution (Pinstripe Bank) as the 

institution required to report the transfer to FinCEN. 
Feasibility of a Cross-Border Electronic Funds Transfer Reporting System under the Bank Secrecy Act

U.S. Department of the Treasury 13

A “last out” bank’s record should identify the originator, the originator’s bank, 

and other information about the transaction (e.g., beneficiary, beneficiary’s bank, 

information exchange, additional banks involved and their roles, date, amount, 

etc.). Similarly, the “last out” bank’s record may provide a more complete picture 

of the entities involved in the overall chain of the transaction. Investigators 

and analysts could then determine where to turn for further information on the 

transaction and customer. In addition, the customer identification (to the extent 

it is included in the original message) and other transaction detail information 

should remain intact and available throughout this correspondent stage and 

therefore remain available in the instructions handled by the last out banks. 

Whether a “first in” or “last out” institution, because of the size and nature of 

institutions that serve in correspondent roles for cross-border funds transfers, 

these banks are more likely to be connected with and use centralized message 

systems (SWIFT, Fedwire, CHIPS) and their standardized message formats. 

These standardized formats increase the ability of these institutions to handle 

the transactions with little manual intervention. In addition, these larger 

banks may often automatically “map over” messages from one system’s format 

to another (e.g., from SWIFT to Fedwire; from SWIFT to CHIPS). Accordingly, 

many would have systems in place to perform much of the data extraction 

necessary to create the reports required.

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We conclude that it would be most effective to collect funds transfer reports 

from the “First In/Last Out” institutions. In other words, the obligation to 

report should fall upon those U.S. institutions that transmit an electronic funds 

transfer instruction directly to a non-U.S. financial institution or conversely, 

those that receive such instructions directly from a non-U.S. financial 

institution. This approach aims to capture a funds transfer instruction at the 

point at which it crosses the U.S. border. The advantages of the approach are 

that it focuses the reporting requirement upon larger institutions that are most 

familiar with international funds transfers, have the technological systems 

in place to facilitate such transfers, and are in the best economic position to 

implement compliance systems and processes.19 Based on our research, we also 

believe that this will effectively capture the majority of funds transfers entering 

and leaving the United States without creating needless duplication among 

the reports submitted to FinCEN. In addition, such a requirement would have 

the effect of reducing the variation in the types of messages captured and the 

number of institutions submitting reports.

5.2 Money Services Businesses as Collection Points

In addition to the banking industry, certain money services businesses (MSBs) 

operate as retail money transmitters. Money transmitters provide many of the 

same attractions as the major bank-based electronic funds transfer systems.

Money transmitters often maintain agent relationships with businesses 

around the globe, permitting rapid, secure transfer of funds. The largest MSBs 

generally maintain centralized communications systems and database records 

of customer transactions that provide an obvious source for the funds transfer 

information collection. (Appendix D describes funds transfer operations by 

MSBs.)

This kind of centralized data repository provides a much more efficient collection 

point than do the agent businesses. In addition, under current Bank Secrecy 

Act regulations, all money transmitters that meet the definition of an MSB 

are required to register with FinCEN, except if it serves solely as an agent 

of another MSB. Therefore, it is easier to identify and monitor this smaller 

collection universe of MSBs than to collect information directly from MSB 

agents. 

19 In its response to FinCEN’s March 2006 industry survey, the American Bankers Association offered 

that “An unscientific poll of bankers visiting ABA’s compliance web page revealed that only 1 in 

4 respondents identified themselves as conducting “last out, first in” cross-border transfers.” The 

ABA also noted “for some [banks] it required less IT logic to be built into the reporting system.” 

Significantly, the ABA opined “. . . a “last out, first in” reporting obligation would suffice to capture the 

cross border transfer of funds and whatever information is attached to that transmittal. Although this 

method shifts much of the reporting cost to a smaller number of generally larger banks, many of the[m] 

possess sufficient capacity to perform the reporting with greater efficiency than would be the case if the 

obligation rested with all originating or beneficiary’s institutions.”
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The diagram below further illustrates a money transfer process occurring 

through one of the large, centralized money transmitters. 

Collection PointFor Payment Order

to be Forwarded

to FinCEN

Cross-Border Funds Transfer via

Money Services Business (MSB)

Step 1

Funds Transfer instructions

in U.S.dollars

Step 3

Forwards Transfer Request

Various Orgininators

Parent MSB,U.S.

Step 5

Step 4

MSBAgent, U.S.

Step 2 Parent Company Authorization for Transaction Payment

MSB

MSBAgent, Foreign Country

MSB I 

MSB II

Receive Agent Provides Transaction Information for Verification and Seeks Payment Authorization

Respective Beneficiaries Credited (local currency)

1

2 3 4

5 A

Various Beneficiaries

B

C

D E

F

G

OutGo-p102doc copy

Money transmitters generally effect funds transfers through a bank.20 However, 

there are other models, and it is beyond the scope of this study to enumerate the 

possible permutations. We conclude that a combination of realistic expectations, 

carefully tailored reporting requirements, and phased implementation of 

reporting can overcome this challenge.

5.3 Form

Electronic funds transfer messages generally are consistent in terms of the 

types of information that they contain regardless of the underlying message 

system on which they travel. Typically, funds transfers include information 

such as the account number of the bank customer, the originator of the transfer, 

the beneficiary of the transfer, the originating and beneficiary bank, the dollar 

20 Note, however, that this is not true of all money transmitters. As the 9/11 Commission noted, 

“A hawala, at least in its ‘pure’ form, does not use a negotiable instrument or other commonly 

recognized method for the exchange of money. Hawaladars instead employ a variety of means, often 

in combination, to settle with each other: they can settle preexisting debt, pay to or receive from the 

accounts of third parties within the same country, import or export goods (both legal goods, with false 

invoicing, or illegal commerce, such as drug trafficking) to satisfy the accounts, or physically move 

currency or precious metal or stones.” Monograph on Terrorist Financing, National Commission on 

Terrorist Attacks Upon the United States p. 68.
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amount (sometimes denominated in foreign currency), instructions for the 

disposition of the funds, and other information. In addition, some payment 

system messages contain a variety of codes that identify the country of origin 

and destination, the bank of origin and destination, and other information. 

However, depending on the funds transfer system, the actual format of the data 

can vary substantially. 

To accommodate these variations, FinCEN must adopt a limited number 

of standard forms for funds transfer reporting. These standards must 

accommodate automated filing of large collections of funds transfer reports, 

manual uploading of mid-sized collections of funds transfer reports, and discrete 

filing by small volume funds transfer service providers. In addition, the 

standards must assimilate the variations between the different funds transfer 

message systems from which the reporting institutions will extract the data. 

Finally, the standards must be such that reporting institutions can convert the 

source data from their systems into the required format with a minimum of 

manual intervention or system modifications.21

Any implementing regulation should permit institutions to comply with this 

requirement through the submission of customized reports that comply with a 

format prescribed by FinCEN or through the submission of certain pre-existing 

formats (i.e., CHIPS or SWIFT messages) that contain the required data 

elements. The pre-existing forms deemed acceptable by FinCEN would serve 

as proxies for formally prepared reports. In addition, FinCEN must prescribe 

an acceptable standardized format that specifies the specific data elements 

required. Institutions that must report but that lack the ability to deliver data 

in one of the approved pre-existing formats would need to convert their own data 

into this prescribed format and deliver it to FinCEN. 

Developing the minimum data requirements and standard formats will require 

close consultation with members of the U.S. financial services industry through 

the rulemaking process or otherwise. Collaboration is essential to ensuring 

that institutions can reasonably implement the technology to extract SWIFT 

messages from their systems or convert other data into the prescribed format 

with a minimum of investment in time and labor.

21 The ABA suggests, “regardless of the nature of any imagined reporting requirement, the financial 

services industry’s responsibility should extend only to the simple transmittal of raw data, with 

FinCEN assuming full responsibility for the refinement and distillation of the data into a format 

useful to law enforcement agencies.” While we believe that accommodation of every possible format 

is unreasonable, the approach proposed in the text recognizes the potential cost and strikes a balance 

aimed at accommodating the widest possible variation in reporting formats.
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5.4 Manner

Reporting institutions would be responsible for extracting the cross-border funds 

transfer data from their operation systems and generating appropriate reports 

for submission to FinCEN through a secure web protocol. The BSA E-Filing 

program has successfully implemented this kind of solution to allow large filers 

to use Connect:Direct, a commercial product, to transfer the BSA data from their 

own systems to FinCEN. Since many of the reporting institutions have already 

established the connections with FinCEN, it will be easier to continue using the 

same method for funds transfer data submission. 

As a practical matter, due to the volume of anticipated reporting, it will be 

necessary for FinCEN to mandate electronic filing of all cross-border funds 

transfer data. However, the specific means of delivering these electronic reports 

must be flexible enough to accommodate the various business processes of 

the reporting institutions and the volume of reports submitted by the various 

institutions. For institutions that process high volumes of cross-border funds 

transfers, FinCEN proposes to rely upon its existing BSA E-filing infrastructure. 

We propose that the modified BSA E-Filing system provide three separate means 

of submitting reports. 

For those institutions with sufficient infrastructure and volume, FinCEN should 

provide a means to submit reports in large batch files through an automated 

communication between the institutions’ systems and BSA E-Filing. For those 

institutions that lack the infrastructure or choose not to automate the report 

submission, FinCEN must also provide an interface through which employees 

of the institution can manually upload prepared electronic report files through 

a secure internet portal. Last, FinCEN must provide a secure internet portal 

through which institutions that process only a very small number of cross-border 

transfers may complete an online form containing the required information.

5.5 Content

As noted earlier, we conclude that the information or data elements about a 

funds transfer that U.S. financial institutions must maintain under 31 C.F.R. 

§ 103.33 provide sufficient information for meaningful analysis. Thus, we 

recommend that any implementing regulation define the required elements 

of a cross-border funds transfer report in terms identical to those in the funds 

transfer rule, 31 C.F.R. § 103.33. The funds transfer rule currently applies to 

transactions of $3,000 or more and we do not propose any different threshold 

for cross-border funds transfer reporting.22 We believe that any proposed rule 

22 According to the American Bankers Association, “Thresholds – as long as there is no aggregation 

requirement – are not particularly complicating system wise – but distinctions can involve compliance 

monitoring challenges especially if the notion of structuring is applied to wire activity.” 
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should incorporate by reference the data elements and threshold requirements 

of the Funds Transfer Rule in order to accommodate any changes that might 

occur in the future. We recommend further that any proposed regulation apply 

the applicable threshold only for discrete transactions rather than requiring 

financial institutions to attempt to identify multiple transactions aggregating to 

an amount above the threshold. We believe that the added costs to industry that 

an aggregation requirement would entail are unwarranted because the affected 

financial institutions already are required to monitor transactions for suspicious 

activity, including “structured” transactions, and to report any transaction or 

series of transactions in currency of more than $10,000.
U.S. Department of the Treasury Financial Crimes Enforcement Network 19

6.0 Technology Needed 

6.1 Concept of Operations

A federated data warehouse architecture would provide FinCEN with the most flexible approach to integrating cross-border funds transfer data 

with existing, planned, and unanticipated data sources. (Appendix H contains 

additional discussion of the alternatives analysis conducted in support of 

this study). The figure below illustrates, at a very high level, the systems 

architecture of FinCEN’s current data systems. 

BSA Form

Data

Staging

Area Paper

Data

Acquisition

Data Enhancement

and Load

Data Storage &

Aggregation

Data

Dissemination

Authorized

External

Users

FinCEN

BSA Data

Management

Authorized

FinCEN

Users

Financial

Institutions

Services

Layer

BSA Form Data

Warehouse

Magnetic

Media

FinCEN Case

Database

FBI-TFOS

IDW

USSS

IDW

OCDETF

Fusion

Center

Data

Usage

Data Aggregation

Data Enhancement

Cross-Reference

Validation

Quality Initiatives

Receipt and

Acknowledgement

(Web)

CBRS

FinCEN

Analytic

Tools

BSA

E-Filing

Magnetic

Media

Gateway

Secure

Outreach

Financial

Institutions

Authorized

IRS Users FinCEN System Components

IRS-DCC System Components

FinCEN recommends building a separate but integrated channel of data 

acquisition, processing, and storage of cross-border funds transfer data that 

would co-exist and integrate with the current BSA reporting. From a user’s 

perspective, a single interface would provide access to the multiple data 

warehouses. The figure below illustrates, at a very high level, the system 

architecture we recommend for constructing such a system.
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20 U.S. Department of the Treasury

System to 

System

Services

(S2S)

Or

Magnetic

Media

BSA Form

Data

Staging 

Area

Paper Scanning

Data 

Acquisition

Data Enhancement 

and Load

Data Storage & 

Aggregation

Data

Dissemination

Authorized

External 

Users

FinCEN

BSA Data

Management

Authorized

FinCEN

Users

Financial

Institutions

Services 

Layer

BSA Form Data

Warehouse

CBWT Data 

Warehouse

Magnetic

Media

FinCEN Case 

Database

IRS

(WebCBRS)

FBI-TFOS

IDW

USSS 

IDW

OCDETF

Fusion

Center

Data

Usage

Data Aggregation

Data Enhancement

Cross-Reference 

Validation

Quality Initiatives

Data Aggregation

Data Enhancement

Cross-Reference 

Validation

Quality Initiatives

Receipt 

(Paper & 

Mag Media)

Receipt 

(BSA E-Filing)

Web 

Services

Query 

Tools

FinCEN

Analytic 

Tools

BSA 

E-Filing

New System Components

Existing IRS-DCC System Components

Existing FinCEN System Components to be Enhanced

(CBWT) 

Staging 

Area

Financial

Institutions

Existing IRS-DCC System Components to be Duplicated

Existing FinCEN System Components

We propose to deploy a new funds transfer data warehouse and operating system 

in an environment separate from but integrated with existing BSA data. When 

fully implemented, FinCEN would have two data warehouses. FinCEN would 

receive the funds transfer data through the BSA E-Filing system but manage it 

in a separate funds transfer data warehouse environment. The funds transfer 

data warehouse would be separate from but tightly integrated with the existing 

BSA data warehouse. Thus, a dedicated system would handle management of 

the funds transfer reports and provide access to users through an interface that 

integrates the data with other BSA reports. This approach mirrors and extends 

the current BSA data collection process. We anticipate that the direct impact on 

the existing BSA data systems and BSA E-Filing will be minimal. 

A federated architecture gives FinCEN the responsibility and power to plan and 

build smaller customized portals that satisfy the unique needs and requirements 

of separate user communities over time. This approach permits developers 

to deploy a generic portal that serves the most common user needs, and then 

extend the system through development of more advanced or tailored portals. In 

the end, this approach provides an incremental investment of money and labor, 

faster initial deployment, and a greater return on investment over the long term. 

A federated architecture reduces the time and consensus building required in 

the initial planning stages. In the subsequent deployment of specialized portals, 

user requirements analysis becomes easier because the user community consists 

of smaller groups with common needs, project management issues are more 
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manageable, the users’ expectations of the systems’ features are more realistic, 

and the users can more readily recognize clear, tangible benefits of the system.

BSA E-Filing currently is capable of handling large batch filing of BSA 

reports. FinCEN must enhance the hardware used for the BSA E-Filing 

system and then increase the dedicated telecommunications bandwidth of 

the system to accommodate the batch sizes required to submit funds transfer 

data. The submission of funds transfer data also requires very strict security 

arrangements. The current digital certificate process built into BSA EFiling most likely will provide much of the security infrastructure required 

for transmitting batches of funds transfer data. FinCEN must also carefully 

reevaluate the current process for obtaining digital certificates to ensure that it 

does not hinder the increased usage of BSA E-Filing. 

The modifications to the BSA E-Filing system necessary in order to accommodate 

the batch submission of funds transfer include:

Separate Submissions for Funds Transfer Reports: Forms and 

other functionality to accommodate the separate work stream of funds 

transfer submissions. 

Administrative Database Tracking: FinCEN must modify the Oracle 

database used by BSA E-Filing for administrative tracking to track the 

submission of funds transfer batches. Similarly, administrative tracking 

functions must be adapted so that financial institutions could view a 

history of the funds transfer batches submitted to FinCEN. 

Acceptance and Validation of Funds Transfer Batches: The BSA 

E-Filing system must incorporate new business rules and procedures to 

accept batches of funds transfers in an entirely different format.

FinCEN must implement data transformation processes capable of mapping 

the elements of any such acceptable report formats into a single unified format 

for storage in its data warehouse. Providing multiple options to institutions 

with regard to the form of their reports would afford the maximum flexibility to 

institutions in implementing their own compliance processes. Institutions would 

be free to make whatever business decisions were appropriate within the limits 

established in the regulation.

6.2 Rough Order of Magnitude Cost Estimates

Significantly, we conclude that it is not feasible to implement such a system by 

the December 2007 deadline set out in Section 6302 of the Intelligence Reform 

Act. Based on a preliminary work breakdown schedule outlining the necessary 

steps in development, we conclude that deployment of the system described 

above would require approximately three and one-half years of labor and an 

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investment of approximately $32.6 million over that time.23 (Appendix K 

contains a more detailed breakdown of the cost estimates).

Acquisition Phase One Phase Two Sub-Totals

Hardware $1,630,392 $1,324,397 $2,954,789

S

Hoar

ftdwwaarree/Software $3,175,015 $1,227,898 $4,402,913

Maintenance Cost $690,369 $767,905 $1,458,274

Contract Service & Support $770,000 $6,274,797 $14,712,392 $21,757,189

Other $347,710 $754,110 $933,660 $2,035,480

 Total $1,117,710 $12,524,683 $18,966,252 $32,608,645

23 Note that this figure represents a rough order of magnitude cost estimate and could be revised 

significantly based upon the results of the proposed pre-acquisition phase and user requirements 

analysis.
U.S. Department of the Treasury Financial Crimes Enforcement Network 23

7.0 Information Security Protections

The aggregation and analysis of large collections of data and the development of interconnected information systems designed to facilitate information 

sharing is revolutionizing the way in which the federal government attacks 

financial crime. While the benefits have been substantial, these developments 

pose significant risks to the critical operations of the government and the 

security of the data contained in these systems. Bank Secrecy Act data is 

highly sensitive data containing details about the financial activity of private 

persons. Without proper safeguards, this data could be at risk of inadvertent 

or deliberate disclosure or misuse and FinCEN’s mission could be undermined. 

These risks generally fall into two closely related categories, the privacy of the 

personal information contained in government systems, and the risk of system 

compromise or misuse. A number of federal laws directly control the collection 

and use of data by government agencies with the aim of protecting the privacy of 

individual persons – namely, the Right to Financial Privacy Act, the Privacy Act, 

the Federal Information Security Management Act, and the Bank Secrecy Act 

itself. 

U.S. law has long recognized that a person has no Fourth Amendment privacy 

interest in the records of his or her transactions maintained at a financial 

institution. See United States v. Miller, 425 U.S. 435, 442 (1976) (holding 

that a person has no “expectation of privacy” in his records held by a bank). In 

response to the holding in Miller, and two other Supreme Court cases issued in 

the early 1970s – California Bankers Ass’n v. Schultz, 416 U.S. 21 (1974) and 

Fisher v. United States, 425 U.S. 391 (1974) – which further limited a customer’s 

ability to challenge government access to records maintained by third parties, 

Congress enacted the Right to Financial Privacy Act of 1978 (RFPA).24 RFPA is 

the primary federal statute that protects individual privacy interests in financial 

records. RFPA generally prohibits a federal government agency from obtaining 

customer records from a bank unless the customer first receives notice and an 

opportunity to challenge any such disclosure. The information collected by the 

proposed cross border funds transfer system, as with any other information 

required under the Bank Secrecy Act, would fall under the exception to RFPA 

concerning reports required under federal law. Although RFPA provisions would 

not apply to this data, other federal laws would. 

The Privacy Act of 1974 places limitations on federal government agencies’ 

collection, disclosure, and use of personal information maintained in those 

agencies’ systems of records.25 The Privacy Act defines a “record” as any item, 

collection, or grouping of information about individuals that contains those 

24 12 U.S.C. § 3401 et seq.

25 5 U.S.C. § 552a
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persons’ names or other personal identifiers.26 The Privacy Act requires that 

when agencies establish or make changes to a system of records, they must 

notify the public by a notice published in the Federal Register identifying 

the type of information collected, the types of persons about whom the data 

is collected, and the intended use of the information. Generally, a federal 

government agency may not disclose a record contained in a system of records 

without the prior consent of the individual to whom the record pertains, unless 

the disclosure would fall within a published routine use.27 Cross border funds 

transfer data reported to FinCEN under the authority of the Bank Secrecy Act 

would fall within this system of records. Examples of routine uses of Bank 

Secrecy Act data include disclosures to agencies responsible for investigating and 

prosecuting civil or criminal violations of law, and to intelligence agencies in the 

conduct of intelligence to protect against international terrorism.

The Federal Information Security Management Act of 2002 (FISMA)28 requires 

each federal government agency (including those operating national security 

systems) to develop, document and implement an agency wide information 

security program that includes:

Periodic assessments of the risk and harm that would result from 

unauthorized access, use, disclosure, disruption, modification, or 

destruction of data or information systems;

Risk-based policies and procedures to reduce those risks to acceptable 

levels and ensure that information security is addressed throughout the 

life cycle of the agency’s information systems;

Plans for implementation of adequate information security for networks, 

facilities and systems;

Security awareness training for agency personnel, including contractors 

and external users of the information systems;

Periodic testing (at least annually) and evaluation of the information 

security policies, procedures, and practices in place within the agency; 

Procedures for detecting, reporting, and responding to security incidents; 

and 

An annual independent evaluation of its information security program 

and practices.

26 5 U.S.C. § 552a(a)(5)

27 The routine uses for Bank Secrecy Act data are set forth at 70 Fed. Reg. 45756, 45760 (August 8, 2005) 

(Bank Secrecy Act Reports System—Treasury/FinCEN .003). 

28 Federal Information Security Management Act of 2002, Title III, E-Government Act of 2002, Pub.L.No. 

107-347, Dec. 17, 2002.

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FISMA also requires the National Institute of Standards and Technology 

(NIST) to develop standards and guidelines for all federal government agencies’ 

non-national security systems related to: (1) categorization of their data and 

information systems based on risk level and security requirements; (2) the types 

of data and information systems that fit within each category; and, (3) minimum 

information security requirements for data and information systems in each 

category.

In turn, the Office of Management and Budget has established performance 

measures in each of the following areas:

Certification and accreditation;

Testing of security controls;

Agency systems and contractor operations or facility reviews;

Annual security awareness training for employees;

Minimum security configuration requirements; and

Incident reporting

Lastly, the E-Government Act of 2002 provides a further protection for personal 

information in government data systems, by requiring that agencies conduct 

“privacy impact assessments” prior to procuring or developing such systems.29 A 

privacy impact assessment is:

An analysis of how information is handled: (i) to ensure handling conforms to applicable

legal regulatory, and policy requirements regarding privacy; (ii) to determine the risks 

and effects of collecting, maintaining, and disseminating information in identifiable form 

in an electronic information system; and (iii) to examine and evaluate protections and 

alternative processes for handling information to mitigate potential privacy risks.30

FinCEN has developed policies and procedures for compliance with these 

requirements in accordance with the Department of the Treasury’s Information 

Technology Security Program Directive. Compliance with these governmentwide and department-wide standards ensures that FinCEN designs and operates 

its information systems in accordance with government best practices for the 

maintenance and dissemination of sensitive data. In developing a system for the 

collection, storage, analysis, and sharing of cross-border electronic funds transfer 

reports, FinCEN will incorporate compliance with these standards into every 

phase of the design and implementation of the system.

29 E-Government Act of 2002, Pub.L.No. 107-347, section 208, (Dec. 17, 2002).

30 Office of Management and Budget, Memorandum M-03-22, Guidance for Implementing the Privacy 

Provisions of the E-Government Act of 2002 (Washington, D.C., Sept. 26, 2003).

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FinCEN is particularly well suited to protect and steward the data, given 

the strict limits the Bank Secrecy Act imposes on the use and dissemination 

of data collected under its authority. Pursuant to 31 U.S.C. § 5319, FinCEN 

must make Bank Secrecy Act data available to other agencies for uses 

consistent with the stated purposes set forth in 31 U.S.C. § 5311 (i.e., to require 

reports or records that “have a high degree of usefulness in criminal, tax, or 

regulatory investigations or proceedings, or in the conduct of intelligence or 

counterintelligence activities to protect against international terrorism”). The 

Bank Secrecy Act protects the privacy of individuals by making a wrongful 

disclosure or unauthorized use of a suspicious activity report subject to a 

criminal penalty of up to five years imprisonment. 

FinCEN has more than fifteen years’ experience in handling sensitive financial 

information about persons through the reporting it currently receives from 

financial institutions in the United States. FinCEN imposes strict limits on 

the use and re-dissemination of the data it provides to its law enforcement, 

regulatory, and foreign counterparts and strictly monitors those persons and 

organizations to which it grants access to the data. For example, all FinCEN 

employees and contractors that have access to BSA data are subject to rigorous 

background investigations. Likewise, external users have access to BSA data 

only under the terms of Memoranda of Understanding (MOU) between FinCEN 

and the users’ agency. Those MOUs require that the agencies conduct similar 

background investigations of all users within the agency, implement specific 

physical and technological security measures to protect the computers they 

use to access BSA data, and permit FinCEN to conduct electronic and on-site 

audits of their use of the data and the safeguards and procedures in place 

within the agency. Finally, all users of BSA data must agree to the terms of 

FinCEN’s “BSA Re-Dissemination Guidelines,” which spell out in detail the 

terms under which a user may share the BSA data they obtain with others. If 

collected, cross-border funds transfer data would be technologically protected 

and secure and would be available only to law enforcement and regulatory 

agencies authorized by law to access it. Finally, FinCEN has created a position 

within its Office of Information and Technology to advise the Chief Information 

Officer regarding privacy issues implicated by the collection of BSA information. 

This official will advise the CIO on the development and implementation of 

information technology to help ensure that Bank Secrecy Act and related 

data and records are collected, transmitted, maintained and utilized only for 

authorized purposes and that the privacy interests of those persons subject to 

BSA reporting are considered. In addition, the official will recommend policies, 

technology, and processes for preventing the purposeful or unintended disclosure 

or other misuse of information about individuals or organizations.

A further consideration stemming from the cross border nature of the 

funds transfers at issue is the potential relevance of privacy laws of foreign 

jurisdictions or other provisions regarding the uses of electronically stored data 
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and its flow between countries. For example, initiatives within the European 

Union recommend limits on the collection of data, limitations on the use of data 

based on relevance and the purpose for which the data was initially collected, 

reasonable security safeguards, and prohibitions on disclosure without the 

subject’s consent or authorization. Some of these initiatives provide that 

member countries should permit the transmission of data to other countries only 

if the receiving country has implemented controls on the use of the data that 

are consistent with the principles of those EU initiatives. The EU initiatives 

apparently apply only to “personal data,” defined as any information relating 

to an identified or identifiable natural person. To date, legislation in member 

countries implementing these initiatives generally has not extended the term 

“personal data” to include corporate data or business records such as funds 

transfer instructions. In addition, a substantial proportion of electronic funds 

transfer messages relate to the activity of corporations and other artificial 

entities rather than individuals. Should the Treasury Department implement 

a cross-border funds transfer reporting requirement, other countries’ privacy 

restrictions could affect the usefulness of the data for money laundering analysis 

to the extent they served to limit the receipt of information other than as 

necessary to carry out the funds transfer. 

The problem is not limited, however, to purely legal issues. A high level of 

confidentiality of banking services can be very lucrative for both financial 

institutions and their host countries. Whereas the U.S. government can and has 

taken steps to require that certain information be included in electronic payment 

messages, foreign institutions may hesitate to provide detailed information in 

funds transfer instructions and are beyond the reach of U.S. law. To require 

that U.S. banks reject any funds transfer instruction that does not include 

the elements required under U.S. law could significantly disadvantage U.S. 

institutions in the international financial system. 

Foreign institutions that provide such confidentiality would present two 

problems for an electronic funds transfer reporting initiative. First, they would 

undermine the value of electronic funds transfers reporting in the United States 

by limiting the available information related to funds transfers entering the 

U.S. Second, the institutions that provide such confidentiality compete in the 

marketplace with U.S.-based banks. This increases the cost of compliance to 

U.S. institutions in a way, by making these other institutions more attractive to 

certain customers who seek anonymity. 

The U.S. and other members of the Financial Action Task Force (FATF)31 have 

attempted to address these issues in a global context by adopting international 

31 FATF is an inter-governmental policy-making body created in 1989 whose purpose is the development 

and promotion of national and international policies to combat money laundering and terrorist 

financing. The FATF works to generate the necessary political will to bring about legislative and 

regulatory reforms in these areas. The FATF has published the Forty Plus Nine Recommendations in 

order to meet this objective. See http://www.fatf-gafi.org .
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“best practice” standards. For instance, FATF Special Recommendation VII, 

and the interpretive note thereto, requires countries to mandate that crossborder funds transfers of more than the specified threshold contain accurate and 

meaningful originator information, and that such information is immediately 

available to appropriate law enforcement, FIUs, and the beneficiary’s financial 

institution. 

The originator information required to be included in cross-border funds 

transfers by the Interpretive Note to SR VII includes: 

Name of the Originator

Location of the Account

Account number, if one exists, or a unique reference number; and 

Address of the Originator, or national identity number, customer 

identification number, or date or place of birth if the country 

permits.

The interpretive note to Special Recommendation VII also states that there is 

value in nations requiring all incoming cross-border funds transfers to contain 

full and accurate originator information regardless of the value of the transfer. 

Special Recommendation VII further requires that countries take measures to 

ensure that financial institutions conduct enhanced scrutiny of and monitor 

for suspicious activity funds transfers that do not contain complete originator 

information. The provisions of Special Recommendation VII and the BSA 

travel rule are illustrative of a global movement to promote transparency in 

the international financial system. As this movement matures, the value of 

electronic funds transfer data will likewise increase. 

Of course, there are general concerns about government agencies having access 

to large collections of data related to the activity of individual persons. A 

discussion of these issues should begin with the nature of the data itself, the 

context in which it is collected, and the standards for its use and dissemination. 

In this case, any reporting requirement would collect only information already 

obtained and maintained by financial institutions and already available to the 

government -- albeit through cumbersome and sometimes inefficient processes 

-- and would be used largely for the same purposes to which it is currently put 

on a very limited scale. Such information is far more limited in scope than that 

collected in other BSA reports. In the context of the Bank Secrecy Act regime, 

such data adds an additional layer of transparency to the U.S. financial system, 

holding the promise to enhance both deterrence and detection of illicit financial 

activity. Dissemination of the data, as with all other BSA data, is subject to 

strict controls based on the data’s value to legitimate efforts to combat illicit 

financing undertaken by those with appropriate legal authority. Federal law 

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and court precedent establish that such information is appropriate to these tasks 

and provides the authority to obtain and use it. Thus, the primary question 

becomes whether this move toward more efficient and intelligent use of the 

information significantly alters the balance between government efforts to 

protect the nation and its financial system and individual privacy. 

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8.0 Conclusions and Recommendations

8.1 Project Risks

There are a number of significant challenges facing the development and implementation of cross-border electronic funds transfer reporting in the 

United States. On a technical level, development of information technology 

systems capable of receiving, storing, analyzing, and disseminating an estimated 

350-500 million records a year is a daunting task. In the regulatory context, 

developing a clear definition of what actually constitutes a cross-border 

electronic funds transfer is also difficult. Certain kinds of cross-border funds 

transfers traverse the United States without involving any U.S.-based sender 

or recipient, and the collection of such information implicates serious policy 

issues related to the privacy of data regarding both U.S. persons and non-U.S. 

persons, as well as the role of the U.S. dollar in the international economy. In 

addition, imposing yet another compliance cost on the U.S. financial services 

industry requires careful consideration of financial institutions’ ability to 

implement compliance processes and the impact that might have on industry 

operations and the costs to customers. Last, but not least, any data collection 

and analysis effort such as the one contemplated by the Intelligence Reform Act 

also implicates personal privacy concerns. Properly maintaining and securing 

the data from unauthorized access, as well as managing the appropriate and 

intelligent use of the data, are paramount.

Technical Issues

The technical alternatives for the receipt, storage, analysis, and dissemination 

of the data described in this study presume an electronic reporting system that 

could receive data in standardized formats, normalize the data, and load it into 

a data warehouse. The technology for implementing this type of communication 

between the financial institutions and FinCEN already exists, and FinCEN has 

already implemented it in the BSA E-Filing system. 

Section 361 of the USA PATRIOT Act specifies that FinCEN must establish and 

“maintain a government-wide data access service, with access to . . . information 

collected by the Department of the Treasury, including report information . . . 

(such as reports on cash transactions, foreign financial agency transactions and 

relationships, foreign currency transactions, exporting and importing monetary 

instruments, and suspicious activities). . . .” To fulfill its mandate under the 

USA PATRIOT Act, FinCEN must provide a powerful data warehouse and 

communication infrastructure that permits external users to access and analyze 

the BSA data in meaningful ways. The anticipated volume of cross-border 

electronic funds transfer reporting makes this a difficult task.
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Any reporting system should leverage existing technology and integrate the 

various collections of data maintained by FinCEN. The proposed system would 

require:

Integration with and enhancement of the BSA E-Filing system currently 

utilized or in development by FinCEN for the receipt of Bank Secrecy Act 

data. 

Processing, integrating and enhancement of data submitted by filers, 

which will share many common data elements, but may be in multiple 

formats and data structures, to create a uniform data structure.

Storage of 2-3 years (going forward, not retroactive) worth of cross-border 

funds transfer data for online access with up to 7-8 additional years’ data 

archived and accessible through other means. 

Integration with other databases including BSA data accessible to 

external users through a secure web-based interface. 

High-performance and high-availability system with 24/7/365 support, 

including maintenance, support and help desk services.

Audit trail capability to track connections to and submissions to the 

databases, and to provide receipt acknowledgements for data submissions 

by users.

Compliance with applicable industry and government standards 

and security measures appropriate to the handling of Sensitive but 

Unclassified (SBU) data for the use of Law Enforcement and Regulatory 

organizations.

These issues highlight the need to conduct a detailed requirements analysis and 

system design process prior to development. Below we propose an incremental 

approach to conducting such an analysis and planning for future development.

Regulatory Approach

The definition of “cross-border electronic transmittal of funds” lies at the heart 

of a successful implementation of the reporting requirement. The nature of 

the electronic funds transfer process as it has evolved in the United States 

poses specific difficulties in creating a definition that at once captures all of the 

nuances of the payment systems and avoids needless complexity. 

Further, the regulation must also provide a clear definition of what types of 

electronic funds transfers an institution must report, and what particular 

information it should report about each transfer. For the purposes of our study, 

we have focused on electronic “funds transfers” as defined in 31 C.F.R. § 103.11

in which a U.S. institution sends or receives a payment instruction directing the 

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transfer of funds to or from an account domiciled outside the U.S.32 Refining 

an appropriate regulatory definition of what transactions fall within the new 

reporting requirement will implicate a number of concerns that we identify 

below. 

Institutional Costs

U.S. financial institutions already comply with a wide array of reporting and 

record-keeping obligations under the Bank Secrecy Act. In the event that the 

Treasury Department imposes such a reporting requirement, relatively few 

and mostly large institutions would need to modify the information technology 

they currently employ and assign staff to manage the implementation process. 

Institutions would need to train staff in the use and maintenance of the 

system and the details of the reporting procedures. Some institutions may 

need or choose to rely on third-party vendors to provide the necessary tools 

or modifications to their systems. Many vendors currently provide financial 

institutions with technology to assist them in complying with Bank Secrecy Act 

regulations. It is possible, if not likely, that the vendors would expand their 

services to offer the service of extracting the appropriate funds transfer data 

and reporting that data to FinCEN on behalf of customer institutions. Whether 

done internally or through outsourcing, reporting institutions will incur some 

additional costs.

It is very difficult to estimate the costs of compliance with precision, and we have 

been unable to quantify the costs to U.S. financial institutions. Coordination 

of the flow of information presents a number of challenges in implementing the 

proposed system. U.S. financial institutions process and record funds transfers 

in myriad ways. The development of business processes within U.S. financial 

institutions to extract the required data from whatever systems they use 

and transform it into properly formatted reports may be necessary. Any new 

reporting requirement must necessarily include a reasonable amount of time in 

which institutions can develop and implement their compliance processes. 

Privacy and Confidentiality

Throughout the conduct of this study, many have raised concerns about privacy 

and the security of personally identifiable and sensitive data about persons’ 

financial transactions. FinCEN has always taken seriously the importance 

of safeguarding the financial data it collects. Nonetheless, as previously 

discussed, a system such as the one contemplated in this report raises important 

questions about the collection of a very large set of private information about 

persons within and outside the United States without any indicia of suspicious 

32 Section 6302 contemplates a reporting requirement that is coextensive with the scope of the BSA 

funds transfer rule (31 C.F.R. § 103.33). Accordingly, this study does not address any debit card type 

of transmittals, point-of-sale (POS) systems, transaction conducted through an Automated Clearing 

House (ACH) process, or Automated Teller Machine (ATM).
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activity. Policymakers must weigh the potential value of the data in supporting 

government efforts to safeguard the financial system from abuse and to deter, 

detect, and prevent illicit financing carefully against these concerns.

The privacy issues raised by the proposed system should turn primarily on the 

specific content of the reports proposed and the integration of those reports 

with other data sets and not on the volume of the reporting. The amount of 

information in a funds transfer message is limited, far more so than the data 

already collected by FinCEN through its Suspicious Activity Reports, Currency 

Transaction Reports, and Currency and Monetary Instrument Reports. In 

addition, the proposed reporting requirement would not establish a new source 

of information. Funds transfer data, whether domestic or cross-border is already 

available to the government but can be difficult to obtain and analyze (see 

appendix F). Rather, the proposed requirement is an administrative change 

that would permit investigators and analysts to access and employ data already 

available in a more effective way.

In addition to the concerns about personal privacy, there are practical, technical 

concerns regarding the prevention of unauthorized access to data by network 

intruders, particularly in light of the types of personal and business information 

contained in funds transfer data. FinCEN is sensitive to these concerns, 

and practiced in minimizing such risk. FinCEN stands between financial 

institutions and law enforcement, balancing regulatory costs and privacy 

concerns against the important value gained by law enforcement access to 

financial information. As with the current Bank Secrecy Act reports, FinCEN 

plays an important role as an intermediary between the sensitive information 

and unfettered or inappropriate access by law enforcement. 

8.2 Pre-Acquisition Planning

In its response to FinCEN’s March 2006 survey, the American Bankers 

Association “proposes for discussion whether piloting a single channel specific 

reporting requirement and then evaluating what has been achieved from a law 

enforcement perspective for what cost from an economic and privacy basis, isn’t 

a preferred alternative to attempting to implement a comprehensive definitionand-exception driven cross-border, cross-system regime.” We believe that there 

is some value to a phased implementation of a cross-border funds transfer 

reporting system. 

Building on the ABA’s suggestion, we propose a multi-phase development 

process. The pre-acquisition phase of the process would involve three parallel 

efforts. 
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8.2.1 User Requirements Analysis

First, FinCEN would engage with its partners in the law enforcement, 

regulatory and intelligence communities to develop detailed user requirements. 

This effort would focus on determining the functionality required to meet the 

most central needs of those who access BSA data. 

8.2.2 Institutional Cost Analysis

Second, FinCEN proposes to engage in a detailed discussion with representatives 

of the U.S. financial services industry that would be subject to the proposed 

requirement, along with representatives of the major payment systems and 

members of the Canadian and Australian financial services industries. 

There is no quantitative data on the labor or cost involved in implementing 

processes to comply with the proposed requirement. We propose that the 

reporting requirement should fall upon a relatively small segment of the 

financial services industry, and primarily upon large institutions with 

correspondingly more substantial resources. We recommend that, as part of the 

planning and requirements analysis phase of development, FinCEN engage in 

detailed discussions with representatives of industry, particularly with officials 

familiar with and responsible for the operation of funds transfer systems within 

U.S. financial institutions, to determine the specific needs of industry members. 

This exchange also should involve, to the extent possible, representatives from 

the major payment systems and institutions doing business in Australia and 

Canada.

These discussions would focus on quantifying the cost the proposed requirement 

would impose on reporting institutions and the potential impact on the day-today operation of the payment systems. In turn, the outcome of these discussions 

would lead to exploration of means to minimize or avert these impacts. 

8.2.3 Value Analysis

Third, FinCEN would engage outside support in obtaining and analyzing a large 

collection of funds transfer data and exploring means of extracting value from 

the data. This effort would require correlating funds transfer data with BSA 

data to validate conclusions contained in this report and to identify means of 

effectively and intelligently using the funds transfer data to advance efforts to 

combat money laundering and illicit finance. Based on its own experience and 

that of other users of BSA data, FinCEN is convinced of the analytical value of 

funds transfer data (see Appendix F). Once FinCEN identifies and tests potential 

analytical techniques for employing the funds transfer data, however, it can 

select those techniques that best combine acceptable costs, reasonable analytical 

value, and realistic resource requirements. That process will drive the system 

design process.
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All three of these efforts would provide vital information required to develop 

detailed requirements for the proposed regulation and technological system. 

If any of these efforts were to reveal insurmountable obstacles to the project, 

this multi-faceted pre-acquisition effort provides the opportunity to halt the 

effort before FinCEN or the U.S. financial services industry incur significant 

development and implementation costs. In fact, this approach would provide 

such answers prior to the issuance of a contract for development of the 

technological systems. In other words, this approach provides a clear decision 

point at which FinCEN or policy makers may terminate the effort if appropriate.

8.3 System Development and Deployment

Based on the above-described pre-acquisition efforts, FinCEN will create a 

development plan that incorporates a series of milestones that would permit 

pilot testing of different aspects of the reporting system. Key components of 

the system development that would benefit from such pilot testing are the data 

acquisition component (modification of BSA E-Filing), the ETL process, and 

the data analysis component. FinCEN would divide the development of the 

data acquisition component into phases that address batch delivery of SWIFT 

messages, batch delivery of non-SWIFT messages, manual upload of prepared 

reports, and online completion of reporting forms. The development of the 

Enhancement, Transformation, and Load (ETL) process would parallel these 

same phases, addressing the processing of the various reporting forms. This 

type of collaborative, incremental development approach would enable FinCEN 

to build the system in manageable stages and to test the system’s functionality 

at each stage before moving on to the next. The results of these different stages 

of development would provide vital experience and lessons that would assist in 

the creation of appropriate final regulations, including clear definitions of which 

transfers U.S. financial institutions would need to report and the creation of 

appropriate and practical exclusions from the reporting requirement, if any.
U.S. Department of the Treasury Financial Crimes Enforcement Network 37

Appendix A – Financial Crimes 

Enforcement Network Programs

The Department of the Treasury established the Financial Crimes Enforcement Network in April 1990.33 FinCEN’s original mission was to 

establish a government-wide multi-source financial intelligence and analysis 

network to support the detection, investigation, and prosecution of domestic and 

international money laundering and other financial crimes. In 1994, FinCEN’s 

mission expanded to include regulatory responsibilities. The USA PATRIOT 

Act of 2001 established FinCEN as a Bureau within the Treasury Department 

to support law enforcement efforts and foster interagency and global cooperation 

against domestic and international financial crimes, and to provide U.S. policy 

makers with strategic analyses of domestic and worldwide trends and patterns.34 

FinCEN works toward those ends through information collection, analysis, 

and sharing, as well as technological assistance and innovative, cost-effective 

implementation of the Bank Secrecy Act. On March 8, 2004, FinCEN became 

a part of the Department of the Treasury’s Office of Terrorism and Financial 

Intelligence, the lead office in the Treasury Department for fighting the financial 

war on terror, combating financial crime, and enforcing economic sanctions 

against rogue nations.

The Bank Secrecy Act is the nation’s first and most comprehensive federal antimoney laundering statute. Since its enactment in 1970, Congress has amended 

the Act several times to improve and enhance information collection. The 

Bank Secrecy Act authorizes the Secretary of the Treasury to issue regulations 

requiring banks and other financial institutions to keep records and file reports 

on certain financial transactions determined to have a high degree of usefulness 

in criminal, tax, regulatory investigations and proceedings, and certain 

intelligence and counterterrorism matters. The authority of the Secretary to 

administer Title II of the Bank Secrecy Act (codified at 31 U.S.C. 5311-5330 

with implementing regulations at 31 C.F.R. Part 103) has been delegated to the 

Director of the Financial Crimes Enforcement Network.

FinCEN is charged first and foremost with safeguarding the financial system 

of the United States from abuse by criminals and terrorists. FinCEN works to 

accomplish its mission through: 

Administration of the Bank Secrecy Act - a regulatory regime that 

provides for the reporting of highly sensitive financial data that are 

critical to investigations of financial crime; 

33 Treasury Order Number 105-08 (Apr. 25, 1990).

34 Pub. L. No. 107-56, Title III, Subtitle B, Section 361(a)(2), 115 Stat. 272, 329-332. See Treasury Order 

180-01 (Sept. 26, 2002).

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Dissemination of the data reported under the Bank Secrecy Act to law 

enforcement and, under appropriate circumstances, the intelligence 

community; 

Analysis of information related to illicit finance - both strategic and 

tactical analysis; and

Education and outreach provided to law enforcement and the financial 

industry on issues relating to illicit finance. 

In carrying out this mission, FinCEN serves many complementary roles:

FinCEN is a regulatory agency. FinCEN administers the Bank Secrecy 

Act, the principal regulatory statute aimed at addressing the problems 

of money laundering and other forms of illicit finance, including terrorist 

financing. FinCEN is responsible for shaping and implementing this 

regulatory regime and, in concert with the federal functional regulators 

and the Internal Revenue Service, for ensuring compliance with the 

regime. The agency also protects the integrity and confidentiality of the 

information collected under the Bank Secrecy Act. 

FinCEN is a financial intelligence agency. While not a member of the 

intelligence community, FinCEN is responsible for ensuring the efficient 

and timely collection, maintenance, analysis, and dissemination of 

financial information critical to investigations of illicit finance.

FinCEN is a law enforcement support agency. While FinCEN has no 

criminal investigative or arrest authority, much of its effort supports the 

investigation and successful prosecution of financial crime.

FinCEN is a network. FinCEN does not support one agency or a select 

group of agencies, but makes its information, products, and services 

available to all agencies that have a role in investigating illicit finance. 

FinCEN networks these agencies using technology that identifies 

when different agencies are searching the same data and facilitates 

coordination - avoiding investigative overlap and permitting the agencies 

to leverage resources and information.

From its position within the Treasury Department’s Office of Terrorism and 

Financial Intelligence, FinCEN works to “operationalize” Treasury's policy 

priorities on these important issues. This coordinated effort contributes to a 

greater emphasis and understanding of money laundering, terrorist financing, 

and other forms of illicit finance not only at Treasury, but also throughout the 

United States Government.

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In its role as the administrator of the Bank Secrecy Act, FinCEN: 

Develops and issues regulations to implement the provisions of the BSA 

and the USA PATRIOT Act; 

Issues interpretive guidance to educate industry about red flags, 

vulnerabilities, and money laundering and terrorist financing 

methodologies; 

Conducts outreach and training to regulated industries, regulators, 

examiners, and law enforcement to improve consistency in the 

administration and enforcement of the BSA; 

Collects, maintains, and analyzes reports and information filed by 

financial institutions under the Bank Secrecy Act; 

Disseminates BSA data to law enforcement and regulatory agencies; 

Ensures financial institution compliance with the regulations and 

consistent application of the regulations across all affected financial 

services industries; and 

Takes civil enforcement actions in the case of serious non-compliance. 

While FinCEN is responsible for ensuring compliance with the Bank Secrecy 

Act and implementing regulations, FinCEN does not itself examine financial 

institutions for compliance. Instead, FinCEN has delegated its authority 

to examine financial institutions for BSA compliance to the primary federal 

regulators of those financial institutions. FinCEN thereby can leverage 

the resources and expertise of other Federal agencies and self-regulatory 

organizations by relying on these agencies to conduct compliance exams. 

FinCEN has delegated its examination responsibility to the Board of Governors 

of the Federal Reserve System, the Office of the Comptroller of the Currency, 

the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, the 

National Credit Union Administration, Securities and Exchange Commission, 

the Commodity Futures Trading Commission, and the Internal Revenue Service 

(Small Business/Self-Employed Division).35

FinCEN has an important role in supporting the examination regime created 

through our delegations. FinCEN's role involves providing prompt Bank Secrecy 

Act interpretive guidance to regulators, policy makers, and the financial services 

industry, and ensuring the consistent application of the Bank Secrecy Act 

regulations across industry lines, most notably through the rule-making process, 

issuance of guidance, and through FinCEN’s Office of Compliance. Through that 

Office, and pursuant to Memoranda of Understanding executed with FinCEN, 

35 See 31 C.F.R. § 103.56(b).

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federal agencies to which FinCEN has delegated BSA compliance examination 

authority periodically provide to FinCEN information related to BSA deficiencies 

within the institutions they regulate. This information helps FinCEN develop 

a more accurate picture of compliance in the industry and address compliance 

issues expeditiously. The information also helps FinCEN fulfill its obligation to 

administer and to oversee compliance with the BSA, and provides consistency 

and quality in referrals of potential BSA violations to FinCEN. 

At the invitation of the Federal Financial Institutions Examination Council, 

FinCEN, along with the five Federal banking agencies, has issued interagency 

Bank Secrecy Act/Anti-Money Laundering examination procedures. These 

examination procedures emphasize a banking organization’s responsibility to 

establish and implement risk-based policies, procedures, and processes to comply 

with the BSA and safeguard its operations from money laundering and terrorist 

financing. 

As noted above, FinCEN promotes BSA compliance by all financial institutions 

through training, education, and outreach. Further, FinCEN supports the 

examination functions performed by the other agencies by providing them access 

to information filed by financial institutions and by facilitating cooperation 

and information sharing among the various financial institution regulators to 

enhance the effectiveness of Bank Secrecy Act examination and, ultimately, 

industry compliance.

FinCEN has retained the authority to pursue civil enforcement actions against 

financial institutions for non-compliance with the Bank Secrecy Act and the 

implementing regulations. Under the Bank Secrecy Act, FinCEN is empowered 

to assess civil monetary penalties against, or require corrective action by a 

financial institution committing negligent or willful violations of the Bank 

Secrecy Act. Generally, FinCEN identifies potential enforcement cases through: 

(1) referrals from the agencies examining for Bank Secrecy Act compliance; (2) 

self-disclosures by financial institutions; and, (3) FinCEN's own inquiry to the 

extent it becomes aware of possible violations.36 

FinCEN's Counter-Terrorism Strategy

An important operational priority for FinCEN is providing counter-terrorism 

support to law enforcement and the intelligence agencies. FinCEN’s 

comprehensive counter-terrorism strategy draws from its analytic support to 

law enforcement, regulatory tools and expertise, and international networking 

capabilities. The strategy has five basic components.

36 It should be noted that under Title 12 of the U.S. Code, the banking regulators have authority to 

enforce certain regulations that fall under their respective statutes as well as under the Bank Secrecy 

Act, such as the requirement that depository institutions have anti-money laundering programs. In 

addition, the Internal Revenue Service has authority to enforce certain Bank Secrecy Act requirements 

including the IRS/FinCEN Form 8300 reporting for non-financial trades and businesses, and the Report 

of Foreign Bank and Financial Accounts by individuals and entities.
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Analysis of Terrorist Financing Suspicious Activity Reports

FinCEN analyzes suspicious activity reports for both tactical and strategic 

value. At the tactical level, every report that indicates a connection to terrorism 

is immediately reviewed and validated and then analyzed with other available 

information. This information is packaged and referred to the Terrorist Threat 

Integration Center (TTIC), within FBI’s Terrorist Financing Operations 

Section (TFOS), and other relevant law enforcement agencies. Moreover, this 

information is stored in a manner that facilitates its access and availability for 

analysis.

At the strategic level, FinCEN analysts study Bank Secrecy Act data and 

all other available information to gain an increased understanding of 

methodologies, typologies, geographic patterns of activity and systemic 

vulnerabilities relating to terrorist financing. These analysts focus on regional 

and systemic "hot spots" for terrorist financing, studying and analyzing all 

sources of information. Such focus can significantly add to the knowledge base of 

law enforcement.

USA PATRIOT Act Section 311 

To safeguard the financial system at home from criminal threats abroad, 

section 311 of the USA PATRIOT Act authorizes the Secretary of the Treasury 

to designate foreign financial institutions, jurisdictions, classes of foreign 

transactions, or types of accounts as being of “primary money laundering 

concern” and to require U.S. financial institutions to take special measures 

regarding the designated entities. FinCEN provides analytic, regulatory, 

and legal resources to support effective implementation of Section 311 by 

the Treasury Department. FinCEN conducts in-depth analyses, including 

interagency consultation, and compiles the administrative records to support 

designations and proposed special measures.

International Cooperation and Information Sharing

FinCEN offers a wide array of information exchange and technical assistance 

to foreign governments, providing policy recommendations and guidance, 

analytical training, technological advice, and staff support in order to foster 

the implementation of anti-money laundering and counter-terrorism financing 

regimes worldwide. FinCEN works in tandem with other government agencies 

such as the Departments of State and Justice and the Treasury Department’s 

Office of Technical Assistance in assessing nations' efforts to combat money 

laundering and terrorism finance, playing a lead role in reporting on countries 

in the money laundering section of the annual International Narcotics Control 

Strategy Report. Such assessments serve as a basis for establishing U.S. 

government priorities in the realm of technical assistance to other nations. 

Since June 1995, the U.S. has pursued an aggressive policy of promoting a 

worldwide network of financial intelligence units in its overall strategy of 

fighting money laundering and terrorist financing. FinCEN is a founding 
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member of the Egmont Group of financial intelligence units. The Egmont Group 

is an international network of 101 countries that have implemented national 

centers to collect information on suspicious or unusual financial activity from the 

financial industry, to analyze the data, and to make it available to appropriate 

national authorities and other financial intelligence units for use in combating 

terrorist funding and other financial crime. FinCEN, in its FIU capacity, acts as 

a conduit to process and disseminate requests for information between domestic 

U.S. law enforcement or regulatory agencies and our counterpart Egmont 

member FIUs. FinCEN additionally prepares and provides analytical products 

in response to requests from our counterpart FIUs. The exchange of information 

is at the heart of the Egmont Group. 

Effectively addressing money laundering and terrorist financing requires 

international cooperation and coordination. FinCEN also supports U.S. bilateral 

and multilateral efforts to join with other nations in a concerted fashion to 

combat transnational crime, such as the Financial Action Task Force (FATF),37

as well as FATF-style regional bodies including the Asia/Pacific Group on 

Money Laundering, Caribbean Financial Action Task Force, Eastern and 

Southern Africa Anti-Money Laundering Group, Financial Action Task Force 

for South America, International Group Against Money Laundering,38 and 

the MONEYVAL Committee of the Council of Europe. FinCEN supports the 

Department of the Treasury by participating to varying degrees in all of these 

bodies with the aim of furthering information exchange among members and 

coordinating training and technical assistance programs. 

FinCEN is able to play a unique role in working with other nations interested 

in establishing FIUs and strengthening ties among existing units. To this end, 

FinCEN, through its Office of Global Liaison, advises FIUs under development, 

providing training to FIU personnel on subjects such as suspicious transaction 

report analysis, charts and graphing, link analysis, money laundering typologies, 

alternate remittance systems, bank compliance, and other FIU-specific topics. 

USA PATRIOT Act Section 314(a) Information Sharing

Section 314(a) of the USA PATRIOT Act of 2001 requires the Secretary of 

the Treasury to adopt regulations to encourage regulatory authorities and 

law enforcement authorities to share with financial institutions information 

regarding individuals, entities, and organizations engaged in or reasonably 

suspected, based on credible evidence, of engaging in terrorist acts or money 

laundering activities. FinCEN’s regulations under Section 314(a)39 enable 

37 Formed in 1989 by the G-7 Economic Summit, FATF is dedicated to promoting the development of 

effective anti-money laundering and counter-terrorism finance laws and programs and enhancing 

cooperation among its membership and around the world.

38 An organization comprised of West African states under the umbrella of ECOWAS.

39 31 C.F.R. § 103.100.
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federal law enforcement agencies to reach out, through FinCEN, to more than 

45,000 points of contact at more than 27,000 financial institutions to locate 

accounts and transactions of persons that may be involved in terrorism or money 

laundering. 

FinCEN receives requests from federal law enforcement and upon review, 

sends requests to designated contacts within financial institutions across 

the country once every two weeks via either a secure Internet web site or via 

facsimile. The requests contain subject and business names, addresses, and as 

much identifying data as possible to assist the financial industry in searching 

their records. The financial institutions must query their records for matches, 

including accounts maintained by the named subject during the preceding 

twelve months and transactions conducted within the last six months. Financial 

institutions have two weeks from the transmission date of the request to respond 

to 314(a) requests. If the institution does not identify any matching accounts or 

transactions, it need not reply to the 314(a) request. 

The 314(a) process enables investigators to canvas financial institutions for 

potential lead information that they might otherwise never find. This cooperative 

partnership between the financial community and law enforcement allows 

disparate bits of information to be identified, centralized, and evaluated rapidly. 

The 314(a) process is not, however, a substitute for a subpoena or other legal 

process. To obtain documents from a financial institution that has reported a 

match, a law enforcement agency must meet the legal standards that apply to 

the particular investigative tool that it chooses to use to obtain the documents. 

To ensure that investigators use the 314(a) process appropriately, FinCEN 

requires federal law enforcement agencies to submit documentation 

demonstrating the size or impact of the case, the seriousness of the underlying 

criminal activity, the importance of the case to a major agency program, and 

any other facts demonstrating the significance of the case. The requestor also 

must certify that the investigation arises from credible evidence of terrorist 

financing or money laundering and, in cases involving money laundering, that 

all traditional means of investigation have been exhausted. 

Regulatory Outreach

FinCEN applies its analytical skills also to provide information to the regulated 

community to better identify potential vulnerabilities to money laundering 

and terrorist financing activity. One area of particular focus is money services 

businesses. Money services businesses continue to require more attention and 

resources. These operations include small businesses that typically offer money 

remittance services, check cashing, money orders, stored value products and 

other informal value transfer systems. Our most recent initiative, an Advance 

Notice of Proposed Rulemaking issued on March 8, 2006, addresses the issue of 

access to banking services by money services businesses. This Advance Notice 
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solicits updated facts and recommendations regarding ongoing concerns about 

the Bank Secrecy Act, and what additional guidance or regulatory action, if any, 

would be appropriate to address these concerns. The comments will assist us in 

determining whether to provide additional guidance to industry and the content 

of any such guidance. 
U.S. Department of the Treasury Financial Crimes Enforcement Network 45

Appendix B – Section 6302 

INTELLIGENCE REFORM AND TERRORISM PREVENTION ACT OF 2004

PUBLIC LAW NUMBER 108-458

SECTION 6302

REPORTING OF CERTAIN CROSS-BORDER

TRANSMITTAL OF FUNDS

Section 5318 of title 31, United States Code, is amended by adding at the end the following

new subsection:

(n) Reporting of Certain Cross-Border Transmittals of Funds-

(1) IN GENERAL- Subject to paragraphs (3) and (4), the Secretary shall prescribe

regulations requiring such financial institutions as the Secretary determines to be 

appropriate to report to the Financial Crimes Enforcement Network certain crossborder electronic transmittals of funds, if the Secretary determines that reporting

of such transmittals is reasonably necessary to conduct the efforts of the Secretary

against money laundering and terrorist financing.

(2) LIMITATION ON REPORTING REQUIREMENTS- Information required to be 

reported by the regulations prescribed under paragraph (1) shall not exceed the

information required to be retained by the reporting financial institution pursuant 

to section 21 of the Federal Deposit Insurance Act and the regulations promulgated

thereunder, unless--

(A) the Board of Governors of the Federal Reserve System and the Secretary jointly

determine that a particular item or items of information are not currently required 

to be retained under such section or such regulations; and

(B) the Secretary determines, after consultation with the Board of Governors of the

Federal Reserve System, that the reporting of such information is reasonably

necessary to conduct the efforts of the Secretary to identify cross-border money

laundering and terrorist financing.

(3) FORM AND MANNER OF REPORTS- In prescribing the regulations required under 

paragraph (1), the Secretary shall, subject to paragraph (2), determine the appropriate

form, manner, content, and frequency of filing of the required reports.
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(4) FEASIBILITY REPORT-

(A) IN GENERAL- Before prescribing the regulations required under paragraph 

(1), and as soon as is practicable after the date of enactment of the National

Intelligence Reform Act of 2004, the Secretary shall submit a report to the

Committee on Banking, Housing, and Urban Affairs of the Senate and the

Committee on Financial Services of the House of Representatives that--

(i) identifies the information in cross-border electronic transmittals of funds that 

may be found in particular cases to be reasonably necessary to conduct the

efforts of the Secretary to identify money laundering and terrorist financing, 

and outlines the criteria to be used by the Secretary to select the situations in

which reporting under this subsection may be required;

(ii) outlines the appropriate form, manner, content, and frequency of filing of the 

reports that may be required under such regulations;

(iii) identifies the technology necessary for the Financial Crimes Enforcement 

Network to receive, keep, exploit, protect the security of, and disseminate

information from reports of cross-border electronic transmittals of funds

to law enforcement and other entities engaged in efforts against money

laundering and terrorist financing; and

(iv) discusses the information security protections required by the exercise of the 

Secretary's authority under this subsection.

(B) CONSULTATION- In reporting the feasibility report under subparagraph (A), the

Secretary may consult with the Bank Secrecy Act Advisory Group established by

the Secretary, and any other group considered by the Secretary to be relevant.

(5) REGULATIONS-

(A) IN GENERAL- Subject to subparagraph (B), the regulations required by 

paragraph (1) shall be prescribed in final form by the Secretary, in consultation 

with the Board of Governors of the Federal Reserve System, before the end of

the 3-year period beginning on the date of enactment of the National Intelligence

Reform Act of 2004.

(B) TECHNOLOGICAL FEASIBILITY- No regulations shall be prescribed

under this subsection before the Secretary certifies to the Congress that the 

Financial Crimes Enforcement Network has the technological systems in place

to effectively and efficiently receive, keep, exploit, protect the security of, and 

disseminate information from reports of cross-border electronic transmittals of

funds to law enforcement and other entities engaged in efforts against money

laundering and terrorist financing.
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Appendix C – Funds Transfer Rule
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U.S. Department of the Treasury 55

Appendix D – Fundamentals of the 

Funds Transfer Process

Essentially, an electronic funds transfer is a transaction by which funds move 

from one institution to another or one account to another at the direction of an 

institution’s customer and through the transmission of electronic instruction 

messages that cause the institutions to make the required bookkeeping entries 

and make the funds available. Funds transfers are the primary mechanism used 

by the business community for fast and reliable transfer of funds between two 

parties. 

The funds transfer process generally consists of a series of electronic messages 

sent between financial institutions directing each to make the debit and credit 

accounting entries necessary to complete the transaction. A funds transfer can 

generally be described as a series of payment instruction messages, beginning 

with the originator’s (sending customer’s) instructions, and including a series of 

further instructions between the participating institutions, with the purpose of 

making payment to the beneficiary (receiving customer). 

The “players” that may be involved in a funds transfer transaction include:

Originator, e.g., individual, business entity - the initiator of a funds 

transfer;

Beneficiary - the ultimate party to be credited or paid as a result of a 

funds transfer;

Originator’s Financial Institution - the financial institution receiving 

the transfer instructions from the originator and transmitting the 

instructions to the next party in the funds transfer;

Beneficiary’s Financial Institution - the financial institution that is to 

credit or pay the beneficiary party; and

Additional Financial Institutions - other institutions that may be 

required to effect the transaction.

The simplest funds transfers occur between two customers of a single financial 

institution. The originating customer simply instructs the institution to transfer 

funds to the beneficiary customer. The institution makes the required book 

entries in its accounting system and the transfer is complete. Such transfers 

occur primarily in purely domestic transfers, but could conceivably occur within 

a single institution with both U.S. and foreign branches.

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Scenarios that are more complicated appear when the number of institutions 

involved increases. These more complicated scenarios are far more common in 

the cross-border context, especially if an originator’s institution does not have a 

branch in the beneficiary’s foreign location. In this case, one financial institution 

may rely upon established business relationships with additional financial 

institutions to complete the transaction. Such relationships are “correspondent 

relationships.”40 A correspondent relationship, simply put, is the provision of 

banking services by one financial institution to another financial institution. For 

example, in the case that two institutions that need to complete a transaction 

both maintain accounts at a third institution, that third institution may transfer 

the funds from one’s account to the other’s to facilitate the customers’ transfer.41 

When coupled with electronic communications systems, such correspondent 

relationships expedite the transfer of funds across international borders and 

within countries. 

To complete this kind of transfer, the customer’s bank must identify another 

bank with which it maintains a “correspondent” relationship. In this case, a 

secure message between the banks can result in a “book transfer” where funds 

40 The financial industry commonly uses many technical terms to describe these additional financial 

institutions. These terms include “intermediary” financial institution, “instructing” financial 

institution, “sender’s correspondent,” and “receiver’s correspondent.” In this study, we use the term 

“correspondent” to describe these additional financial institutions.

41 For example, America’s Community Bankers, in its response to FinCEN’s March 2006 industry survey, 

noted, “Most community banks use a correspondent bank to provide cross-border transactions. As a 

result, most community banks do not deal directly with institutions located outside the United States. 

Any reporting requirement should be limited to institutions that transmit funds directly to a foreign 

bank. The Department of the Treasury would still receive data about cross-border transfers originated 

by community banks, but that information would come from the correspondent.”

Funds Transfer Instruction

Originator Pinstripe Bank

Ms. Johnson

Simple Electronic Funds Transfer

Customer to Customer Transfer at Same Bank

Credits Account of

Mr. Jones

Beneficiary

Funds Transfer Instruction

Originator Pinstripe Bank

Ms. Johnson

Simple Electronic Funds Transfer

Customer to Customer Transfer at Same Bank

Credits Account of

Mr. Jones

Beneficiary
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are simultaneously debited from one account and credited to another. In the 

simplest example, the originator instructs her bank to transfer funds to the 

beneficiary and the bank sends an instruction to its correspondent, which 

makes the funds available to the beneficiary. When both the originator’s and 

beneficiary’s institutions have a correspondent relationship with the same thirdparty institution, the originator’s institution can send the funds transfer through 

this “mutual correspondent.” 

Two banks that do not have a correspondent relationship can still transfer 

funds if they can establish a chain of banks that do have such a relationship. 

When the originator and beneficiary financial institutions do not maintain 

relationships with a mutual correspondent financial institution, they must 

rely upon additional correspondent financial institutions to complete the funds 

transfer. The additional “correspondent” financial institutions are essential 

pieces of the end-to-end funds transfer. Examples of these kinds of transfers 

appear in the discussion of the major funds transfer payment and messaging 

systems below. This process is eased by the existence of large “money center” 

banks that maintain correspondent relationships with many smaller banks and 

with each other. Importantly, a relatively small number of major money center 

banks specialize in facilitating international funds transfers through their 

network of correspondent relationships, and thus form a key link in the vast 

majority of all international funds transfers.
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Cross-border electronic funds transfers of the type considered by this study flow 

primarily through banks.42 However, money remitters also provide valid and 

legitimate financial services in this area. Generally, remitters receive from 

their customers cash, for which the remitter transfers corresponding value to 

designated beneficiaries for a fee. Money remitters generally tend to engage in 

low dollar transactions, and traditionally serve the non-banking segment of the 

population -- notably new immigrants, permit-holding or clandestine foreigners, 

or any other person not having a bank account -- and frequently transfer funds 

to less advanced regions of the world where banking services are scarce.

Primary Industry Funds Transfer Systems in Operation

The actual exchange of data and funds necessary to complete a funds transfer 

transaction relies upon electronic processing, settlement, and communication 

systems.43 This study focuses primarily upon the communication aspect of these 

systems. While the various payment and messaging systems offer differing 

levels of functionality, the instruction messages underlying all of these functions 

are the primary source of the data at issue in this study.44 From a financial 

intelligence perspective, it is the information about the transaction rather 

than the movement of any actual funds that advances the effort to combat 

illicit finance. The payment instructions themselves identify the parties to the 

transaction and sometimes even more detailed information. 

For the purposes of this study, FinCEN examined the operations of three 

payment or messaging systems in operation in the United States – Fedwire, 

CHIPS, SWIFT -- and proprietary systems, primarily those used by money 

services businesses.

Fedwire

The Federal Reserve Banks own and operate the Fedwire funds transfer 

system that serves as the primary domestic electronic funds transfer system 

in the United States. The Fedwire system handles both the transmission of 

funds transfer instruction messages among financial institutions, as well as 

the settlement of the payment among the Fedwire participants. The Fedwire 

42 This study, due to the limitations imposed by Section 6302 and the scope of the current funds transfer 

rule, does not examine the use of internet-based payment systems, stored value cards, ATM networks, 

etc. A significant number of “electronic funds transfers” traverse such systems, but would not fall 

within the scope of the proposed reporting requirement.

43 For purposes of this report, the term “settlement” refers to the actual debiting and crediting of accounts 

of the participant financial institutions. Communication between the participant financial institutions 

supports the settlement process as a means by which the institutions advise one another of actual 

debits and credits.

44 For example, Fedwire and CHIPS involve both the transmission of instruction messages and the 

settlement between institutions. SWIFT, on the other hand, does not effect the actual movement of any 

funds, but consists entirely of instructions for transfers that the institutions must complete by other 

means.
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funds transfer system is a real time gross settlement system. In general, a 

system operates in “real time” if it processes each transaction immediately upon 

receipt.45 A Fedwire transfer is irrevocable once the Federal Reserve credits the 

amount of the payment to the receiving bank’s account or delivers the payment 

order to the receiving bank, whichever is earlier.46 The Federal Reserve Bank 

makes final payment to the receiving bank at the time the transfer is complete 

regardless of whether the Reserve Bank has received payment. On an average 

day in 2005, Fedwire processed approximately 528,000 transactions valued at 

$2.1 trillion.47 More than 7,000 institutions use Fedwire. 

The Fedwire system is available only to U.S. financial institutions and does 

not permit a participating U.S. financial institution to transmit instructions 

or transfer funds directly to a non-U.S. financial institution.48 The illustration 

below shows the flow of instructions and funds in a very simple Fedwire transfer.

45 This is in contrast to a batch-processing, store-and-forward system, such as the “Automated 

Clearinghouse” or “ACH” payment system. The ACH system operators process ACH “files” that contain 

multiple payment messages from a single originator (i.e., corporate payroll payments), called “batched 

messages.” An ACH operator processes the batched file for settlement at scheduled intervals, such as 

one to two days after it receives the batched file. The terms of Section 6302 of the Intelligence Reform 

Act defined the current study in such a way as to exclude ACH payments from the scope of the study.

46 “Sending Bank” refers to the financial institution that actually sends the message into the Fedwire 

system. The Sending Bank may be a correspondent bank of an originator’s bank if the originator’s 

bank is not a Fedwire participant. “Receiving Bank” refers to the financial institution actually 

receiving the funds transfer from the Fedwire system. The Receiving Bank may be a correspondent 

bank of the beneficiary’s bank if the beneficiary’s bank is not a Fedwire participant.

47 See http://www.federalreserve.gov/paymentsystems/fedwire/fedwirefundstrfann.htm. See also, 91st

Annual Report 2004, Board of Governors of the Federal Reserve System, p. 285.

48 Note that a foreign financial institution in fact, can gain access to the Fedwire system through a U.S. 

branch of the institution. That U.S. branch would be a U.S. financial institution for the purposes of the 

Bank Secrecy Act and its legal and regulatory requirements. In addition, certain foreign central banks 

receive funds transfers through the Fedwire funds transfer system.
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It is important to note, however, that a Fedwire instruction may serve as one 

segment of a cross-border funds transfer. Fedwire can come into play to settle/

clear the payment in U.S. dollars as illustrated below:
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CHIPS

Like Fedwire, the Clearing House Interbank Payments System (CHIPS) 

handles both the transmission of funds transfer instruction messages among 

financial institutions, as well as the settlement of the payment between the 

institutions. CHIPS is operated by The Clearing House Payments Company, 

L.L.C.49 CHIPS is the United States’ main electronic funds-transfer system for 

processing international U.S. dollar funds transfers made among international 

banks. Like Fedwire, CHIPS is a real-time final settlement system. In other 

words, CHIPS settles the transactions at the time CHIPS transmits the payment 

order; meaning that the sending participant’s obligation to pay the amount of 

the payment order to the receiving participant is discharged at the time CHIPS 

releases the payment message.50 

CHIPS claims to handle more than 90% of all U.S. dollar-based funds transfers 

moving between countries around the world. According to recent information 

provided by CHIPS, the system directly serves 46 banks representing 19 

49 See http://www.chips.org/home.php

50 The “sending participant” refers to the bank actually inputting/sending the payment message 

to CHIPS. The “receiving participant” refers to the bank actually receiving the payment 

message from CHIPS.
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countries. Recent figures reveal an approximate average of 280,000 transactions 

per day with a total monetary value of $1.4 trillion.51

Access to the CHIPS payment system is conditional upon a financial institution’s 

U.S. presence. In other words, the financial institutions using CHIPS must 

operate a U.S. branch or office for the use of the system. Accordingly, the CHIPS 

system does not permit a participating U.S. financial institution to transmit 

instructions or transfer funds directly to a non-U.S. financial institution. As in 

the case of Fedwire, it is important to note that a CHIPS instruction may serve 

as one segment of a cross-border funds transfer, as illustrated below:

SWIFT

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) 

provides secure electronic financial messaging services to financial institutions. 

SWIFT, which is a cooperative society owned by its member banks, is a unified 

international financial transaction messaging service.52 SWIFT represents 

an extensive telecommunications network by which a financial institution in 

one country can communicate with its branches or correspondent institutions 

51 See, generally, CHIPS Annual Statistics from 1970 to 2006, available at http://www.chips.org/about/

pages/000652.php

52 See http://www.swift.com/
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anywhere in the world. In contrast to Fedwire and CHIPS, SWIFT is a 

messaging system for funds transfer instructions, rather than a financial 

settlement system. Recent figures reveal that approximately 7,600 SWIFT 

members and participants located in over 200 countries exchange approximately 

nine million messages per day. SWIFT's worldwide user community includes 

banks, broker/dealers and investment managers, as well as their market 

infrastructures in payments, securities, treasury, and trade. As of 2004, there 

were 574 U.S. financial institutions connected to SWIFT; those institutions 

sent approximately 383 million and received approximately 427 million SWIFT 

payments messages.53 SWIFT processes over 2 billion messages per year. Daily 

overall volume of messages sent using the SWIFT system has tripled over seven 

years, with peak days of over 10 million messages in 2004. SWIFT messages 

direct the transfer of nearly $5 trillion worldwide each day.

In contrast to Fedwire and CHIPS, a SWIFT message may travel directly from 

a U.S. financial institution to a foreign institution or vice versa. In practice, 

SWIFT is the primary method for international funds transfer messages. 

53 The SWIFT messaging system uses many different types of message formats to complete specific kinds 

of transactions. The primary message format used for customer payment messages is the SWIFT 

“MT-103” which represents a “Single Customer Credit Transfer,” or in simpler terms, a transaction 

conducted by an institution not on its own behalf, but on behalf of its customer. These figures include 

MT-103 customer payments as well as other forms of payment messages that are not a subject of this 

study. We could find no more detailed breakdown of SWIFT MT-103 traffic.
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Interplay Between Funds Transfer Systems

The aforementioned systems serve different functions and roles in the funds 

transfer transaction process. Financial institutions often use the Fedwire and 

CHIPS systems to handle both the message traffic and the actual movement 

and settlement of the funds. Institutions typically use the SWIFT system for 

communicating message instructions among financial institutions relating to the 

funds transfer. 

Funds transfers often involve a combination of SWIFT and Fedwire messages 

or SWIFT and CHIPS or other instruction messages in the same transaction. 

For example, a U.S. institution may receive a SWIFT message from a foreign 

institution and map the message into a Fedwire or CHIPS message before 

passing it along to the additional U.S. financial institutions serving as 

correspondents.54

When a funds transfer requires multiple correspondents’ participation and 

involves more than one message system, one or more of the institutions 

translates or “maps over” the data from one message format to another. An 

estimated 70% of the traffic on the CHIPS system, for example, originates from 

SWIFT message traffic.55 

54 Whether an institution employs Fedwire or CHIPS as a settlement system in a transaction may 

depend, for example, upon whether the financial institutions involved are participants of CHIPS or 

Fedwire.

55 Global Payments: Moving U.S. Dollars, Teleseminar, March 30, 2005, available through http://www.

paymentsuniversity.com/home.php
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Money Transmitters

In addition to the banking industry, certain money services businesses (MSBs) 

operate as retail money transmitters. The term “money services business” 

refers to five distinct types of financial services providers that perform valuable 

services to a wide array of individuals, many of whom do not have ready 

access to or for their own reasons may eschew relationships with depository 

institutions.56 Of primary concern for the purposes of this study are money 

transmitters. 

Money transmitters provide many of the same attractions as the major bankbased electronic funds transfer systems. Money transmitters often maintain 

agent relationships with businesses around the globe, permitting rapid, secure 

transfer of funds. In addition, because money transmitters do not have account 

relationships with their customers, they are not required to perform customer 

identification and verification other than pursuant to the Funds Transfer and 

Travel Rules and the CTR requirements. While there are many such businesses, 

it is estimated that a relative handful of large money transmitters (i.e., 3-10) 

account for as much as 97% of the total volume of money remittances to or from 

the U.S.57 through money transmitters. 

56 See 31 C.F.R. § 103.11(uu) for the definitions of “money services business” and “money transmitter” 

under the Bank Secrecy Act.

57 Non-Bank Financial Institutions: A Study of Five Sectors, Coopers & Lybrand, L.L.P. (Feb. 28, 1997).
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The few largest U.S. money transmitters provide money transfer services for 

consumers and businesses worldwide. Through hundreds of thousands of 

independently owned businesses (“send and receive agents”), these institutions 

provide money transfer services in approximately 200 countries and territories 

worldwide. Each day, these institutions process hundreds of thousands of money 

transfers involving U.S.-based customers. 

The largest money transmitters maintain centralized data collection systems 

for all transactions and process all transactions by their agents through central 

processing systems located in the United States. Every send and receive agent 

collects the relevant information from its customers, including the data elements 

required by the Funds Transfer rule as appropriate, and submits the funds 

transfer instructions through a centralized system which in turn transmits the 

instructions to another appropriate send and receive agent for delivery of the 

funds. 

It is possible for investigators to obtain information about funds transfers 

made through these money transmitters pursuant to a subpoena or other legal 

process. In response, the companies conduct a computer-based search based 

on key identifying information and generate a summary report containing 

basic information about the identified transactions. The information generally 

includes the send and receive agents, the date and amount of the transfer, and 

the parties to the transaction. The large money transmitters typically can 

retrieve additional detailed information in response to follow-up requests from 

investigators. In addition, these companies can conduct aggregate searches of 

larger volumes of transfer data in response to a proper legal request from law 

enforcement. 

While money transmitters offer an alternative to banks, many must retain the 

services of a depository institution in order to conduct their own business.58 In 

this situation, a money transmitter collects currency from its customers, sends 

transfer instructions to affiliates in other locations, deposits the currency into 

a bank account, and effects one or more electronic funds transfers through the 

bank to settle its accounts with the affiliates.

Proprietary Transfer Systems and Other Issues

Whether a depository institution, a money transmitter, or otherwise, a financial 

institution, may also use proprietary or internal systems to handle all or part of 

58 Note, however, that this is not true of all “money transmitters.” As the 9/11 Commission noted, 

“A hawala, at least in its “pure” form, does not use a negotiable instrument or other commonly 

recognized method for the exchange of money. Hawaladars instead employ a variety of means, often 

in combination, to settle with each other: they can settle preexisting debt, pay to or receive from the 

accounts of third parties within the same country, import or export goods (both legal goods, with false 

invoicing, or illegal commerce, such as drug trafficking) to satisfy the accounts, or physically move 

currency or precious metal or stones..” Monograph on Terrorist Financing, National Commission on 

Terrorist Attacks Upon the United States. p. 68
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an electronic funds transfer, i.e., between branches of the same institution. Such 

systems pose a special challenge because of the wide range of potential message 

formats, communications protocols, and data structures involved. For example, 

a U.S.-based correspondent involved in a cross-border transfer may have a 

foreign branch that can complete the transfer without involving additional 

institutions. In such a case, the U.S.-based correspondent may employ the 

institution’s internal systems to transmit the instructions to its foreign branch. 

In such a case, the instruction may have traversed the Fedwire or CHIPS 

systems, but never traversed any other messaging systems not within the direct 

control of the correspondent institution. 

Ajax Import/Export Co. UAE

Beneficiary

Credits 

Account of

Step 3

 Cross-Border 

Funds Transfer Involving SWIFT

Step 2

Pinstripe Bank, NY Pinstripe Bank, UAE

Originator

Mr. Jones, NY 

Step 1 

Payment 

Order

Customer to Customer Transfer Involving Same Bank,

But a U.S. Location and a Foreign Branch Location

SWIFT

 message to

“U-Turn” Transactions

It also occurs that funds transfers from one foreign location to another foreign 

location may involve a U.S.-based bank serving as a correspondent bank. In 

this type of transaction, there is no originator or beneficiary within the United 

States, but a U.S. financial institution handles some segment of the funds 

transfer. As a result, these U.S.-based banks may be privy to the specific details 

of such transactions and maintain related internal records of these transactions. 

“Serial” Payment and “Cover” Payment Methods

In examining these foreign location-to-foreign location funds transfers involving 

U.S.-based correspondent banks, there are two primary methods of payment: the 

“Serial” payment method and the “Cover” payment method. 
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In the serial payment method, one financial institution transmits the 

funds transfer instructions (i.e., a SWIFT MT 103 message) to the next 

financial institution in the overall “payment chain.” Each institution in the 

communication chain receives the same level of detail about the transaction at 

each step.

In contrast, the “Cover” payment method divides the message into two parts. 

The originator’s bank sends the detailed funds transfer instruction directly to 

the beneficiary’s bank. In this case, no U.S. institution receives the instruction 

that identifies the originator and beneficiary of the transaction. The originator’s 

bank also sends a second “cover” payment instruction (i.e., a SWIFT MT 202 

message) that directs the transfer of the funds from the originator’s bank to the 

beneficiary’s bank as a financial institution-to-financial institution settlement 

payment. 

The following diagram illustrates the basic comparison between the two 

methods: 

When the “Cover” payment method is used, a U.S.-based correspondent bank 

will receive the cover payment message identifying only the foreign institutions 

involved, but not the originator and beneficiary. Although this particular 

message may not contain the customer-related details that could appear in 

a serial payment, the cover payment message could, nevertheless, be useful 

for broader analyses. This may include, for example, examining these cover 
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payment messages to monitor and detect sudden and unusual spikes in overall 

funds flows to, through, and from certain banks and/or countries possibly 

resulting in findings warranting further exploration from either the regulatory 

or law enforcement perspectives. 

The illustration below represents the use of the Cover payment method. 

Cover Payment

Originator

Step 1

 Payment

Order

Step 5

Globe Bank, Ukraine

Worldwide Trading, Ukraine

Beneficiary

Mr. X, Colombia

Step 2

SWIFT MT 103

Credits

Account

of

Bravo Bank, NY

SWIFT MT 202

Step 3

Step 4

XYZ Bank, Colombia Credits

Account

of

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Appendix E – Cross-Border Funds 

Transfer Reporting in Canada and 

Australia

Systems for the collection, storage, processing, analysis, and dissemination of cross-border electronic funds transfers are in place. Both the Australian 

and Canadian governments, through their financial intelligence units, have 

imposed cross-border electronic funds transfer reporting requirements on their 

financial services industries. What follows is a discussion of the similarities, 

and differences between the American recordkeeping requirement and the 

Australian, and Canadian reporting regimes. 

Canada

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) 

is Canada’s financial intelligence unit. The Centre was created to detect 

and deter money laundering by providing critical information to support 

the investigation or prosecution of money laundering offences. In December 

2001, FINTRAC’s mandate expanded to include the detection and deterrence 

of terrorist financing. FINTRAC collects reports from Canadian financial 

institutions and others related to, among other things, suspicious transactions, 

large currency transactions, and cross border movement of currency and 

monetary instruments valued at $10,000 (CAN) or more. In addition, FINTRAC 

collects reports related to any cross-border electronic funds transfer in an 

amount of $10,000 (CAN) or more.

FINTRAC analyzes the reports it collects for unusual patterns of transactions 

that resemble money laundering or terrorist financing activity. Subsequently, 

FINTRAC checks other databases to which it has access, including databases 

maintained for law enforcement and national security purposes, as well as public 

and commercial databases. When FINTRAC concludes that it has reasonable 

grounds to suspect that information in its possession “would be relevant to 

investigating or prosecuting a money laundering offence or a terrorist activity 

financing offence,” it discloses designated information, as defined in Canadian 

law, to the appropriate police force or to the Canadian Security Intelligence 

Service (CSIS). 

FINTRAC first required the reporting of cross-border electronic funds transfers 

(“EFT” reporting) in June 2002. Initially, FINTRAC required only reports of 

international funds transfers made using certain SWIFT messages. Effective 

March 31, 2003, FINTRAC expanded the international EFT reporting 

requirement to cover all forms of international EFT regardless of system or 
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message format (See below for the specific legal requirements in Canada). 

FINTRAC receives almost all of its international EFT reports electronically; 

FINTRAC’s regulations permit for paper filing where the reporting institution 

can certify that they lack the capability to file electronically, but FINTRAC 

officials noted that this rarely happens.

To facilitate the electronic filing of these reports, FINTRAC established a “batch 

file transfer format” that informs financial institutions of the appropriate report 

content and form. In turn, reporting institutions must implement their own 

systems for converting the institutions’ non-SWIFT data to the proper format 

prior to submission. For non-SWIFT EFTs FINTRAC has also developed an 

online form that is generally used by smaller institutions. For both SWIFT and 

non-SWIFT messages, FINTRAC has established minimum mandatory data 

fields (17 fields for outgoing SWIFT messages; 8 fields for incoming SWIFT 

messages; 11 fields for both outgoing and incoming non-SWIFT messages) that 

must be included in the report (again, FINTRAC dictates the format of the batch 

submission, but distinguishes between mandatory fields and those fields).59

More than 300,000 entities and persons are potentially subject to the EFT 

reporting requirement in Canada, but many do not conduct business that 

reaches the thresholds in the law and thus, need not report. In addition, not all 

types of regulated institutions are currently required to report. However, the 

Department of Finance has issued a public consultation paper recommending 

that Parliament amend existing law to require all regulated entities to report 

cross-border EFTs. As noted above, FINTRAC permits reporting institutions to 

report by batch file and by single report through either a web-based interface or 

client software distributed by FINTRAC. Currently 56 entities report via the 

batch process, with the others using the online reporting mechanism.

In total, FINTRAC receives approximately 590,000 international EFT 

transaction records per month. 

In ’03-04, FINTRAC received 2.7 million SWIFT EFT reports and 3.9 

million non-SWIFT EFT Reports

In ’04-’05, FINTRAC received 3 million SWIFT EFT reports and 4.1 

million non-SWIFT EFT Reports

60% of all the FINTRAC reports are submitted by banks

FINTRAC’s international EFT data store contains approximately 15.6 

million records

59 See http://www.fintrac.gc.ca/publications/guide/archive/Guide8/81_e.asp#1a

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Australia

The Australian Transaction Reports and Analysis Centre (AUSTRAC) is the 

financial intelligence unit of the Australian government. The Centre was 

created to detect and deter money laundering by providing critical information 

to support the investigation or prosecution of money laundering offences 

and oversee compliance with the reporting requirements of the Financial 

Transaction Reports Act 1988 (FTR Act). Under the FTR Act, AUSTRAC collects 

reports from Australian financial institutions related to, among other things, 

suspicious transactions, large currency transactions, and cross border currency 

transactions. AUSTRAC also issues guidelines and circulars to those entities 

that report to it, called “cash dealers,” about their obligations under the FTR Act 

and Financial Transactions Reports Regulations. In addition, AUSTRAC collects 

reports related to any cross-border electronic funds transfer in any amount.

AUSTRAC first required the reporting of cross-border electronic funds transfers 

(“IFTI” reporting) in 1992.60 Generally, AUSTRAC requires the institutions 

“who are senders of IFTIs transmitted out of Australia; or who are receivers of 

IFTIs transmitted into Australia” submit reports of those transactions. 

AUSTRAC accepts IFTI reports in one of two formats. First, AUSTRAC accepts 

reports containing properly formatted SWIFT instruction messages from those 

institutions that use the SWIFT system. Second, AUSTRAC established a 

batch file transfer format and requires the reporting institutions to implement 

their own systems for converting the institutions’ non-SWIFT data to the 

proper format prior to submission. For both SWIFT and non-SWIFT messages, 

AUSTRAC has established minimum mandatory data fields that must be 

included in the report.

AUSTRAC permits reporting institutions to report by batch file and by single 

report through a web-based interface operated by AUSTRAC. This interface 

enables institutions to upload prepared files automatically, provides an interface 

for the manual upload of prepared batch files, and provides a form for extremely 

low volume reporting institutions to submit their data. In addition, AUSTRAC 

developed and distributes to financial institutions a Microsoft Excel macro that 

will convert certain electronic records to the prescribed data format for upload 

to the AUSTRAC systems. AUSTRAC officials told us that the largest four 

institutions in Australia account for approximately 80% of the IFTI reporting, 

while a second tier of approximately 20 institutions account for the majority of 

the remaining reports.

60 The IFTI reporting provisions are set out in section 3 and sections 17B to 17F of the FTR Act. 

The prescribed details in relation to IFTIs are contained in Regulation 11AA of the Financial 

Transaction Reports Regulations 1990 (FTR Regulations); see also AUSTRAC Information 

Circular No. 2, available at http://www.austrac.gov.au/resources/publications/information_circular/

pdf/AIC%2002%20-%20International%20Funds%20Transfer%20Instructions.pdf
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In total, AUSTRAC receives approximately 9 to 10 million IFTI records per year. 

In ’03-’04, AUSTRAC received approximately 4 million inbound and 

approximately 4.5 million outbound IFTI reports 

In ’04-’05, AUSTRAC received 4.2 million inbound IFTI reports and 

approximately 5.5 million outbound IFTI reports

The most recent figures reveal that in the course of a year, approximately 

78% of the IFTI reports are in SWIFT format and 22% in non-SWIFT 

format

AUSTRAC’s data store contains approximately 70 million records dating 

from 1995 to present; 55 million of those are IFTI reports

Applicable United States Regulations

Under the funds transfer rule (31 C.F.R. § 103.33), for each payment order that 

it receives, a financial institution operating in the United States must obtain 

and retain the following information on funds transfers of $3,000 or more:61 (a) 

name and address of the originator; (b) the amount of the funds transfer; (c) the 

date of the request; (d) any payment instructions received from the originator 

with the payment order; (e) the identity of the beneficiary’s bank; (f) and as 

much information pertaining to the beneficiary as is received, such as name and 

address, account number, and any other identifying information. Intermediary 

and beneficiary banks receiving a payment order are required to keep an original 

or a copy of the payment order. An originator bank is required to verify the 

identity of the person placing a payment order if the customer places the order 

in person and if the person is not already a customer. Similarly, if a beneficiary 

bank delivers the proceeds to the beneficiary in person, the beneficiary bank is 

required to verify the identity of that person if not already a customer. 

In addition, a bank must retain a copy of the identifying items that it received 

with the payment order, such as the name, address, and account number of the 

beneficiary. The Funds Transfer Rule contains an important provision known 

as the “Travel Rule,” which requires the payment message, when it is sent to a 

receiving financial institution, to include the following information:

the name and address of the originator;

the amount of the transfer;

61 The U.S. Department of the Treasury is reviewing the current threshold, particularly in light of 

international standards. See Interpretive Note to FATF Special Recommendation VII (requiring 

countries to mandate that cross-border wire transfers contain accurate and meaningful originator 

information. Countries may adopt a de minimus threshold of no higher than USD or EUR 1,000. 

Countries are expected to be in compliance with the Special Recommendation by December 2006.); See 

71 Fed.Reg. 35564 (June 21, 2006).

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the execution date of the transfer; 

any payment instructions received;

the name and address of the beneficiary (if available);

the account number of the beneficiary (if available); 

any other specific identifiers of the beneficiary (if available); and

the beneficiary’s financial institution.

An originator’s financial institution operating in the United States also must 

include in the payment message as many of the identifying items as it receives 

with the payment message, such as the name, address, and account number of 

the beneficiary. This information must be included in, or “travel” with, every 

subsequent payment message.

Comparison of Funds Transfer Reporting and Recordkeeping

Canada Australia U.S. Recordkeeping

Collecting since 2002 1992 n/a

Value Threshold $10,000 CAN N/A $3,000 USD

Types of Reporting

Institutions

Depository

Institutions

Money Transmitters

Currency

Exchangers

Depository

Institutions

Money Transmitters

Depository

Institutions

Nonbank financial 

institutions

Specific Institutions 

Required to Report

All institutions,

including

correspondents

First In/Last Out All institutions,

including

correspondents

No. of Regulated

Institutions

~14,000* 315 >200,000

No. Reporting EFTs Unknown 212 n/a

Reporting Form/Manner SWIFT MT-103

Online Form

Prepared Report

SWIFT MT-103

Online Form

Prepared Report

n/a

Annual Volume 7.1 million 9-10 million 350-500 million

(est’d)

% SWIFT/non-SWIFT 42% SWIFT

58% non-SWIFT

78% SWIFT

22% non-SWIFT

67% SWIFT

33% non-SWIFT**

Primary Filers/% of Total Unknown 4/80% n/a

LE access to the data None – by referral

from FINTRAC

only

Direct Query

Access

Direct Query

Access

* Statistics on Payment and Settlement Systems in Selected Countries, Figures for 2004, Bank for 

International Settlements, March 2006, pp. 16-17. 

**Estimated.

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The primary differences between Canada’s, Australia’s, and the United States’ 

reporting frameworks are that the U.S. does not currently require reporting 

of funds transfer information, and that the number of regulated financial 

institutions and the volume of cross-border funds transfers is greater in the 

U.S. than in Canada or Australia. This latter difference suggests that the 

burden on FinCEN related to the collection, storage, processing, analysis, and 

dissemination of cross-border funds transfer reports is substantially higher than 

on FINTRAC and AUSTRAC. 

Funds Reporting Requirements in Canada and Australia

Canada

Legal Source

Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations - 

November 06, 2003

http://www.fintrac.gc.ca/reg/ConsolReg_031106-2_e.asp

Definition of Transfers to be Reported

“electronic funds transfer,” means the transmission - through any electronic, 

magnetic, or optical device, telephone instrument, or computer - of instructions 

for the transfer of funds, other than the transfer of funds within Canada. In the 

case of SWIFT messages, only SWIFT MT 100 and SWIFT MT 103 messages are 

included. (télévirement)

“Interpretation” 1(2) http://www.fintrac.gc.ca/reg/ConsolReg_031106-2_e.asp

“Interpretation” 1(2) http://www.fintrac.gc.ca/reg/ConsolReg_031106-2_e.asp

“Financial entity” means an authorized foreign bank within the meaning of 

section 2 of the Bank Act in respect of its business in Canada or a bank to which 

that Act applies, a cooperative credit society, savings and credit union or caisse 

populaire that is regulated by a provincial Act, an association that is regulated 

by the Cooperative Credit Associations Act, a company to which the Trust and 

Loan Companies Act applies and a trust company or loan company regulated 

by a provincial Act. It includes a department or agent of Her Majesty in right 

of Canada or of a province where the department or agent is carrying out an 

activity referred to in section 45. (entité financière) Persons or Entities Engaged 

in the Business of Foreign Exchange Dealing

“Money services business” means a person or entity that is engaged in the 

business of remitting funds or transmitting funds by any means or through any 

person, entity or electronic funds transfer network, or of issuing or redeeming 

money orders, traveller’s cheques or other similar negotiable instruments. It 

includes a financial entity when it carries out one of those activities with a 
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person or entity that is not an account holder. (entreprise de transfert de fonds 

ou de vente de titres négociables)

U.S. Equivalent Financial Institutions – Banks and Money Services Businesses

Reporting Requirement

http://www.fintrac.gc.ca/reg/ConsolReg_031106-2_e.asp

“Financial Entities” – Section 12(b) and 12(c) of Proceeds of Crime Act

“Persons or Entities Engaged in the Business of Foreign Exchange Dealing” 

– Section 24(b) and 24(c) of Proceeds of Crime Act

“Money Services Businesses” – Section 28(b) and 28(c) of Proceeds of Crime Act

The text of the reporting requirement for the above three entities is 

substantively similar to each other, as follows:

12. (1) Subject to subsection (5), section 50 and subsection 52(1), every financial entity 

shall report the following transactions and information to the Centre:

The sending out of Canada, at the request of a client, of an electronic funds transfer 

of $10,000 or more in the course of a single transaction, together with the information

referred to in Schedule 2 or 5, as the case may be; and

The receipt from outside Canada of an electronic funds transfer, sent at the request 

of a client, of $10,000 or more in the course of a single transaction, together with the

information referred to in Schedule 3 or 6, as the case may be.

(2) For greater certainty, paragraph (1)(b) does not apply when the financial entity sends 

an electronic funds transfer to a person or entity in Canada, even if the final recipient is 

outside Canada.

(3) Paragraph (1)(b) applies in respect of a financial entity that orders a person or entity 

to which subsection (1), 24(1) or 28(1) applies to send an electronic funds transfer out of

Canada, at the request of a client, unless it provides that person or entity with the name 

and address of that client. (SOR/2003-358, subs.5(1))

(4) For greater certainty, paragraph (1)(c) does not apply when the financial entity 

receives an electronic funds transfer from a person or entity in Canada, even if the initial

sender is outside Canada.

Exceptions to General Requirement

Transfers made by a financial institution on its own behalf are exempt. See 

sections 12, 24, and 28, which restrict reporting to transactions made “at the 

request of a client.”

http://www.fintrac.gc.ca/reg/ConsolReg_031106-2_e.asp
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Reporting Threshold

$10,000 Canadian

Australia

Legal Source

Financial Transaction Reports Act 1988 – as of 6 February 2004

http://scaleplus.law.gov.au/html/pasteact/0/59/top.htm

Definition of Transfers to be Reported

International funds transfer instruction means an instruction for a transfer of 

funds that is transmitted into or out of Australia electronically or by telegraph, 

but does not include an instruction of a prescribed kind. (ED – see exceptions, 

below)

“Interpretation” Sec. 3 http://scaleplus.law.gov.au/html/pasteact/0/59/0/

PA000070.htm

Financial Institutions subject to Reporting Requirement

 “Interpretation” Sec. 3 http://scaleplu.law.gov.au/html/pasteact/0/59/0/

PA000070.htm

All “cash dealers” including: 

(a) A financial institution;

(b) A body corporate that is, or, if it had been incorporated in Australia, would be, a

financial corporation within the meaning of paragraph 51(xx) of the Constitution;

(c) An insurer or an insurance intermediary;

(d) A financial services licensee (as defined by section 761A of the Corporations Act 

2001) whose licence covers either or both of the following:

(i) Dealing in securities (as defined by subsection 92(1) of the Corporations Act 2001);

(ii) Dealing in derivatives (as defined by section 761A of the Corporations Act 2001);

(f) A Registrar or Deputy Registrar of a Registry established under section 14 of the

Commonwealth Inscribed Stock Act 1911;

(g) A trustee or manager of a unit trust;

(h) A person who carries on a business of issuing, selling or redeeming travellers

cheques, money orders or similar instruments;
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(j) A person who is a bullion seller.

(k) A person (other than a financial institution or a real estate agent acting in the ordinary 

course of real estate business) who carries on a business of:

(i) collecting currency, and holding currency collected, on behalf of other persons; or

(ia) exchanging one currency for another, or converting currency into prescribed

commercial instruments, on behalf of other persons; or

(ib) remitting or transferring currency or prescribed commercial instruments, or making

electronic funds transfers, into or out of Australia on behalf of other persons or arranging

for such remittance or transfer; or

(ii) preparing pay-rolls on behalf of other persons in whole or in part from currency

collected; or

(iii) delivering currency (including payrolls);

(l) A person (other than a financial institution or a real estate agent acting in the ordinary 

course of real estate business) who carries on a business in Australia of:

(i) on behalf of other persons, arranging for funds to be made available outside Australia

to those persons or others; or

(ii) on behalf of persons outside Australia, making funds available, or arranging for funds

to be made available, in Australia to those persons or others;

(m)A person who carries on a business of operating a gambling house or casino; and

(n) A bookmaker, including a totalisator agency board and any other person who operates

a totalisator betting service.

“Financial institution” means (from (a), above): 

an Authorized Deposit-taking Institution (ADI):

A body corporate that is an ADI for the purposes of the Banking Act 1959;

The Reserve Bank of Australia; or

A person who carries on State banking within the meaning of paragraph 51(xiii) 

of the Constitution.

Or (from (b), above), a co-operative housing society.

U.S. Equivalent Financial Institutions – Banks, Securities Brokers/Dealers, 

Futures Commission Merchants, Money Services Businesses, Casinos
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Reporting Requirement

FTR Act - Section 17B - Reports of international funds transfer instructions 

http://scaleplus.law.gov.au/html/pasteact/0/59/0/PA000300.htm

(1) If: 

A cash dealer in Australia is:

(i) the sender of an international funds transfer instruction transmitted out of Australia; or

(ii) the recipient of an international funds transfer instruction transmitted into Australia; 

and

at least one of the following applies:

(i) the cash dealer is acting on behalf of, or at the request of, another person who is 

not an ADI;

(ii) the cash dealer is not an ADI;

the dealer must, before the reporting time, prepare a report of the instruction.

(2) The report must be in the approved form and include the prescribed details. 

(3) Subject to subsection (4), the report must be sent to the Director in the 

approved way and form before the reporting time. 

(4) The Director may, by notice in the Gazette, declare that subsection (3) does 

not apply in relation to a cash dealer in relation to a report or a class of report. 

(ED - i.e. AUSTRAC can declare certain transactions exempt; they have declared 

several categories – see below).

(5) If, because of the operation of subsection (4), subsection (3) does not apply in 

relation to a report, the cash dealer must retain the report for 7 years. 

(6) For the purposes of this section, if a cash dealer transmits an instruction on 

behalf of, or at the request of, another person, the cash dealer is taken to be the 

sender of the instruction. 

(7) For the purposes of this section, if a person, not being a cash dealer, 

transmits an instruction on behalf of, or at the request of, a cash dealer, the cash 

dealer is taken to be the sender of the instruction. 

(8) In this section: 

reporting time, in relation to an instruction, means: 

(a) if the instruction is transmitted into Australia—14 days after the day that the

transmission is received or such later time as is specified in the regulations;
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(b) if the instruction is transmitted out of Australia—14 days after the day that the

instruction is transmitted or such later time as is specified in the regulations. 

Exceptions to General Requirement

Transfers conducted by a bank on its own behalf are exempted. All other 

financial institutions (“cash dealers”) must report transfers that they conduct on 

their own behalf. See section 17B(1)(b) requirements.

http://scaleplus.law.gov.au/html/pasteact/0/59/0/PA000300.htm

In addition, AUSTRAC Information Circular #2 sets forth the following 

exceptions to the general reporting requirement:

http://www.austrac.gov.au/resources/publications/information_circular/pdf/AIC%2002%20-%20International%20Funds%20Transfer%20Instructions.pdf

IFTIs which only involve ADIs (ED – i.e. banks) acting solely on their own 

behalf, such as where there is a transfer of funds to effect ADI-to-ADI 

settlements, need not be reported. The exclusion of an ADI’s own transactions 

and ADI-to-ADI settlements is provided as those ADIs are caught by stringent 

regulatory and supervisory requirements of the Banking Act 1959. The 

legislation does, however, provide for the Director of AUSTRAC to allow 

exclusion of transactions of other cash dealers, which are similar to those types 

of transactions which have specifically been excluded for ADIs. The Director of 

AUSTRAC has granted exemptions to some cash dealers, on a case by case basis, 

in the following terms:

1. Transactions conducted by a cash dealer on its own behalf, i.e. 

transactions where the cash dealer is not acting on behalf of, or at the request of 

another person, where:

1a) The cash dealer has authority from the Reserve Bank of Australia to deal in foreign

exchange; and/or

1b) The cash dealer has applied to the Reserve Bank of Australia to be considered for

Bank ‘branch’status.

2. Telex transactions transmitted or received by the cash dealer which 

cannot be reported to AUSTRAC in an electronic format, where:

After excluding reports covered by all other declarations of the Director in 

respect of that cash dealer, the cash dealer would still be required to report 

10,000 or more IFTI telex transactions per year and those telexes are not 

capable of being reported in an electronic format but will be capable of being 

reported electronically to AUSTRAC within 5 years of the first exemption date.

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3. Other classes of reports for which the cash dealer seeks exemption.

The Director has considered for declaration in the Government Gazette, classes 

of reports in addition to those referred to in 1 and 2 above. The cash dealer is 

required to retain those exempted reports for a period of seven (7) years.

Reporting Threshold

No Threshold – institutions must report all cross-border funds transfers 
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Appendix F – Potential Analytical 

Value of Cross-Border Funds Transfer 

Reports

Basic cross-border funds transfer messages generally include, for example:

Date;

Amount;

Customer parties, and even possibly associates, and identifiers, e.g., 

account numbers, addresses, phone numbers;

Customer parties’ financial institutions and additional financial 

institutions involved in the transaction flow;

Customer-to-customer and financial institution-to-financial institution 

information; and/or

Transaction reference information.

The message formats used by the primary systems are relatively standardized. 

On the other hand, the specific format of an internal funds transfer database 

record that is maintained by a financial institution may vary from financial 

institution-to-financial institution and also be based upon the internal record, 

tracking, storage, and accounting procedures of a financial institution. These 

internal database records may be somewhat more difficult to decipher without 

the direct assistance of officials from that particular financial institution.

Any reporting requirement would provide a means of centralizing cross-border 

electronic funds transfer information in a single format and linking it with other 

highly relevant financial intelligence.62 The value of the cross-border funds 

transfer data lies partially in the revelation of additional identifiers (personal 

information, phone numbers, bank and branch identification codes, etc.). 

62 Many in industry and government have raised the question of what changes, if any, the proposed 

collection system would require to the established funds transfer messaging systems (i.e., CHIPS, 

SWIFT, Fedwire). In its response to FinCEN’s industry survey issued in March 2006, the American 

Bankers Association stated that “Imposing a new requirement to include this type of information for 

all wire transfers would require substantial changes to US payment systems.” Such changes were not 

necessary to the implementation of the corresponding requirements in either Canada or Australia. We 

conclude that not only would no such change be required, but that if such a change were necessary in 

order to make such a system work, the system would not be feasible.

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Individual Targeting/Research of Known Subjects

Many analysts will rely primarily on the capacity to search electronic funds 

transfer data for specific names or account numbers and receive results within 

seconds. This kind of query and reporting function allows analysts to construct a 

customized query in response to a specific need. Many commercial software tools 

provide the query and reporting capabilities for retrieving structured data. 

Typical commercially available search tools allow users to perform the following 

functions:

Exact Key Word Searches – The query will return only results that 

exactly match the search criteria. This type of query is usually sufficient, 

however, it does not work well if the analyst is looking for approximate 

results. 

Searching with Wildcards – Wildcards searches overcome some of the 

errors and variation in the name, address, or other fields. It is very 

easy to use; however, users may find the results overwhelming because 

such searches often return too many irrelevant results that are hard to 

manage. 

Many commercial software tools or database systems include search engine tools 

that provide advanced text search capability. FinCEN analysts employ these 

tools to conduct complex character matching and pattern matching to find more 

search results. FinCEN analysts have more than fifteen different searching 

algorithms designed to assist in their discovery of new data including basic 

“exact” and “first x characters match” and “last x charaters match.” They also 

have access to complex quantitative string matching algorithms such as JaroWinkler, Levenshtein Distance, or Monge-Elkan algorithms which measure the 

similarity between two strings of information. These tools can provide unified 

results from multiple, simultaneous searches across data sources. 

As the technology continues evolving, FinCEN would have many options among 

commercially available search tools that can satisfy its specific needs to identify 

more connections in the BSA data, funds transfers and other reports and 

documents. 

Data Matching Against Other Data Sources	 	

FinCEN currently uses a large number of databases to identify and analyze 

financial data. FinCEN information comes from four primary sources: 

the Bank Secrecy Act Database that contains SARs, CTRs, Currency and 

Monetary Instruments Reports, Foreign Bank Account Reports, and other 

reports; 

several databases of criminal reports sourced from, among others, 

the Immigration and Customs Enforcement’s TECS II system, the 

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FBI’s National Criminal Information Center, the Drug Enforcement 

Administration’s Narcotics and Dangerous Drugs Information and NDIC 

Systems, the United States Secret Service database, and the United 

States Postal Inspection Service; 

FinCEN’s own database of investigations and queries conducted through 

FinCEN’s systems; and 

Commercial database services from organizations such as Dun & 

Bradstreet, LEXIS/NEXIS, and credit bureaus,63 as well as commercially 

available lists of “Politically Exposed Persons.”64

In addition, FinCEN analysts have access to other lists and databases 

maintained by federal government agencies that they may use to cross-reference 

BSA data, or as the basis of a search of the data. These sources include the 

Office of Foreign Assets Control’s list of Specially Designated Nationals, the 

Social Security Administration’s Death Master File, and the State Department’s 

list of Designated Foreign Terrorist Organizations.

These additional data sources and the BSA data repository FinCEN currently 

maintains make it possible to conduct link analysis on funds transfers. FinCEN 

and many of its partner agencies in the law enforcement community have 

already assembled the data, technology, and expertise necessary to apply link 

analysis techniques.

Link Analysis

Link analysis is a technique used to explore associations among a large 

collection of data of different types. Link analysis requires a variety of readily 

available data, some of which provide indicators of money laundering activity 

(i.e., SARs, law enforcement data, case files, etc.). In the case of financial 

data, the connections might include names, addresses, phone numbers, bank 

accounts, businesses, funds transfers, and cash deposits. Combining and linking 

these pieces of data from multiple sources adds layers of understanding to the 

behavior that the data represents.

Link analysis depends on the integration of one or more sets of data records. 

Within each data set, each record has several data fields containing information. 

These might be records of an individual (with fields of name, address, and phone 

number), bank account (account number, owner, bank), or business (name, 

owners’ names, board members, address). As noted, FinCEN already collects 

multiple Bank Secrecy Act reports, each containing specific data fields. While 

63 FinCEN only has access to credit bureau header information, not full credit reports. Header 

information typically consists of identifying information such as name, address, SSN, etc.

64 See https://www.world-check.com and http://www.worldcompliance.com. Many government agencies 

and financial institutions employ such lists for intelligence and risk management purposes respectively.

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there are many differences between them, there are also many fields common 

to the various reports. Likewise, even the limited pieces of data necessary to 

a funds transfer message overlap some of the information collected in these 

reports. Link analysis looks for matching fields in each of these records. For 

example, two reports identifying two separate individuals but each associating 

its subject with the same phone number as the other, could indicate that two 

persons know each other well, or even live at the same address.

Link analysis can integrate many disparate sources of information. As noted, 

with the exception of SARs, the individual reports that FinCEN currently 

receives, and even the records that might be available through cross-border 

funds transfer reporting, provide few indicators of suspicion. However, link 

analysis provides a way of combining these different records so that analysts 

may detect the patterns and relationships between the different sets of data. 

FinCEN employs link analysis to identify relationships between the various BSA 

reports it currently collects. 

FinCEN analysts use visualization software tools to develop a comprehensive 

and graphical representation of the link analysis results. The visualization 

tools assist the user in interpreting, identifying, and analyzing relationships 

from data by providing a visual mechanism that reflects relationships. These 

commercial software products help the users to visualize the correlation and 

association quickly through graphic representations, thereby reducing the 

amount of text that analysts must review and analyze. This tool provides 

a capability to represent the geographic relationships described in textual 

documents spatially.

FinCEN has adapted an advanced analytical and visualization application that 

enables internal analysts to search and analyze the BSA data residing in more 

than a dozen databases. The link analysis tool compares transactions with each 

other and relates transactions to each other, for all transactions and transaction 

types, based on any reported item of information in a BSA filing. The tool 

has an icon-based, point and click interface with three-dimensional displays, 

multiple link chart views, easy exporting of subsets of data to other software 

packages, and allows for user annotations that can be private or shared. It 

enables graphical interaction with data to quickly expose patterns and discover 

new relationships. The tool relies upon an open architecture approach making 

it possible for FinCEN to customize it to support the additional funds transfer 

data. 

The illustration below represents the kind of links and relationships FinCEN 

can identify by analyzing its current data sets. The example derives from 

actual analysis of a sample of BSA data currently maintained at FinCEN and 

represents the full extent of the links identified in that data. The illustration 

reflects that currently collected BSA data contained three BSA reports about 

the subject – two CTRs and one SAR. The contents of these reports reveal 
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that the subject offered three different addresses, two different bank accounts, 

and notably, two different Social Security Numbers when conducting the 

transactions. In addition, one of the CTR reports reveals a transaction or 

relationship between the subject and another person.

The addition of another set of data for the link analysis provides a richer 

context for the analysis, and a broader set of data containing potential links. 

Building upon the example illustrated above by adding electronic funds transfer 

data results in a far more detailed picture. The funds transfer data permits 

an analyst to identify additional relationships and parties and new accounts. 

Beginning with the chart above, which reflects the current BSA reporting, and 

adding electronic funds transfer data, reveals three additional addresses and two 

additional phone numbers that provide new investigative leads. It also reveals 

three specific electronic funds transfers between the subject and a previously 

unidentified associate not revealed in the current BSA reports.
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Link analysis can help determine the focus of investigations and the proper 

allocation of resources. For example, if an analyst is researching a specific 

transaction by a specific person, link analysis across multiple financial data 

sources may reveal relationships between that subject and other persons. In 

turn, if the investigators already suspect those persons of involvement in illegal 

activity, additional investigation may be warranted. If, on the other hand, those 

relationships support the conclusion that the transaction fits a recognizable 

pattern of legitimate activity, the investigators need not expend any further 

resources. 

In the following example, at least two associates of the primary subject would be 

unidentifiable absent the funds transfer information. In addition, each of those 

transfers provides a new starting point for further research.
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Link analysis can identify and display the relationships between data sources. 

However, human analysts and investigators must make the judgments about 

whether those patterns reflect legitimate activities and relationships or 

suspicious financial activity. An additional layer of linking to other database 

records (e.g., criminal records, active or past investigations, etc.) can take the 

analysis one step further.

One challenge in this area is to have well-trained analysts to be able to 

thoroughly analyze the patterns discovered during the mining process and 

make sense of it. Some patterns are not statistically strong and some are very 

strong. The stronger the pattern is, the better chance that pattern will form 

a basis for exploitation. On the other hand, if the pattern is not strong today 

but its strength is increasing over time, then, this kind of pattern may be of 

great interest because it may be a clue as how to anticipate the illegal activity. 

Another problem is “false positives.” False positives may occur simply because 

there is so much data or, in the context of electronic funds transfer data, due to 

the lack of unique identifiers such as Social Security Numbers within the data. 

All these scenarios require experienced analysts to provide their knowledge to 

interpret the outcomes properly. 
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Cluster Analysis

Cluster analysis is another analytical method that FinCEN uses to determine 

underlying groupings that are not otherwise apparent in the data. The first step 

is the creation of basic clusters. For example, a subject may list an address and 

a phone number. Then a separate subject lists a different address but the same 

phone number. The clustering process would link these two subjects together 

based on the common phone number. In addition to names, phone numbers, 

and addresses, an analyst could repeat this process with driver’s licenses, 

identification numbers, bank accounts, and any other data available. This 

type of clustering allows the analyst to determine the extent of the underlying 

connections within the data.

A more advanced form of clustering is to create a hypothesis regarding the 

anomaly an analyst is investigating. For example, in the United States there 

is a one-to-one relationship between individuals to Social Security numbers. 

There should never be more than one person identified with a Social Security 

number and a single person should never use multiple Social Security numbers. 

An analyst could retrieve, for example, all of the clusters of people and Social 

Security numbers where the cluster is “greater than five.” This “greater than 

five” means any combination of people and Social Security numbers (one person 

connected to four Social Security numbers, two people connected to three Social 

Security numbers, etc.) This type of clustering allows the analyst to test a 

hypothesis to determine if the data supports the hypothesis.

As another example, analysts could design a cluster analysis of funds transfers 

based on discovering a pattern of activity that appears innocuous. An analyst 

could set a cluster analysis to alert on many different senders all wiring funds to 

the same recipient. The difference between this type of query and others is that 

this query focuses on identifying a pattern of activity rather than on a specific 

target. This alert could discover informal value transfer systems (hawalas), 

terrorist fundraising and other types of activity by identifying patterns of 

activity that appear not to have a legitimate business purpose.

Using the available BSA data, including cross-border funds transfers, cluster 

analysis might reveal patterns in the types of accounts, individuals, or 

organizations involved in certain cross-border transactions. For example, the 

currency and wire transactions of manufacturing firms might cluster closely 

together in comparison to other firms. Similarly, insurance companies might 

resemble each other closely in terms of their financial transactions. These 

clusters help analysts and investigators to identify predictable and recognizable 

patterns of legitimate transactions, and thereby identify patterns of financial 

transactions that are atypical. Identification of atypical transactions provides 

possible indicators of illicit activity. This quickly focuses the effort of the analyst 

or investigator by identifying those clusters that represent unusual activity 

that warrants attention. The analyst can then examine them more closely to 

determine whether the pattern represents suspicious activity.
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Geographic Analysis 

Geographic Information Systems (GIS) provide another visual interface by which 

analysts and managers can discover and assess patterns and relationships 

within massive amounts of data. GIS provides analysts with “situational 

awareness” and enables them to develop a fuller understanding of the data by 

illustrating the status of the data (i.e. how many Suspicious Activity Report 

documents did financial institutions file last month compared to previous months 

nationwide). It can even display emerging trends such as the filing of Suspicious 

Activity Reports by foreign locations of U.S. institutions. In addition, GIS-based 

situational awareness could identify the last reported location of all suspects 

named on Terrorist Financing Suspicious Activity Reports filed in the United 

States. Using temporal analysis, analysts can track relative increases and 

decreases in Suspicious Activity Reports on Terrorist Financing and understand 

how this type of data is changing over time – whether related to the location of 

the suspect or the location of the filer. Analysts can compare this information to 

relevant news reports and sensitive information provided by law enforcement.

Analysts can conduct even deeper analysis of the data by layering data called 

“themes.” These themes serve as overlays on a map and can add information 

such as average income, crime rates, financial institutions, ATM locations, roads, 

ports, immigration rates, or any other relevant data desired. This data can then 

be overlaid on top of Bank Secrecy Act and funds transfer data for consistency 

and hypothesis testing (i.e. if there are multiple similar locations where all of the 

layers are displaying the same relative activity, then the analyst could examine 

why one particular area is showing a huge increase in cross border funds 

transfers). 

GIS can be both historical and predictive. Most traditional analyses relate to 

events that have already occurred while predictive modeling and forecasting 

attempts to understand the patterns of the past and making certain assumptions 

about the future environment. On this basis, analysts can attempt to predict the 

outcome at a certain point in the future. While these methods are not perfectly 

accurate, they are still valuable to quantitatively estimate the future situation 

and test hypotheses. These estimates can assist in strategic and tactical 

planning for those agencies that will take advantage of the BSA and funds 

transfer data.

There also are more specifically targeted controls like the United States Geographic 

Targeting Order (GTO). This authority (31 U.S.C. § 5326) allows the Department of

the Treasury to impose stricter reporting and recordkeeping requirements on financial 

institutions for a limited period and in a specific geographic area. For example, the 

Department of the Treasury issued the first Colombian GTO in August 1996, and 

applied it to 12 money transmitters and 1,600 agents in the metropolitan area of New

York, requiring them to report all cash transfers of over US$750 to Colombia. Treasury 

renewed the initial order, which was valid for 60 days, six times to terminate in October
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1997. It also extended the orders’ coverage to 23 licensed transmitters and about 3,500

agents. The result of the Colombian GTOs was an immediate and spectacular reduction

in the flow of drug trafficking proceeds to Colombia (down 30 percent in volume). About 

900 money transmitters ceased their activity. Wire transfer data is especially conducive 

to this type of geographic analysis because, unlike our current BSA documents, wire

transfer data provides a dynamic geospatial picture of money flow, in many cases 

indicating both the origin and final destination of the funds transfer.

65

Anomalies uncovered in funds transfers originating in money remitters located 

in the Washington Heights neighborhood of New York City to Colombia was one 

of the primary justifications for the Colombian GTOs. Geospatial analysis of 

BSA Data and more importantly, funds transfer data, can help analysts identify 

domestic areas of significant money laundering concern in support of U.S. GTO 

actions. Funds transfer data is especially conducive to this type of geographic 

analysis.

Benefits to Law Enforcement Operations

Obtaining useful information from financial institutions requires investigators 

to determine the most mutually productive search parameters, identify 

transactions relevant to a particular investigation, and determine whether the 

request is technically feasible for that financial institution. As the National 

Commission on Terrorist Attacks Upon the United States noted in one of its staff 

reports:

In a typical investigation, a financial institution received a grand jury subpoena or a 

National Security Letter (NSL) from a federal prosecutor or agent. The subpoena had a

return date—the date by which the bank was required to produce the records requested. 

In a typical investigation, the bank searched its records and produced hard copies of the

material requested. Banks and other financial institutions then needed substantial time to 

locate and produce records, even in response to a lawful subpoena. Financial institutions

had been prohibited from giving law enforcement certain records absent compulsory legal

process.66

Investigative officials may also request information based on Suspicious Activity 

Reports (SARs). Financial institutions often file SARs on activities involving 

funds transfers. FinCEN’s customers, including Federal, State and local 

law enforcement and regulatory agencies have direct access to certain SAR 

data through the existing BSA data systems. In addition, the filing financial 

institutions must produce any supporting documentation to FinCEN or the 

institution’s federal functional regulator upon request, and may be required to 

provide that information to appropriate law enforcement officials upon request.67 

65 See, FATF-IX Report on Money Laundering Typologies, 12 February 1998, ¶ 28

66 Monograph on Terrorist Financing, National Commission on Terrorist Attacks Upon the United States. 

p.59

67 See, e.g., 31 C.F.R. § 103.18(d), 103.19(e), (g), and 103.20(c) 
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To the extent that investigators can identify SARs that warrant further scrutiny, 

this provides one avenue for pursuing an investigation. Using link analysis, 

clustering, and other techniques, analysts and investigators with access to 

the BSA data (including cross-border funds transfer data) could more readily 

identify subjects and evaluate whether further investigation is warranted.

If a financial institution has filed a SAR, investigative officials with access to 

SARs can request, solely based on the SAR, that the financial institution provide 

underlying documents pertaining to the suspicious transaction. Supporting 

documentation may even include supplementary information resulting from the 

financial institution’s own internal follow-up investigations with other parties to 

the transaction (e.g., information from their foreign correspondents).

In addition, some representatives from large-scale financial institutions, 

operating in the United States and often serving as correspondents in crossborder funds transfers, have indicated that correspondent financial institutions 

could make an effort to obtain certain customer specific information from 

foreign-based financial institutions.68 A contributing factor in the receptiveness 

to such requests is the continuing global cooperation to counter terrorist 

financing and other criminal financial activity. 

Along these lines, if investigative officials are able to identify69 the foreignbased originator’s or beneficiary’s financial institutions that are involved in a 

given cross-border transaction, FinCEN may be able to help obtain additional 

information about the transaction. FinCEN, through its participation in the 

Egmont Group of financial intelligence units, and at the specific request of 

authorized officials, can contact those Egmont partners that may be able to 

retrieve relevant information.70 If electronic funds transfer data were available 

through FinCEN the data could provide valuable leads in identifying foreign 

banks from which FinCEN may be able to obtain further information through its 

relationship with other FIU members of the Egmont group.

Section 314(a) of the USA PATRIOT Act of 2001 required the Secretary of 

the Treasury to adopt regulations to encourage regulatory authorities and 

law enforcement authorities to share with financial institutions information 

regarding individuals, entities, and organizations engaged in or reasonably 

suspected, based on credible evidence, of engaging in terrorist acts or money 

laundering activities. Pursuant to FinCEN’s regulations, FinCEN developed a 

system that enables federal law enforcement agencies, through FinCEN, to reach 

68 Indications received from some financial industry representatives are that these types of requests are 

increasingly common and that foreign institutions are increasingly receptive to such requests as global 

cooperation in anti-money laundering and counter terrorist financing efforts continues to improve.

69 E.g., through a domestic financial institution’s records, funds transfer systems’ message formats, or 

other independent means.

70 See appendix A for a description of the Egmont Group.
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out to over 40,000 points of contact at more than 25,000 financial institutions to 

locate accounts and transactions of persons that may be involved in terrorism or 

money laundering.

Another source, National Security Letters, are written investigative demands, 

somewhat analogous to administrative subpoenas that the Federal Bureau 

of Investigation may issue in counterintelligence and counterterrorism 

investigations to obtain the following:

telephone and electronic communications records from telephone 

companies and Internet Service Providers (pursuant to the Electronic 

Communications Privacy Act, 18 U.S.C. § 2709);

information from credit bureaus (pursuant to the Fair Credit Reporting 

Act, 15 U.S.C. § 1681u); and 

financial records71 from financial institutions72 (pursuant to the Right to 

Financial Privacy Act of 1978, 12 U.S.C. § 3401 et seq.).73

Other federal government authorities may also issue National Security Letters 

to obtain financial records from financial institutions74 for purposes of conducting 

foreign counter- or positive-intelligence activities,75 certain protective functions,76

or intelligence or counter-intelligence analyses related to international 

71 Under the Right to Financial Privacy Act of 1978 (“RFPA”), “financial records” are defined as “an 

original of, a copy of, or information known to have been derived from, any record held by a financial 

institution pertaining to a customer’s relationship with the financial institution.” 12 U.S.C. § 3401 (2).

72 Section 374 of the Intelligence Authorization Act for Fiscal Year 2004 (Pub. Law 108-177 (Dec. 13, 

2003) amended the definition of “financial institution” for purposes of the Right to Financial Privacy 

Act of 1978 (12 U.S.C. § 3414) to incorporate the definition of “financial institution” in the Bank Secrecy 

Act, 31 U.S.C. § 5312(a)(2) and (c)(1).

73 The USA PATRIOT Act changed the standard predicate for FBI RFPA National Security Letters to 

one requiring that the information being sought through the National Security Letter is “for foreign 

counter intelligence purposes to protect against international terrorism or clandestine intelligence 

activities, provided that such an investigation of a United States person is not conducted solely on the 

basis of activities protected by the first amendment of the Constitution of the United Staes.” The USA 

PATRIOT Act also provided authority of the Director of the FBI to delegate signature authority for 

National Security Letters to Special Agents in Charge serving in designated field divisions.

74 In Doe v. Ashcroft, 334 F. Supp.2d 471 (S.D.N.Y. 2004), a federal district court held that 18 U.S.C. 

§ 2709, which authorizes the issuance of national security letters to Internet service providers, is 

unconstitutional on account of its nondisclosure provisions and lack of judicial review. The Federal 

Bureau of Investigation appealed the decision and obtained a stay pending appeal, so it is continuing to 

issue national security letters under that statute. That decision did not adjudicate the constitutionality 

of the statute authorizing the issuance of national security letters to financial institutions, 12 U.S.C. 

§ 3414.

75 Foreign counter- or positive-intelligence activities could include, for example, the audit of customer 

records of a financial institution related to the clandestine activities of an intelligence agency, pursuant 

to the RFPA, 12 U.S.C. §3414(a)(1)(A). See, e.g., Duncan v. Belcher, 813 F.2d 1335, 1339 and 1339 n. 1

(4th Cir. 1987).

76 The RFPA, 12 U.S.C. § 3414(a)(1)(B), permits certain disclosures of financial records to the United 

States Secrect Service for the purposes of conducting its protective functions.

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terrorism.77 National Security Letters are highly confidential investigative tools 

employed by the federal government. Financial institutions that receive National 

Security Letters must take appropriate measures to ensure the confidentiality of 

the letters. FinCEN encourages financial institutions to have procedures in place 

for processing and maintaining the confidentiality of National Security Letters.78

Even with this kind of information available through these various established 

channels, the retrieval and analysis of such information can be difficult, and is 

usually time-consuming. Once an investigator identifies the information he or 

she wants, a subpoena or warrant must issue. Responding institutions must 

identify, extract, and prepare the relevant data for delivery to the investigator. 

Many institutions resist providing such information in electronic form, which 

results in the need for investigators or their support personnel to manually 

review the data and enter it into computers to aid in their analysis. This entire 

process can take weeks or even months to reach a point at which investigators 

and analysts can make use of the data. Another possible problem is that an 

investigator may be reluctant to turn to a particular financial institution at the 

outset of an investigation to inquire about the suspect’s financial activities (i.e., 

suspected internal infiltration at the financial institution and concerns about 

possible intentional or inadvertent “tip-offs” to the suspect customer). 

Some of the funds transfer systems can be potential sources for searching and 

retrieving funds transfer messages via subpoena. Law enforcement officials 

inform us that it can be difficult and time consuming to find funds transfer 

records after the fact in order to reconstruct the flow of money unless the 

investigators know the name or account number, the time and place of origin, or 

other specific characteristics of the transactions. Housing cross-border electronic 

funds transfer data at FinCEN could make such records available for efficient 

extraction of the needed information. 

Below, we present information provided to us by representatives from other 

government agencies involved in efforts to detect, prevent, and prosecute illicit 

financial activity.

Federal Bureau of Investigation

As is typical among law enforcement, FBI agents begin with information 

developed in the course of an investigation and seek additional data through 

subpoenas to financial institutions and the message service providers, and 

National Security Letters. The information the FBI typically requests may 

77 The RFPA, 12 U.S.C. § 3414(a)(1)(C), permits certain disclosure of financial records pursuant to a 

request from a federal government agency authorized to conduct investigations or intelligence or 

counter-intelligence analyses related to international terrorism.

78 Pursuant to 12 U.S.C. § 3414(a)(3) and (5)(D), no financial institution, or officer, employee or agent 

of the institution, can disclose to any person that a government authority or the FBI has sought or 

obtained access to records through an RFPA National Security Letter.
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include “any and all documentation related to certain specified transactions” 

to include originator and beneficiary information, dates and amounts of 

transactions, any special instructions or notes included on the record, sender 

and recipient bank names, account numbers and ABA numbers and other 

internal codes. These records often arrive in paper format that then requires 

additional resources to input the information into analytical systems. Much of 

this information would reside in the proposed system, providing FBI and other 

law enforcement agencies ready access and thus saving considerable time and 

effort in the initial stages of a financial investigation. The identification of the 

overseas accounts used in cross-border transfers also facilitates the preparation 

of requests for information from foreign governments under Mutual Legal 

Assistance Treaties (MLAT) and via Letters Rogatory. The resulting records 

of which provide other leads and identify others connected to the subjects. 

The identification of overseas relationships in the data could also serve as a 

catalyst for the exchange of information between FinCEN and its international 

counterpart FIUs throughout the world.

The FBI currently has the ability to analyze large amounts of data from 

numerous sources. Under a Memorandum of Understanding between FinCEN 

and the FBI, FinCEN provides wholesale access to its archive of BSA reports. In 

turn, the FBI loads the data into its Investigative Data Warehouse (IDW) and 

finds the links between the data sets. The IDW is a centralized, web-enabled, 

closed system repository for intelligence and investigative data. This system 

allows appropriately trained and authorized personnel throughout the country 

to query for information of relevance to investigative and intelligence matters. 

In addition to the BSA data provided by FinCEN, IDW includes information 

contained in myriad other law enforcement and intelligence community 

databases. One of the many offices within FBI that makes use of the IDW is the 

FBI’s Terrorist Financing Operations Section (TFOS).

The FBI believes that TFOS allows for (1) consistency of financial investigations and the 

assurance that every major terrorism case will have a financial investigative component; 

(2) the establishment of effective working relationships with international banking, law

enforcement, and intelligence communities; (3) the development of a real-time financial 

tracking capability, resting in large part on the FBI’s extensive relationships with the

financial community, which has transformed financial investigations from the traditional, 

methodical, slow-paced analysis to a tool that can provide near real-time information in

urgent situations; and (4) the formation of teams that can be sent to field offices to bolster 

document-intensive financial investigations and provide guidance and leadership on 

conducting financial investigations.79

The benefits of IDW include the ability to efficiently and effectively access 

multiple databases in a single query. As a result of the development of this 

robust information technology, a review of data that might have previously 

79 Monograph on Terrorist Financing, National Commission on Terrorist Attacks Upon the United States. 

p. 41-42
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taken days or months now takes only minutes or seconds. According to the FBI, 

the BSA information has provided a tremendous lift to the FBI’s investigative 

missions, particularly as they relate to terrorist financing. The cash reporting 

and suspicious activity reporting in particular are proving to be of significant 

value. FBI officials believe the potential benefits of the addition of cross border 

funds transfer information into this type of analysis are incalculable. 

Financial information, lawfully acquired, significantly enhances the ability of U.S. law 

enforcement and intelligence community members to overcome defects in financial 

transparency as mentioned in the previous excerpt from the USA PATRIOT Act. 

Likewise, BSA data is of incalculable value in this important effort. When combined 

with other data collected by the law enforcement and the intelligence community,

investigators are better able to “connect the dots.”

More recently, BSA data has proven its utility relative to counterterrorism matters. 

For example, BSA data is used to obtain additional information about subject(s)

under investigation and their methods of operation. Analysis of BSA data permits

counterterrorism investigators to acquire biographical and descriptive information, to 

identify previously unknown subject associates and/or co-conspirators, and, in certain

instances, to determine the location of subject(s) by time and place.80

Drug Enforcement Administration

In a tactical or case-by-case context, DEA officials noted that each time DEA 

subpoenas records, the records provide leads that merit further subpoenas. 

However, this is an extremely time-consuming process. Given ready access 

to cross-border funds transfer data, DEA analysts could quickly track illicit 

funds through the financial system, greatly enhancing and streamlining their 

investigative capabilities. For example, this would potentially allow DEA 

investigators to penetrate the Black Market Peso Exchange (BMPE) process for 

laundering drug proceeds by tracing funds through the system from the U.S. 

exporter back to the source.

DEA officials stressed that every time they identify a financial target individual, 

business, or bank account, the cross-border funds transfer data would enable 

them to identify associated accounts, businesses, co-conspirators, nominees, the 

volumes of money involved, offshore partners, etc. Intelligence gleaned from 

cross-border funds transfer data could provide a basis for subpoenas to CHIPS, 

Fedwire, money transmitters, or other individual financial institutions.

DEA officials opined that a database such as this would allow them to attack the 

layering stage of the laundering process in ways that are currently unavailable. 

Investigators could tie together different investigations and identify shell/

front companies, nominees, previously unidentified co-conspirators, etc. DEA 

representatives noted that because DEA is currently obtaining this information 

80 Special Agent Michael Morehart, Section Chief, Terrorist Financing Operations Section, 

Federal Bureau of Investigation, before the U.S. House of Representatives Committee on 

Financial Services, May 26, 2005
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on a case-by-case basis, they cannot easily identify “trends” per se. The analysis 

of a macro dataset of interbank transfer records could result in the identification 

of these trends. With the data, FinCEN could perform this kind of strategic 

trends-and-patterns analysis and provide the results to DEA and FinCEN’s 

other partners.

Intelligence-driven investigations and coordinated, strategic enforcement 

initiatives are essential components of the Organized Crime Drug Enforcement 

Task Force (OCDETF) Program. Each year OCDETF strives to focus on 

investigations of the highest priority regional, national, and international 

targets. OCDETF disseminates information generated from those investigations 

to law enforcement quickly and in a manner that allows for the maximum 

impact against drug trafficking and money laundering activity. To do this 

effectively, intelligence must drive enforcement efforts. OCDETF participants 

must have the ability to access, link, and interpret voluminous intelligence 

information from the OCDETF member agencies and from others in the drug 

law enforcement community. OCDETF provides a mechanism to disseminate 

and receive leads that will aid in the development of coordinated, multijurisdictional investigations targeting all related components of drug trafficking 

enterprises operating worldwide.

To enhance OCDETF’s overall capacity to engage in intelligence-driven 

enforcement, OCDETF created the OCDETF Fusion Center (OFC) – a 

comprehensive data center containing all drug and related financial intelligence 

information from six OCDETF-member investigative agencies, the National 

Drug Intelligence Center and FinCEN. The OFC is designed to:

Conduct cross-agency integration and analysis of drug and related 

financial data, 

Create comprehensive intelligence pictures of targeted organizations, 

including those identified as Consolidated Priority Organization Targets 

(CPOTs) – the United States’ “most wanted” international drug and 

money laundering targets – and regional priority targets, 

Pass actionable leads through the multi-agency Special Operations 

Division (SOD) to OCDETF participants in the field, and, 

Develop and coordinate, multi-jurisdictional OCDETF investigations of 

the most significant drug trafficking and money laundering networks. 

A primary objective of the OFC is to assist the OCDETF Program in focusing on 

the financial components of the most significant drug trafficking organizations 

influencing the U.S. drug supply. It is a requirement that every OCDETF 

investigation include a financial component within six months of receiving 

designation as an OCDETF investigation. The OFC will greatly increase 

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OCDETF’s ability to disrupt and dismantle major organizations, including their 

financial components. 

While in its infancy, the OFC has already assembled a team of senior agents 

and analysts from the OCDETF member agencies who are working to develop 

the protocols and procedures for OFC operations. The OFC expects to reach an 

initial operating capability in mid- 2006 when the technical infrastructure that 

supports the Center will be complete.

United States Secret Service

According to officials with the U.S. Secret Service (USSS), access to funds 

transfer data provides critical well-documented evidence of wire fraud, funding 

of digital and electronic currency accounts via MSBs and other electronic funds 

transfers, funds transfers associated with “account takeovers,” telemarketing 

schemes, and other crimes within their jurisdiction. Accessing funds transfer 

data and tracking the data allows the USSS to determine whether money 

laundering is occurring and what suspects are involved, as well as providing 

documented evidence of criminal activity. However, this access has been 

extremely limited and has presented obstacles to investigators’ efforts to gather 

evidence. Like the other law enforcement agencies, USSS points out that ready 

access to cross-border funds transfer data would significantly enhance the 

development of new investigative leads, increase and improve the validation of 

known investigative leads, allow proactive identification of suspects, locations 

and contraband, corroborate existing investigative leads, and generally add to 

the body of criminal intelligence information in support of the Secret Service 

investigative mission.

In the specific context of telemarketing schemes, USSS notes that schemes that 

originate from Canada and target U.S. victims often involve the movement of 

funds from the U.S. victim’s accounts to the Canadian perpetrator’s accounts. 

The transfers often flow from bank to bank or via MSBs. Organized criminal 

groups are also frequently using “the border” between two countries as a way 

of insulating themselves from investigators who normally will not investigate 

international cases. Typically, investigators will first pursue leads that they 

can quickly verify or dismiss. Pursuing leads related to cross-border activity 

are usually time consuming, involve extensive “red tape,” and thus are assigned 

a lower priority. According to USSS officials, anything that can eliminate 

the bureaucracy and allow for quick resolution of leads would be useful. This 

additional information on the money laundering aspects of known criminal 

organizations could provide the extra information needed to decide if the 

organizations are large enough to warrant the necessary budget and labor 

allocation needed for a proper investigation.

USSS also notes that most, if not all, white collar and drug smuggling criminal 

organizations in Vancouver and western Canada primarily target the U.S. 

for criminal activity. The reasons for this are the close geographic proximity 
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between Vancouver and the U.S., the large population and financial base of the 

U.S. as compared to Canada, and differences in criminal penalties. In virtually 

every investigation of these groups, the movement of the proceeds of the criminal 

acts from the U.S. back to Canada, whether by movement of bulk cash, funds 

transfers, or stored value cards, has been significant. If FinCEN were to collect 

cross-border funds transfer reports, this kind of investigation would present a 

prime opportunity for FIU-to-FIU exchange of information between FINTRAC 

and FinCEN for example, expanding the analytical and investigative reach of 

the U.S. government in cross-border investigations

Department of Justice – Asset Forfeiture and Money Laundering Section

In addressing the current tools available to pursue investigation and analysis 

of funds transfers, Department of Justice officials echoed the same concerns 

raised above about the difficulty and time involved in obtaining electronic funds 

transfer data for investigations. Initially, a subpoena would issue requesting 

records of specific funds transfer activity (specific customers, specific amount 

thresholds) for a certain time period. The request should include all activity 

from named-originators or named-beneficiaries. Department of Justice officials 

noted that many financial institutions resist providing this information in 

electronic format. 

The Department officials also noted that investigating crime is labor intensive 

and costly. In order to perform meaningful analysis of such data, investigators 

would need to have an open grand jury with subpoena power or have a search 

warrant issued by a magistrate judge. Once investigators receive bank 

statements based on a subpoena, the next challenge is to build a database of 

transactions. Details of originators and beneficiaries are essential. Each of 

these challenging phases of investigation is demanding and time consuming. 

Because delays are common, some investigative cases are shut down without 

adequate analytical support due to inadequate compliance by financial 

institutions.

Again, aggregating a collection of cross-border electronic funds transfer data in 

a central repository can mitigate, at least in part, the concerns highlighted by 

the Department of Justice. Access to this data by investigators can significantly 

reduce the time and labor involved in establishing a foundation for sophisticated 

financial investigations.

U.S. Department of Housing and Urban Development - OIG

The Department of Housing and Urban Development’s Office of the Inspector 

General (HUD-OIG) investigates fraud against the programs administered by 

the Department. In this role, HUD-OIG sees numerous mortgage fraud and 

grant program frauds that involve the transmission of the proceeds outside 

the U.S. by funds transfer. HUD-OIG officials emphasize that they anticipate 

significant potential fraud against the programs designed to aid those impacted 
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by Hurricane Katrina. In the typical program fraud investigated by HUD-OIG, 

monies disbursed by HUD never fulfill their intended purposes, but rather, 

once deposited in the Management Agent’s bank accounts, simply disappear. 

Investigations may reveal false invoicing and other schemes to cover the fraud, 

but HUD-OIG lacks ready access to, or the legal authority to obtain, relevant 

bank records to determine the disposition of the misappropriated funds. In 

a large number of their investigations, HUD-OIG uncovers allegations that 

perpetrators transferred the misappropriated funds overseas, but cannot 

obtain the evidence necessary to track the money any further. As an Inspector 

General’s office, HUD-OIG must rely on other federal law enforcement agencies, 

which suffer their own resource allocation restraints, to obtain the legal process 

necessary to investigate further. Lacking more detailed evidence, HUD must 

often resort to open-ended orders for restitution in an often vain attempt to 

recover the losses.

HUD-OIG officials expressed the opinion that access to a database that included 

simple information such as the sender and recipient names, account numbers, 

institutions, and the dates and amounts of funds transfers out of the U.S. would 

provide HUD-OIG with prima facie evidence of the misuse of the funds. Such 

information would aid HUD-OIG in establishing the true extent of the losses 

suffered by HUD programs, recovering assets through asset forfeiture, and 

ensuring that these vital program funds reach those in need for whom they are 

intended.

U.S. Department of Agriculture - OIG

Officials of the U.S. Department of Agriculture’s Office of Inspector General 

(USDA-OIG) expressed the opinion that they would benefit from cross-border 

funds transfer information, especially in investigations involving fraud in food 

stamp electronic benefits transfer (EBT), stolen infant formula, and export loans. 

For many years, USDA-OIG has seen large amounts of misappropriated program 

money transferred out of the country, usually overseas but sometimes to Canada 

and Mexico. Some stores accepting food stamps also serve as money services 

businesses to facilitate transferring these funds through money orders and funds 

transfers to banks or individuals in other parts of the country or overseas.

Funds transfers also appear in some cases to be replacing cross-border currency 

shipment. One recent search located many CMIRs involving the subjects/

companies 5-10 years ago, but almost none recently, while several more recent 

SARs mentioned significant funds transfers by some of the parties to foreign 

banks. 

USDA-OIG officials also echoed the opinion that traditional methods of obtaining 

information about electronic funds transfers are almost universally time- and 

labor-intensive, and in many cases ineffective. One USDA-OIG agent stated 

that, “It would be very useful for our agents to have direct access to cross-border 

funds transfer data to be better able to track where the funds are being sent and 

by whom and to more easily check if, indeed, this is occurring in their cases.”
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Internal Revenue Service – Criminal Investigation Division 

The Internal Revenue Service Criminal Investigation Division (IRS-CI) has 

varied responsibilities and authorities under the BSA, including criminal 

enforcement of the tax laws, criminal enforcement of certain provisions of 

the BSA, and enforcement of federal money laundering statutes. IRS-CI 

accomplishes these tasks through a variety of programs such as its Suspicious 

Activity Report (SAR) Review Teams, its participation in the High Intensity 

Drug Trafficking Area (HIDTA) and High Intensity Money Laundering and 

Financial Crimes Area programs (HIFCA) and the IRS’ fraud referral program. 

From fiscal year 2001 through fiscal year 2005, approximately 32% of IRS-CI’s 

investigation time was devoted to money laundering-related investigations. IRSCI’s money laundering investigations involve a wide variety of predicate offenses 

including narcotics trafficking, health care fraud, gambling, and all manner of 

confidence and investment schemes.

The review and analysis of BSA data is a mandatory procedure in every IRSCI criminal investigation. In fiscal year 2005 IRS-CI devoted approximately 

15% of its investigative time to BSA related investigations. From fiscal year 

2003 through fiscal year 2005 IRS-CI initiated in excess of 1,500 investigations 

from BSA data, BSA related projects and/or targeting BSA violations such as 

structuring and the operation of illegal MSBs. 

As part of its compliance strategy, IRS-CI has designated Lead Development 

Centers (LDC) that focus on specific IRS-CI program areas. Investigative 

analysts in these LDCs access a variety of databases in the development of leads 

for criminal investigation. One of the programs within the LDC structure is 

BSA analysis. The LDCs provide support to IRS-CI and the Small Business/SelfEmployed (SB/SE) BSA Compliance Examination program (see below) through 

identification of cases with trends, patterns and issues associated with income 

tax violations, money laundering and other financial crimes covered under the 

BSA. 

Some of the objectives of the LDC program related to BSA include the following: 

Identification of income tax violations and money laundering violations 

for criminal or civil referral. 

Identification of newly emerging income tax violations, money laundering 

methodologies and trends through research and analysis. 

Identification of MSBs that are actively involved in or facilitate income 

tax violations and money laundering.

One key weapon in the LDC’s arsenal is a powerful data mining tool. This 

system provides users with an enhanced capability to simultaneously access, 

analyze, and interpret large volumes of disparate data for the purpose of 

identifying and developing leads to criminal cases and asset forfeitures. This 

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program is unique in that it is linked to a variety of databases including its 

Currency and Banking Retrieval System (CBRS) and tax return information 

that is generally unavailable to other Federal, state and law enforcement 

agencies.81 This program also allows for the identification of connections in 

the information contained in different databases. Information such as that 

provided in cross border funds transfers could be combined with BSA data and 

tax return information in a program such as the IRS-CI’s data mining tool. This 

information could further enhance the development of leads identified in these 

other databases. 

IRS-CI officials inform us that it encounters funds transfers in many of its 

investigations in all program areas, including abusive trust schemes, money 

laundering, BSA, health care fraud, confidence and investment frauds, narcotics, 

and others. 

Analytical Value – Canada

In contrast to FinCEN’s operations, FINTRAC’s analysis is entirely a proactive 

analysis. Canadian law enforcement and national security agencies cannot 

request that FINTRAC conduct specific analyses and do not have direct access 

to FINTRAC’s databases. To develop its analysis and disseminate the results, 

FINTRAC’s system applies business rules developed internally to assess its 

“Suspicious Transaction Reports” (STRs) and other intelligence information 

by correlating the STR data fields with data in the “Large Cash Transaction 

Report” (LCTR), Cross Border Currency, and “Electronic Funds Transfer” (EFT) 

databases. This process results in a score for each STR based on the links 

between that STR and other reports in the FINTRAC databases (i.e., same 

subject, account, etc.).

Every day, FINTRAC analysts review incoming STRs and other intelligence to 

determine whether to open a “case.” Upon opening a case, analysts review the 

FINTRAC database information, and then conduct further research using all 

source information and link analysis, the results of which the analyst compiles 

into an Analytical Report and Disclosure Statement. A Senior Management 

Committee within FINTRAC must review and approve all Disclosure Statements 

before FINTRAC releases the report to law enforcement or national security 

agencies.

Each year, FINTRAC discloses approximately 140 analytical reports, 

approximately 30 of which are “Terrorist Financing” disclosures. FINTRAC 

officials informed us that, on average:

Among money laundering disclosures, the majority are primarily 

domestic, while about one third contain international EFT data and could 

not be disclosed without that data;

81 But see 26 U.S.C. § 6103 (prescribing the circumstances under which specified persons and agencies 

may obtain federal tax returns or return information).

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Among Terrorist Financing disclosures, almost 80% contain international 

EFT data. 

Analytical Value – Australia

AUSTRAC provides the Australian Taxation Office and specified law 

enforcement, security and revenue agencies with both general and specific access 

to the FTR information it collects. The general access, governed by memoranda 

of understanding, is by way of controlled on-line access to the data and, where 

appropriate, by extracts of parts of the data holdings. This allows AUSTRAC’s 

partner agencies to add the financial intelligence to their own intelligence for a 

better understanding of the activity. 

Officials from the Australian Federal Police (AFP), Australian Taxation Office 

(ATO), and the Australian Customs Service (ACS) all report that IFTI data 

available through AUSTRAC are integral to their investigative strategies, and 

both AFP and ATO have made the use of AUSTRAC data mandatory in the 

development of cases by their investigators. The Australian Federal Police, for 

example cite the data as the central piece in its attempts to not only identify, 

but to predict the movement of narcotics into and out of Australia. By analyzing 

patterns within the IFTI data and comparing it to other law enforcement 

information, including entry/exit data from the ports of entry, the AFP can 

identify recurring patterns of outgoing funds transfer activity based on historical 

cases and lay plans to interdict narcotics based upon patterns of funds transfer 

activity.

The ATO stated that IFTI data is an integral part of the ATO’s overall strategy 

to deter the movement of money to offshore tax havens. The ATO has expended 

considerable effort in identifying jurisdictions, primarily tax havens that 

Australian taxpayers may use to avoid taxes. General trends and patterns 

analysis helps describe the overall flow of funds to and from Australia, and 

helps analysts develop a baseline profile of funds transfer activity. The very 

volume of the reporting enhances its value to ATO by providing a richer context 

for analysis. In turn, this enables analysts to identify and analyze apparent 

anomalies. Based on this information, ATO can concentrate on funds transfers 

to jurisdictions that raise concern. 

One of the monitoring tools AUSTRAC utilizes highlights monthly variations in 

the flow of funds between Australia and other countries. AUSTRAC provides 

a monthly report to an ATO analyst who examines it for unusual transactions 

or trends (normally involving tax havens). In one case, an ATO analyst noted 

a sizeable increase in funds sent to Australia from a small tax haven country 

during a particular month. Further investigation identified that a particular 

individual had been receiving a large amount of these funds and had received 

around $18 million (AUD) over the past 5 years.

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Checks on tax records showed that the subject individual had not lodged returns 

for a number of years and ATO had to ascertain if the subject was an Australian 

resident and thereby establish if the $18 million (AUD) was assessable income 

for Australian taxation purposes. Interviews with the subject established that 

he was a professional gambler who had developed a program to select winning 

horses for a business that operated from an offshore tax haven. Immigration 

checks on his international movements confirmed that the individual was not 

an Australian resident for Income Tax purposes. This research indicated a link 

between the subject and the United States.

ATO decided to provide the information they obtained during the course of 

the audit to the IRS. ATO provided the information under the Exchange of 

Information provisions of the Australia/United States Double Tax agreement.

On receipt of the information, the IRS conducted their own investigation 

and identified undeclared income of approximately $32 million (USD) with 

uncollected tax and interest of $9 million (USD). Three ATO officers received 

formal commendations from the IRS for their part in the investigation.

In addition, analysts are able to identify potential subjects based on volume, 

value, and geographic links. ATO has identified jurisdictions, including tax 

havens, and can monitor funds transfer activity between Australia and those 

jurisdictions for indicators of concern or suspicion. The information gleaned 

from such analysis helps ATO identify tax return information that warrants 

review. ATO updates its baseline analysis and outlier identification monthly. 

Among 21,000 ATO employees, 1,300 have direct access to the AUSTRAC data 

on their desktops, representing 48% of all AUSTRAC’s external users. In FY ’05, 

ATO made assessments for $62 million (AUD) in back taxes and penalties in 499 

cases developed from the AUSTRAC data. Over the past four fiscal years, ATO 

assessments have totaled over $269 million (AUD). Of the assessments ATO 

makes based on AUSTRAC data, approximately 70% relate to IFTI data.

The ATO has been using AUSTRAC data to support its compliance activities 

since the early 1990s. The data provides an important source of financial 

intelligence for the ATO and has been used to:

monitor money movements into and out of Australia; 

profile individuals, industries, occupations and geographical areas;

identify potential high-risk transactions;

identify and quantify compliance risks and develop compliance strategies;

assist in the selection of compliance cases for further investigation;

debt collection.

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ATO relies on its analysis of AUSTRAC data in a number of ways to shape and 

direct its operational activities. ATO representatives explained to us that the 

agency uses AUSTRAC’s IFTI reports for

Case Selection -- ATO correlates AUSTRAC data (including IFTIs) with 

other information to determine whether a case is suitable for audit.

Case Profiling -- ATO analyses AUSTRAC data (including IFTIs) to 

develop a financial profile of taxpayers already selected for audit. 

Debt Collection -- ATO queries AUSTRAC data (including IFTIs) to 

identify previously unknown bank accounts, undisclosed funds and new 

addresses or other information to help trace a taxpayer’s whereabouts.

ATO also employs the IFTI data in its strategic analysis aimed at identifying 

and assessing potential revenue risks, such as tax havens. ATO analyses IFTI 

data to monitor money flows into and out of tax havens and highlights statistical 

anomalies for further investigation.

Representatives of the Australian Customs Service (ACS) emphasized that 

the IFTI data, standing alone, provides a useful starting point for identifying 

potential subjects. ACS uses IFTI data to develop a picture of the flow of funds 

into and out of Australia. By first identifying patterns and clusters of activity 

in the IFTI data, ACS can eliminate those patterns that are explicable on their 

face. By combining otherwise inexplicable patterns of activity with other law 

enforcement information such as immigration entry/exit data and trade data, 

ACS can prioritize its leads and identify patterns of activity that warrant further 

scrutiny. ACS has applied this methodology to investigations of narcotics 

trafficking, trade-based smuggling, and human trafficking with great success.

Benefits to Financial Industry Regulation and Compliance

In addition to its own analytical work and direct case support to law 

enforcement, FinCEN also provides analytical support to its regulatory partners. 

One example of FinCEN’s support role is the conduct of targeted research of the 

reporting and compliance activity of identified institutions. Currently, FinCEN’s 

Office of Regulatory Analysis can research the available BSA data related to a 

specific institution by extracting the reports filed by that institution. FinCEN 

analysts can then compare the data with other related reports submitted by 

other institutions. For example, analysts can review the SAR filings of an 

identified institution initially, and then extract SARs filed by other institutions 

related to transactions with the identified subject institution or its customers. 

Identification of transactions that other institutions identified as suspicious that 

the subject institution did not similarly report may provide some insight into 

possible compliance issues or weaknesses in the subject institution’s anti-money 

laundering program. FinCEN can in turn provide the results of its analysis to 

the delegated regulators to aid in the conduct of examinations. The addition 

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of cross-border funds transfer data to the universe of BSA data would provide 

many of the same benefits in this application as it would in law enforcementrelated analysis described above. 

This type of analysis affords FinCEN many opportunities to enhance the use and 

utility of BSA data. First, it could provide FinCEN the opportunity, through the 

kinds of analysis described, to find indicators of compliance problems through 

proactive analysis. This capability would place FinCEN in a position to identify 

problems in the BSA reporting regime and the way financial institutions are 

implementing their AML programs. If this effort identifies the problems at an 

early stage, FinCEN, working with the functional regulators and the institution, 

can attempt to correct the problem. Combining electronic funds transfer 

data with BSA reporting and information gleaned from examinations by the 

functional regulators can theoretically enable the government and the financial 

services industry to address compliance and AML issues early. This would 

provide all involved the opportunity to correct AML compliance, and ensure 

the quality of overall BSA reporting, thus enhancing the transparency of the 

financial system. Effective use of the data in this way could aid in the overall 

efforts to combat illicit finance and potentially reduce the need for significant 

enforcement actions.

Internal Revenue Service – Small Business/Self-Employed

In general, under the BSA the IRS’ Small Business/Self-Employed Division 

(SBSE) is responsible for examining non-bank financial institutions (NBFIs) 

not regulated by another federal agency for compliance with the BSA. These 

institutions include Money Services Businesses (MSBs), casinos, non-federally 

insured credit unions, dealers in precious metals stones or jewels, and insurance 

companies regulated under the BSA. In addition to compliance and examination 

responsibilities, IRS-SBSE is responsible for the identification of unregistered 

MSBs and educational outreach on NBFI BSA obligations. The difficulties 

in regulating and even in defining the money services business sector of the 

financial services industry are well known. While a substantial proportion 

of money transmitters are legitimate and law-abiding operations, IRS-SBSE 

and FinCEN face difficulty in identifying money transmitters that are neither 

registered as required nor in compliance with the BSA’s anti-money laundering 

program requirements. 

IRS-SBSE already makes effective use of CTR data in identifying businesses 

that make large cash deposits indicative of the operations of a money 

transmitter. However, that data, standing alone, has limitations. In an 

example posited by IRS-SBSE officials, a retail business that operates a money 

transmitting service as only part of its business, may be identified by its bank as 

a retail business but not as an MSB. As a result, a CTR related to transactions 

by that business identifies the account holder as a retail business. On its face, 

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routinely take in large amounts of currency. However, the additional layer of 

understanding developed when combined with funds transfer data reflecting 

corresponding international funds transfers, may alert analysts or investigators 

to a problem. By combining the identifying information in the CTR and funds 

transfer data, with information available from IRS-SBSE’s database of non-bank 

financial institutions for example, IRS could theoretically identify unregistered 

money transmitting businesses. Furthermore, employing geographical analysis 

techniques, IRS-SBSE, either independently or in cooperation with FinCEN 

could develop maps of financial activity that indicated suspicious or otherwise 

inexplicable geographic concentrations of the kinds of transactions that might 

indicate unregistered money transmitters.

As in other examples cited throughout this study, this kind of analysis has the 

potential of providing great benefits in conducting a “triage” of available leads, 

and in allocating analytical, investigative, and examination resources. 

Benefits to State and Local Government Partners

Our conversations with representatives of state and local law enforcement 

and regulatory agencies reveal many of the same benefits that our Federal 

partners envision. However, the nature of the state and local agencies’ work 

raises additional concerns that a cross-border electronic funds transfer database 

may mitigate. For example, while state and local authorities face many of 

the same difficulties in deriving useful information about funds transfer 

activity from subpoenas, they face additional difficulties related to their own 

geographic jurisdiction. The ease with which financial activity can cross 

international borders is mirrored in interstate commerce. Targets of a state or 

local investigation can easily conduct business with associates in other states 

or countries. State and local officials shared with us that they increasingly 

face resistance from financial institutions to subpoenas for records related to 

transactions involving out-of-state subjects that arise in their investigations. 

In addition to providing the same time and labor savings as at the Federal 

level, state and local authorities may enjoy the added benefit of avoiding 

protracted legal maneuvering sometimes required to obtain even the most basic 

investigative information. 

State and local authorities also echoed the concerns of some federal investigators 

related to various types of fraud schemes. State and local authorities dedicate a 

significant amount of resources to investigating seemingly localized fraudulent 

financial schemes. Despite the local pool of victims, it is no more difficult for 

these criminals to employ the international financial system to spirit their 

proceeds out of reach of the state and local authorities. The investigators we 

spoke to noted, however, that the types of fraud schemes they investigate involve 

transactions that lend themselves to pattern analysis. A database of funds 

transfer data would provide a source for this kind of analysis in support of state 
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and local efforts to protect their citizens from fraud and would further enhance 

the Bank Secrecy Act data and other sources already available to them.

Benefits to Financial Services Industry

Another example of the utility of funds transfer reporting stems from recent 

efforts at FinCEN to establish information sharing agreements with the 

functional banking regulators. Under the program, the regulators provide 

FinCEN with the findings made during the conduct of examinations. The Office 

of Regulatory Analysis and the Office of Compliance review these reports and 

identify areas for further research. Based on the findings of the examiners, 

analysts can further research the BSA reporting by the subject institution for 

such items as application of the CTR filing exceptions, and can crosscheck all of 

the BSA reporting for consistency among the varying reports. 

This kind of analysis in the context of regulatory and compliance programs 

and examination could, hypothetically, enable FinCEN analysts to identify 

general trends or vulnerabilities in the U.S. financial services industry that 

warrant the issuance of industry guidance. Through such guidance, FinCEN 

can theoretically aid U.S. financial institutions in compliance by casting light 

on kinds of activity that the institutions themselves might not be in a position 

to recognize. The addition of cross-border funds transfer data to the BSA 

reporting holds the potential of providing previously unavailable insights into 

illicit financial activity. As profiles of this activity emerge through analysis, 

FinCEN can describe to industry members the outline of such patterns and their 

significance. In this way, FinCEN can take a more direct role in assisting the 

industry in shaping its anti-money laundering efforts.

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Appendix G – FinCEN Industry Survey 

and Responses
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Appendix H – Technical Alternatives 

Analysis

In developing our assessment of the technical feasibility of building and 

implementing a system to collect, process, store, secure, analyze, and 

disseminate cross-border funds transfer reports, we gathered information 

from published sources, issued a Request for Information from private sector 

information technology developers, and consulted with data systems experts 

from other government agencies. The study is also based on the lessons learned 

from a funds transfer proof-of-concept system developed in partnership with 

our colleagues at AUSTRAC. Other conclusions derive from discussions with 

technical experts from both the government and private sectors with experience 

in the design and construction of systems for the collection and analysis of 

extremely large volumes of data.

Assumptions About System Architecture

The underlying premise of the assumptions listed below is that the architecture 

of a system to collect, process, store, secure and disseminate cross-border 

funds transfer data must enable FinCEN to leverage existing infrastructure, 

interfaces, capabilities, and services; to benefit from the return on the 

investment in BSA E-Filing and other systems; and to integrate these under a 

common data architecture with shared application and data services.

 FinCEN made the following assumptions when preparing this report:

FinCEN plans to improve the level of constructive control it exerts over 

BSA data collection and management and to assume over time the full 

lifecycle BSA data management responsibilities. 

FinCEN plans to enhance the use and capabilities of its BSA E-Filing 

system as an integral component of the integrated BSA data center. 

FinCEN would provide direct, private, and secure communications 

between its collection system and reporting institutions’ systems. 

Stability - The funds transfer system will meet all uptime and response 

time performance specifications as FinCEN’s current and planned BSA 

data systems. 

Failover and disaster recovery processes and technologies should be in 

place.

Risk – The architecture design should introduce minimal impact on the 

existing FinCEN technical environment. 

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Flexibility – The chosen architecture must easily integrate existing and 

new technologies.

Scalability –The architecture design should be easy to expand and scale. 

The target funds transfer system must scale to process 350-500 million 

transaction records per year, securely store 3-5 years of data available 

for online access, initially serve several hundred reporting financial 

institutions and several thousand data users, and provide 24/7/365 

availability.

Data Warehouse Architecture Design Principles

A data warehousing architecture defines the technical framework needed to 

ensure that a variety of data warehousing components work together to provide 

the decision support capability expected by business users now and in the 

future. There are five main objectives of the architecture. 1) Business Value: 

Information systems are a means to an end, not an end unto themselves; 2) 

Usability and Performance: funds transfer data warehousing systems should 

be easy to use and provide useful business information within acceptable 

timeframes; 3) Adaptability: Data warehousing systems should accommodate 

changes in requirements and technologies in a cost effective manner; 4) 

Interoperability: A data warehouse should work well with the large number of 

operational and decision support systems in use at FinCEN; and 5) Availability: 

The data warehouse should incorporate redundancy sufficient for decision 

support and should meet the availability requirements typical of mission critical 

systems. 

Service-Oriented Architecture

A Service-Oriented Architecture (SOA) provides the necessary components to 

facilitate the secure distribution and sharing of funds transfer data between 

FinCEN, financial institutions regulators, law enforcement agencies, and the 

intelligence community. In SOA, development is component-driven and based 

on reusable parts or services. SOA itself is not an application, but more of a 

methodology or architecture. One element of an SOA is the enterprise service 

bus (ESB). The role of an ESB is to provide the backbone on which you can 

build a SOA. SOA handles all of the service definitions, service creation, 

integration, and deployment and management. SOA enables the entire lifecycle 

of building, deploying, and managing multiple services while introducing 

minimum impact on the component parts. ESB simply acts like an application 

server. SOA permits a system owner to leverage the architecture design with 

existing technologies and systems, and to reuse the functionality of existing 

systems rather than building them from scratch. Eliminating overlapping pointto-point connections simplifies maintenance and integration. Developing the 

funds transfer system using the SOA design will provide FinCEN with a flexible 

integration approach based on dynamic (just-in-time integration), not hard-wired 

(point-to-point) integration. 

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Web Services

Most SOA implementations use Web services based on XML and HTTP.82 

The Web services a standardized way of integrating web-based applications 

using XML, SOAP, WSDL and UDDI open standards over an internet protocol 

backbone.83 XML is used to tag the data, SOAP is used to transfer the data, 

WSDL is used for describing the services available, and UDDI is used for listing 

what services are available. Web services allow organizations to communicate 

data without intimate knowledge of each other's IT systems. Web services also 

allow different applications from different sources to communicate with each 

other without time-consuming custom development or significant modification 

of existing systems, and because all communication is standards-based, web 

services are independent of a single operating system or programming language. 

Because web services are loosely coupled and granular, they provide a better 

infrastructure for protecting confidential data and securing business processes 

than traditional, application-centric security approaches.

Data Acquisition

The process of receiving and processing funds transfer data is similar to 

collecting other BSA data electronically. It involves interaction with a wide 

range of financial institutions. These financial institutions range in nature 

from relatively small organizations and money services businesses, to large 

organizations. This implies that the funds transfer system must address a wide 

range in both the volume of submissions, and in the technical sophistication of 

these entities.

Ideally, FinCEN could deploy a single solution to communicate with all the 

reporting financial institutions. However, industry best practices reveal that 

no single information technology solution, whether a proprietary (Secure 

FTP), virtual private network (VPN), secure web-based protocols (S-HTTP), or 

customized application, is appropriate for all financial institutions. Accordingly, 

FinCEN must combine solutions to allow myriad financial institutions to 

transmit data to FinCEN securely. The use of SSL and S-HTTP, in conjunction 

with Web forms hosted by FinCEN should adequately serve low-volume 

reporting institutions. Large volume reporting institutions can use the secure 

protocols implemented in BSA E-Filing to transfer the funds transfer data from 

their network into the FinCEN system securely.

82 HTTP - HyperText Transfer Protocol, the underlying protocol used by the World Wide Web. HTTP 

defines standards for the format of data presented, and prescribes what actions Web servers and 

browsers should take in response to various commands.

83 SOAP - Simple Object Access Protocol, an XML-based messaging protocol used to encode the 

information in Web service request and response messages before sending them over a network. 

SOAP messages are independent of any operating system or protocol and support a variety of Internet 

protocols. WSDL - Web Services Description Language, an XML-formatted language used to describe 

a Web service's capabilities as collections of communication endpoints capable of exchanging messages. 

WSDL is an integral part of UDDI, an XML-based worldwide business registry. WSDL is the language 

that UDDI uses. UDDI - Universal Description, Discovery, and Integration. A Web-based distributed 

directory that enables businesses to list themselves on the Internet and discover each other.
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The BSA E-Filing system currently serves exactly this type of user community. 

The BSA E-Filing system uses InFlowSuiteTM a commercial off the shelf (COTS) 

tool to manage the submission process. The system can ingest submissions in a 

variety of formats and using a variety of protocols, and control these submissions 

by placing them in protected storage. The system then queues submissions for 

subsequent processing. This allows the system to operate over a wide range 

of load conditions, queuing submissions received during periods of high stress 

for processing when submission volumes diminish. This gives the system an 

extremely wide “dynamic range” within which it can remain responsive to 

submitters’ needs. 

Because the BSA E-Filing system employs service-oriented architecture design 

and web services, the integration of funds transfer data into BSA E-Filing 

becomes possible. The BSA e-Filing system is stable, and adheres to a 99.999% 

availability standard. Usage is growing and FinCEN currently receives 47% 

of its total BSA filings using the system. To date reporting institutions have 

filed over 9 million reports electronically and with the recent inclusion of larger 

banks, FinCEN is processing 350,000 to 380,000 reports through the system per 

month (as compared to an anticipated 30-40 million funds transfer reports per 

month). Over 300 of the 650 identified top filers are using the system. 

To accommodate the concerns of filing institutions about data security, the 

BSA E-Filing system implements a solution that combines SSL (Secure Sockets 

Layer), S-HTTP (secure HTTP) and web-based forms. SSL and HTTPS are 

mature open standards-based communication protocols that enjoy wide adoption 

and that all World Wide Web browsers implement. For the end user, the use 

of browser technology eliminates the need to purchase and deploy specialized 

software and lowers maintenance and support costs. Both Canada and Australia 

have adopted this approach in their reporting systems. For example, a mediumvolume reporting institution could prepare a file containing all of the required 

reports and by logging into a secure web portal hosted by FinCEN, manually 

upload the file to the FinCEN system. In addition, FinCEN could provide a 

secure web-based form by which small-volume reporting institutions could file 

reports regarding single transactions.

FinCEN’s BSA E-Filing system relies upon Sterling Commerce's Connect:Direct 

software to provide reporting institutions with a secure communications tunnel 

between their network and FinCEN’s. Large-volume reporting institutions can 

employ FinCEN’s BSA E-Filing system by using the Connect:Direct FTP protocol 

over SSL to secure the control and data connections over the internet. This has 

proved to be an effective method for hundreds of financial institutions to send 

their reports to FinCEN. The benefits of extending this tool include having 

a highly secured and homogeneous environment, which reduces the need to 

support multiple communication standards. This solution does require reporting 

institutions to obtain and implement compatible communications software. 
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Data Transformation, Enhancement, and Loading 

Data Quality

Data quality assessment is an integral part of data warehouse development. 

The objective in implementing a data warehouse is to enable the users to 

produce better analysis and make better decisions by making available 

accurate, correct, and high quality data. If the data does not satisfy high quality 

standards, the value of the data is lost.

There are a number of data quality problems that a data warehouse architecture 

must address:

Data Validity - Non-conformance of the submitted data to permitted 

values.

Data Decay - Values are correct at one point in time but the values 

change and the data is not automatically updated to reflect the change.

Synchronization - Values of core data stored in multiple places are not 

maintained in consistent ways.

Business Rules - Values that have rules associated with them are not 

programmatically enforced.

Without consistently high quality data, users may miss opportunities of 

detecting potentially important information in the data. For example, a 

recent search of FinCEN’s BSA reports revealed 144 variations in a single 

street address. Because FinCEN does not have direct quality control over the 

data collection process, in order to make it useful and sensible, data must be 

enhanced and improved before analysts and investigators can make use of it. 

If data quality is suspect, analysts cannot effectively use the information or 

share it properly. The challenges FinCEN may face while trying to integrate the 

cross border funds transfer data with BSA data include:

Finding authoritative information sources (master data stores) 

Knowing the underlying location, structure, context, quality and use of 

information 

Determining how to resolve differences in meaning (semantic 

reconciliation) 

Understanding how to profile and ensure data quality 

Applying methods to connect to data sources (choosing among several 

data integration technologies) 

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Knowing how to encapsulate information models to support business 

service composition 

High quality data is a prerequisite for a successful data warehouse and for effective data 

mining and other quantitative analysis. Managing data quality requires system developers 

to view data quality as a business issue and to approach it in a structured manner. The 

methodology for data quality management must focus on three critical components:84

People and skills: Cultural and organizational change to build awareness, 

understanding, ownership and engagement of key stakeholders 

Processes: Establishing standard and repeatable workflows for 

addressing data quality, including metrics, a focus on data quality trends 

and iterative tuning of data quality rules 

Technology: Implementing data quality analysis, monitoring, controls 

and enhancement functionality 

Data transformation is computationally intense, and requires sufficiently powerful systems 

to accomplish the task within acceptable periods. For example, deter­mining whether two

different funds transfers originated from the same individual is not easy. Funds transfer

instructions rarely contain unique indica­tors such as a Social Security number; small 

variations in format and spelling can defeat simple word matching; addresses are not always 

pro­vided and money launderers can use multiple, shifting account numbers.

Simply put, a data warehouse system must establish a standard for data quality and upon 

receipt, the system must examine the submitted data, identify and correct errors, convert

it into a form suitable for analysis, and load the data into the data warehouse. In terms of

technical feasibility, a funds transfer reporting system must incorporate adequate processes 

and technology to manage the data quality. These steps in this “enhancement-transformationand-load” (ETL) process are data profiling, data enhancement, and data load. 

84 Data Quality Methodologies: Blueprints for Data Quality Success, Ted Friedman, July 26, 2005

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 Data Transformation 

Data Quality

assumptions

Data Cleansing

rules

Data

mapping

Data Aggregation

rules

Data Profiling Data Cleansing Data Integration

Data

Aggregation

Source

Systems Data

Warehouse

Legends:

Meta data flow

 

 Data flow 

DATA Extraction DATA Load 

Data Profiling

To ensure that a data warehouse system can handle all these problems and 

establish links to other data, the system must incorporate a data profile. In 

general, data profiling is a process of discovering the characteristics of a 

target set of data. Data profiling is a critical diagnostic process that provides 

information about the quality of the collected data. 

Data profiling generally includes data consistency discovery, data business 

rules validation, and data relationships verification. Data consistency discovery 

checks whether the patterns within the submitted data adhere to expected 

patterns or formats. Data business rules validation typically focuses on 

analyzing and determining if the data values are accurate (i.e., identify ZIP 

codes that contain only four digits), complete, and compliant with the business 

rules (i.e., text appearing in the “amount” field). Data relationships verification 

encompasses not only the identifying data redundancy and potential key interdata relationships but also optimizing the relationships between data elements, 

and data tables. In simpler terms, it looks for repetitive use of the same 

information in multiple places in a data record and begins to identify common 

elements between different data records (i.e., an account number may appear 

in both a funds transfer report and a Currency Transaction Report – the data 

profile will reflect this common element).
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To develop meaningful business rules, identify the relationships between 

funds transfer reports and other BSA data, and to handle the errors or rejected 

records, will require extensive requirements development. Commercial off-theshelf (COTS) data profiling tools exist that can analyze a given set of data and 

proffer appropriate business rules to apply to the data. These products usually 

include common business rules that apply to any organization. During the 

development of a funds transfer reporting system, it will be vital to apply data 

profiling analysis and tools to sample data.

Data Enhancement

Data enhancement is the process of applying the business rules that arise 

from the data profiling process, to “improve” the data. The enhancement of 

the data can include “data cleansing” - the alteration of certain data elements 

to ensure consistency (i.e., 5-digit zip codes expanded to ZIP+4 format) or the 

addition of data elements to enhance the usefulness of the data (i.e., addition 

of “county” information based on address and ZIP code); “data integration” 

– the conversion of multiple data structures (i.e., SWIFT and non-SWIFT funds 

transfer messages) into a single consistent format and the conversion of certain 

data elements into human readable form (i.e., “bank identifier codes” into the 

full name of a financial institution); and “data aggregation” - the summarization 

of certain elements of the data to enhance accessibility. The data enhancement 

process ensures that data is consistently structured into correct and appropriate 

fields, formatted (e.g., abbreviations are expanded into full words), and is 

grouped into appropriate collections.

Metadata Management

After the system enhances the data and structures it consistently, the next step 

is to integrate and aggregate the data. Depending on the source of data, data 

integration can be very complicated. The result of data integration usually 

generates new data entities or attributes, which are easy for end users to access 

and understand. Data aggregation is a key data warehouse requirement that 

facilitates the presentation of data in the form of business reports. Systems also 

generally implement data aggregation to improve query performance. 

Overall, the ETL process results in the creation of “metadata” or “data about 

the data.” Metadata is information about the data such as data source, data 

type, extraction and transformation rules, and any other information needed to 

support and manage the operation of the data warehouse. 

There are three types of metadata that are associated with data warehousing, 

including technical metadata, operational metadata and business metadata. 

Technical metadata describe the data and explain what has been done to 

cleanse, enhance, and standardize the data. The operational metadata created 

during the ETL process includes records of the job executed, the date and time 

when the job executed, the job status (successful/failed), a system generated 
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Batch_ID and the number of records extracted and loaded. The metadata adds 

a layer of context to the data by providing consistent views of, for example, 

abbreviations, acronyms, and other codes in the data.

As a result, the “size” of a data set increases dramatically through the 

enhancement process. The addition of new elements and the transformation of 

others have a significant impact on storage requirements. All these operational 

metadata are available to the user in support of analysis and reporting activities. 

Designing an appropriate ETL process requires both familiarity with the 

specific types of data and general database skills. Therefore, both skilled 

database administrators and end users should be involved in this task. Because 

familiarity with funds transfer message data will be central to the design of the 

system, FinCEN will need to rely heavily upon the expertise of U.S. financial 

institutions throughout the development process.

Data Load

Once the transformation process is complete, the system must load the enhanced 

data into the data warehouse. The data load process depends primarily on the 

kinds of query operations the users will perform and the volume of data that 

must be available on the system. These factors will determine the structure of 

the data warehouse itself, and in turn, the process for loading the data. 

Data Warehouse Architecture Alternatives – Centralized or Federated

The three most common data warehouse architectures are: (1) hub and spoke 

architecture (i.e., centralized data warehouse with dependent data marts), (2) 

centralized data warehouse (with no dependent data marts), and (3) federated 

data warehouse (independent data marts with common elements). The first two 

are centralized approaches and the third is a non-centralized approach. 

Eight factors potentially affect the selection of the data warehouse architecture.

Information Interdependence -- There is a high level of information 

interdependence where one or more funds transfers relate to one or more 

large cash transactions recorded in the CTR data, for example. In this 

situation, the ability to share and integrate divergent information sources 

is important. 

Urgency of Need -- Some architectures are more quickly implemented 

than others, which can impact the architecture selected.

Nature of End User Tasks -- Some users perform more complex tasks 

than others do. Detailed requirements analysis in close partnership 

with FinCEN’s law enforcement and regulatory partners would be a 

prerequisite for defining the appropriate architecture.

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Constraints on Resources -- Some data warehouse architectures require 

more resources than others do. As a result, the availability of IT 

personnel, business unit personnel, and monetary resources can influence 

the selection of the architecture.

Strategic View -- Based on current FinCEN’s strategic view of the 

warehouse, integration of multiple different information sources is 

necessary. 

Compatibility with Existing Systems -- There are many benefits to 

implementing solutions that are compatible with existing systems. The 

cost and time benefits of implementing a funds transfer data warehouse 

that is compatible with existing systems are substantial. 

Perceived Ability of Developers -- It will be essential that FinCEN 

dedicate sufficient and appropriately skilled project management 

resources to the management of the acquisition and development of such 

a system.

Technical Issues -- A variety of technical considerations affect the 

choice of architecture – the ability to integrate metadata; scalability in 

terms of the number of users, volume of data, query performance; the 

ability to maintain historical data; and the ability to leverage existing 

infrastructure. 

Hub and Spoke Architecture 

A hub-and-spoke architecture builds upon an enterprise-level analysis of the 

system users’ data requirements. A hub-and-spoke architecture is a scalable 

and maintainable infrastructure. The architecture is developed in an iterative 

manner, subject area by subject area. That is to say that initially, all data is 

combined into a single data repository, and other specialized “data marts” are 

created by extracting subsets of that data based on frequently used queries. 

These data marts enhance certain queries by organizing the data according to 

pre-defined needs of certain users. For example, a centralized data warehouse 

might contain a complete collection of all BSA reports, while separate data marts 

contain SARs, CTRs, CMIRs, funds transfer reports, and so on. 

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Source Systems / Input Files Normalize rational warehouse Staging Area

Dependent

data marts

End user access & applications

Hub-Spokep88doc

The figure below represents a hub-and-spoke approach to a funds transfer 

data system. Under this scenario, FinCEN would consolidate data from both 

the funds transfer and the BSA data systems into a single, centralized data 

warehouse. During the data transformation process, the existing reference data 

and business rules can be reused to cleanse the funds transfer data before it is 

loaded into the data warehouse. Depending on the business requirements, the 

system could extract a subset of data from the data warehouse to create data 

marts for answering specific questions. 

BSA Direct

ODS

Centralized

Data

Warehouse

(BSA Data, CBWT Data)

User Access

and

applications

FinCEN

existing

Operatinal

Systems

CBWT

ODS

New CBWT

operstional

Systems

BSA

Data

Marts

CBWT

Data

Marts

ETL

ETL

ETL

ETL

ETL

ETL

Centralized Data Warehouse 

A centralized data warehouse is similar to the hub and spoke architecture except 

that there are no dependent data marts. The data warehouse contains atomic 

level data, some summarized data and logical dimensional views of the data. 

Users perform queries directly on the centralized store of data. The following 

figure illustrates this architecture.
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Source Systems Normalize rational warehouse Staging Area End user access & applications

CentralizedData.pdf

Implementation of a centralized data warehouse requires that FinCEN would 

implement an entirely new system for the collection of all BSA reporting, 

including funds transfer information. The proof-of-concept system developed by 

FinCEN and AUSTRAC implements a centralized architecture.

Whether the funds transfer data system includes dependent data marts or not, 

a centralized data warehouse architecture will entail more up-front investment 

in time and money. FinCEN will need to be able to identify the common data 

elements between the existing BSA data and funds transfer data in order 

to establish the linkage between the two systems so that an integrated and 

consistent view of the data is available to the users. FinCEN must create a new 

data model to represent both BSA and funds transfer data simultaneously. The 

new integrated data model also would require structural changes to the existing 

BSA databases. Depending on the complexity of the changes, it may require 

significant effort to implement. FinCEN would also need to modify and enhance 

the current ETL procedures and reports. Further, FinCEN would need to create 

new business rules to replace the ones currently used or significantly modify 

existing business rules to accommodate the new data. 

Federated Data Warehouse

A federated architecture extends the existing operational systems, data marts, 

and data warehouses that are already in place. A federated architecture 

introduces a “services layer” between the user and the multiple data sources 

available (i.e., current BSA data and cross-border funds transfer data). Based 

on users’ varying business requirements, the system manages the distribution 

of the users’ queries across the multiple data sources, aggregates the results, 

and presents a single result to the user. From the users’ perspectives, there is a 

single data source and the technical management of the query is invisible to the 

user. This process integrates multiple sets of data either logically or physically 

using these common or shared elements, global metadata, distributed queries, 

or other methods. As a result, users conduct queries on the integrated data 

elements, reducing the computational load on the respective systems that house 

the data, and increasing the response time of the system. The separate data 

sets remain available as well for more detailed query and analysis. A federated 

architecture provides a solution for environments that already have a complex, 

existing decision support environment or multiple data sets and do not want to 

create an entirely new environment. 
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Existing Data Warehouses, Data Marts, Legacy Systems

Logical / Physical integration of

common data elements

End user

access and

applications

The figure below depicts a federated database for the funds transfer system. 

With this design, FinCEN would create a new funds transfer data warehouse. 

In this example, the current BSA data continues to reside within a separate 

BSA data warehouse. Each system will maintain its own ETL procedures, 

implementation schedules and data warehouse. However, the working ETL 

procedure logic and tools will apply effectively to the funds transfer system. 

Both systems would apply the same reference data to cleanse the funds transfer 

data to make it consist with the BSA data. Minimum design changes will be 

required for the existing BSA data systems. The implementation schedule 

of this kind of funds transfer system can be flexible and will not impact 

significantly on the existing production systems. The federated environment 

also provides funds transfer system with more choices of the infrastructure 

selection that allows FinCEN to choose the latest and best technology. 

ETL

CBWT

Data

Warehouse

BSA Direct

ODS BSA Data

Warehouse

User Access

and

applications

FinCEN

existing

Operatinal

Systems

CBWT

ODS

New CBWT

operstional

System

BSA

Data

Marts

CBWT

Data

Marts

ETL

ETL

ETL

ETL

ETL

Common

Dimension

FedertedArch-p93.pdf

A federated architecture also provides a strong foundation for distributing the 

computing load and adapting the system to the various needs of different user 

communities. With a federated architecture, FinCEN would be able to deploy 

customized portals designed to serve the needs of different external user groups 

(i.e., regulatory, law enforcement, internal FinCEN users) without the need to 

redesign the system, limit system capabilities to a “lowest common denominator” 

of features, or build a system that is all things to all users. By avoiding “one size 

fits all” architecture, FinCEN will be better able to focus on the particular needs 
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of different user communities. Such an approach also permits more control 

over system changes and facilitates an incremental investment in the system 

development. The initial investment will focus on the data collection and storage 

system, while hardware, bandwidth, and other infrastructure costs that arise as 

user needs develop can be distributed over time.

The keys to the success of a federated architecture lie in the development and 

adherence to a consistent data standard, the use of standardized extracts, a 

robust metadata repository, and toolset to maintain and translate multiple sets 

of data definitions. It is also critical that a common business model be defined 

which will provide the basis for common dimensions. The common dimensions 

represent the dimensions having identical business meaning, structure, 

and data. For example, the “currency” of the data (i.e., its age) is a common 

dimension for both traditional BSA data and funds transfer reports. However, 

the currency of the BSA data is very different from the funds transfer data. The 

funds transfer data may be as little as twenty-four hours old if filed daily, but 

the other BSA data may be as much as two months old when it is first available 

to analysts because the BSA allows filers to submit the data up to 60 days after 

the transactions occurred. The volume of the funds transfer data is many times 

larger than the BSA data. To maintain an acceptable performance level, the 

system might only make three years worth of funds transfer data available 

to users while it offers more than ten years worth of BSA data. FinCEN will 

need a very robust services layer that can query two very large volumes of data 

warehouses and integrate the information on the fly to provide users with a 

consistent view. The system hardware that supports both data sets must be 

substantial so that the response time is acceptable. 

Fortunately, technology continues to evolve. For example, grid computing 

enables the virtualization of distributed computing and data resources such as 

processing, network bandwidth and storage capacity to create a single system 

image, granting users and applications seamless access to vast IT capabilities. 

Grid computing relies upon an open set of standards and protocols — e.g., 

Open Grid Services Architecture (OGSA) — that enable communication across 

heterogeneous, geographically dispersed environments. With grid computing, 

organizations can optimize computing and data resources, pool them for large 

capacity workloads, share them across networks, and enable collaboration.

Many financial services businesses have implemented grid computing technology 

and realized increasing productivity and flexibility in sharing data and 

computing resources. Grid computing technology provides a means to leverage 

FinCEN’s existing investments and infrastructure and to optimize the utilization 

of computing capabilities. 

Lessons Learned Technical Issues – Proof-of-Concept

Beginning in March 2006, FinCEN constructed a proof-of-concept system based 

on an architecture and software employed by AUSTRAC for managing the 
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receipt, storage, analysis, and dissemination of its IFTI reports. The proofof-concept system was, necessarily, a very small-scale version of the system, 

designed to permit FinCEN to test AUSTRAC’s architecture and to determine 

whether a similar approach might fill the needs of FinCEN in the event it 

requires such reporting under the BSA. As noted above, AUSTRAC’s system 

implements a centralized data architecture for the management of IFTI reports 

and the other reporting AUSTRAC collects. AUSTRAC and FinCEN personnel 

modified the system to accommodate SARs, CTRs, and funds transfer data 

from U.S. institutions. The figure below illustrates, at a high level, the general 

architecture of the proof-of-concept system. 

Through this experiment, FinCEN was able to draw the following general 

conclusions about handling cross-border funds transfer data in the U.S. First, 

a cross-border funds transfer data warehouse should make available to the user 

only those data elements that their partner agencies find useful to analysis. 

The data warehouse should separately preserve the entire funds transfer report 

for auditing and advanced analytical purposes. To make the entire funds 

transfer message available to all users will dramatically increase the data load 

and dramatically increase storage requirements. Second, the system should 

distribute data sources for special analytical requirements. In other words, 

depending on the requirements, the system should replicate and store the data 

in a separate environment for particular purposes such as data mining, link 

analysis, or other advanced analysis by specific subsets of users. Third, based 
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on a robust user requirements analysis, the system should integrate multiple 

commercial off-the-shelf (COTS) tools to satisfy users’ needs. The system 

design must reflect that one size does not fit all and therefore should implement 

appropriate tools at the services layer. Fourth, the proposed system should 

integrate COTS products as much as possible. AUSTRAC’s system contains 

mainly custom software developed by in-house IT staff. This solution is viable 

for AUSTRAC because it employs such staff. FinCEN employs a much smaller 

number of in-house technical experts and therefore should consider COTS 

products for ease of maintenance. Last, FinCEN must pay special attention to 

the development of a data load process tailored to high volume reporting. The 

data load method adopted in the AUSTRAC system is not optimized for loading 

the much larger volume that FinCEN anticipates. 
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Appendix I – BSA E-Filing Fact Sheet

What is the BSA E-Filing System?

BSA E-Filing (BSA E-Filing) is the system that supports electronic filing of Bank 

Secrecy Act (BSA) forms (either singly or in batches) by a filing institution to 

the BSA database through a FinCEN secure network. It also allows members 

of filing organizations to send secure messages to FinCEN (and receive 

responses when appropriate). In addition, FinCEN can use BSA E-Filing to 

issue advisories and BSA E-Filing system updates to the BSA E-Filing user 

community.

BSA E-Filing was originally called PACS (PATRIOT Act Communications 

System), because the system was mandated by Section 362 of the USA PATRIOT 

Act. The system was renamed in February 2005.

How does BSA E-Filing Work?

The BSA E-Filing system is hosted on a secure website accessible on the 

Internet. Institutions that file BSA forms with FinCEN use digital certificates 

to access the BSA E-Filing system securely. Designated personnel from a filing 

institution can access BSA E-Filing after they have applied for and received a 

digital certificate from a government-approved certificate authority.

More information about the enrolling in and using BSA E-Filing is available 

at "Should I Use BSA E-Filing?" on the BSA E-Filing website. Step by step 

instructions for enrolling are provided online at Getting Started.

What BSA forms can be filed using BSA E-Filing?

Currently, the forms that can be E-Filed are:

CTR (Currency Transaction Report) 

CTRC (Currency Transaction Report by Casinos) 

SAR (Suspicious Activity Report by Depository Institutions) 

SARC (Suspicious Activity Report by Casinos and Card Clubs) 

SAR MSB (Suspicious Activity Report by Money Services Businesses) 

SAR SF (Suspicious Activity Report by the Securities and Futures 

Industries) 

DEP (Designation of Exempt Person) 

The Money Services Business Registration and other forms will be added 

as they become available.

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What are the advantages of using BSA E-Filing?

BSA E-Filing is cheaper, faster, more accurate, and more secure than paper or 

magnetic media filing. A recent Treasury Inspector General report found BSA 

E-Filing to be an effective mechanism for filing BSA reports. The same report 

concluded that institutions using BSA E-Filing to file reports generally found the 

system easy to use.

Who uses BSA E-Filing?

More than 2,300 users representing 700 institutions actively use the system 

to file BSA forms with FinCEN. Since its implementation in October 2002, 

more than nine million forms have been successfully E-Filed and the numbers 

continue to grow. In fact, institutions file 350,000 to 380,000 forms through BSA 

E-Filing in March 2005.

As of March 2006, approximately 47% of all BSA filings and nearly 40% of the 

critical Suspicious Activity Reports - are now E-Filed. 

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Appendix J – Preliminary Work 

Breakdown Schedule

Task Duration Start Date Finish Date Predecessors

1 Acquisition Strategy and Planning 200 days? October 2, 2006 July 6, 2007

2      Acquisition Planning 15 days October 2, 2006 October 20, 2006

3      Develop Concept and high-level Requirement definitions 15 days October 23, 2006 November 10, 2006 2

4      Develop performance Requirements and Measures  15 days October 23, 2006 November 10, 2006 2

5      Design and develop evaluation criteria 15 days November 13, 2006 December 1, 2006 3,4

6      Develop RFP (SOW) 40 days November 13, 2006 January 5, 2007 3,4

7      Issue RFP 1 day? January 8, 2007 January 8, 2007 6

8 Source Selection 79 days January 9, 2007 April 27, 2007 7

9           Form Source Selection Team 5 days January 9, 2007 January 15, 2007

10           Evaluate Proposals 45 days February 26, 2007 April 27, 2007 9

11      Final Selection 25 days April 30, 2007 June 1, 2007 8

12      Award  25 days June 4, 2007 July 6, 2007 11

13 Project kickoff 1 day? July 9, 2007 July 9, 2007 12

14 Project Management 710 days? July 10, 2007 March 29, 2010 13

15      Project Planning, integration and Control 650 days? October 2, 2007 March 29, 2010

16      Configuration Management 649 days? October 2, 2007 March 26, 2010

17      Quality Assurance 649 days? October 2, 2007 March 26, 2010

18      Risk Management 586 days? December 28, 2007 March 26, 2010

19      Security Management 649 days? October 2, 2007 March 26, 2010

20 Strategy and Architecture 199 days July 10, 2007 April 11, 2008

21           System Development Methodology  10 days July 10, 2007 July 23, 2007

22 Architecture 199 days July 10, 2007 April 11, 2008

23                Phase one 45 days July 10, 2007 September 10, 2007

24                Phase two 30 days March 3, 2008 April 11, 2008

25 Infrastructure Implementation 289 days? July 10, 2007 August 15, 2008

26           Planning 30 days? July 10, 2007 August 20, 2007

27           Acquisition 45 days July 24, 2007 September 24, 2007

28 Build 289 days? July 10, 2007 August 15, 2008

29                Development, Test, model office 10 days July 10, 2007 July 23, 2007

30                 Primary site - HW/SW 100 days? July 10, 2007 November 26, 2007

31                Secondary site- SW/HW 75 days? May 5, 2008 August 15, 2008

32 Phase one - SWIFT message submission 320 days? July 10, 2007 September 29, 2008 13

33 Data Warehouse 230 days? July 10, 2007 May 26, 2008

34           Planning  35 days July 10, 2007 August 27, 2007

35           Requirement Analysis 45 days August 28, 2007 October 29, 2007 34

36 System Design and Development 120 days? October 30, 2007 April 14, 2008

37                CBWT Data Warehouse 120 days? October 30, 2007 April 14, 2008 35

38                Query and Reporting  120 days October 30, 2007 April 14, 2008 35

39           Unit Testing 30 days April 15, 2008 May 26, 2008 38

40 CBWT Application 200 days July 10, 2007 April 14, 2008

41           Planning  30 days July 10, 2007 August 20, 2007

42           Requirement Analysis  45 days August 21, 2007 October 22, 2007 41

43           System Design and Development 100 days October 23, 2007 March 10, 2008 42

44           Unit Testing 25 days March 11, 2008 April 14, 2008 43

45 System Test and Integration 70 days April 15, 2008 July 21, 2008

46           Integrate DBWT DW with CBWT application 30 days May 27, 2008 July 7, 2008 39,44

47           Integrate CBWT DW with BSADW 40 days May 27, 2008 July 21, 2008 39

48           Integrate CBWT with Secure Outreach 40 days May 27, 2008 July 21, 2008 39,44

49           Integrate CBWT with BSA E-Filing 45 days April 15, 2008 June 16, 2008 44

50      Roll out and Deploy pilot  30 days July 22, 2008 September 1, 2008 45

51      Evaluate Pilot 20 days September 2, 2008 September 29, 2008 50

52 Phase two - non-SWIFT message submission 541 days? March 3, 2008 March 29, 2010

53 Data Warehouse 275 days? March 3, 2008 March 20, 2009

54           Planning 30 days March 3, 2008 April 11, 2008

55           Requirement Analysis  75 days April 14, 2008 July 25, 2008 54

56 Design and Development 120 days? July 28, 2008 January 9, 2009

57                CBWT Data Warehouse 120 days? July 28, 2008 January 9, 2009 55

58                Query and Reporting  120 days July 28, 2008 January 9, 2009 55

59                Portal Design and Developemnt 120 days July 28, 2008 January 9, 2009 55

60           Unit Testing  50 days January 12, 2009 March 20, 2009 59

61 CBWT Application 260 days March 3, 2008 February 27, 2009

62           Planning 30 days March 3, 2008 April 11, 2008

63           Requirement Analysis  60 days April 14, 2008 July 4, 2008 62

64           Design and Development  120 days July 7, 2008 December 19, 2008 63

65           Unit Testing 50 days December 22, 2008 February 27, 2009 64

66 System Test and Integration 75 days March 2, 2009 June 12, 2009

67           Integrate CBWT DW with CBWT application 60 days March 23, 2009 June 12, 2009 60,65

68           Integrate CBWT DW with BSADW 60 days March 23, 2009 June 12, 2009 60

69           Integrate CBWT with Secure Outreach 60 days March 23, 2009 June 12, 2009 60

70           Integrate CBWT with BSA E-Filing 75 days March 2, 2009 June 12, 2009 65

71      User Acceptance Test 60 days? June 15, 2009 September 4, 2009 66

72      Production Readiness Test 60 days September 7, 2009 November 27, 2009 71

73 Roll-out and Deployment 271 days March 16, 2009 March 29, 2010

74           Training 120 days March 16, 2009 August 28, 2009

75           Help Desk 206 days June 15, 2009 March 29, 2010 66

76           Roll-Out 86 days November 30, 2009 March 29, 2010 72

77 C & A 111 days June 1, 2009 November 2, 2009

78 Initiation Phase 25 days June 1, 2009 July 3, 2009

79           Preparation 5 days June 1, 2009 June 5, 2009

80           Notification and Resource Identification 5 days June 8, 2009 June 12, 2009 79

81           System Security Plan Analysis, Update and Acceptance 20 days June 8, 2009 July 3, 2009 79

82 Security Certification Phase 60 days July 6, 2009 September 25, 2009 78

83           ST &E Testing 15 days July 6, 2009 July 24, 2009

84           ST & E Report Document 15 days July 27, 2009 August 14, 2009 83

85 Security Certification Documentation 30 days August 17, 2009 September 25, 2009 84

86                Risk and Security Assessment Document 15 days August 17, 2009 September 4, 2009

87                Configuration Management Plan (CMP) Document 15 days September 7, 2009 September 25, 2009 86

88                Contingency Plan Document 15 days September 7, 2009 September 25, 2009 86

89                Incident Response Plan (IRP) Document 15 days September 7, 2009 September 25, 2009 86

90                Security Awareness and Training Plan Document 15 days September 7, 2009 September 25, 2009 86

91 Security Accreditation Phase 25 days September 28, 2009 October 30, 2009 82

92           C & A results briefing 10 days September 28, 2009 October 9, 2009

93           Security Accreditation Package 15 days October 12, 2009 October 30, 2009 92

94      Compete C & A 1 day November 2, 2009 November 2, 2009 93

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Appendix K – Rough Order of Magnitude 

Cost Estimates

Summary

Acquisition Phase One Phase Two Sub-Totals

Acquisition Cost

FTE Cost $347,710 $347,710

Contract Support $770,000 $770,000

SubTotal $1,117,710 $1,117,710

Hardware

Server Hardware $1,466,397 $1,274,397 $2,740,794

Development Hardware $113,995 $113,995

Security $50,000 $50,000 $100,000

SubTotal $1,630,392 $1,324,397 $2,954,789

Software & COTS

Development Software $5,427 $5,427

RDBMS $582,146 $575,720 $1,157,866

ETL $458,314 $458,314

OLAP, Reporting $450,000 $450,000 $900,000

CM, QA, Test Manager $76,950 $76,950

Firewall $76,928 $76,928 $153,856

SAN Software $25,250 $25,250 $50,500

Reference Data $400,000 $400,000

Entity Extraction Tool $1,000,000 $1,000,000

Others $100,000 $100,000 $200,000

SubTotal $3,175,015 $1,227,898 $4,402,913

Maintenance

Hardware $67,786 $135,572 $203,358

Software & COTS $622,583 $632,333 $1,254,916

SubTotal $690,369 $767,905 $1,458,274

Vendor Support

Hardware, Servers $100,000 $100,000 $200,000

Software, Tools $300,000 $300,000 $600,000

SubTotal $400,000 $400,000 $800,000

Contract Service & Support $5,374,797 $12,012,392 $17,387,189

IV & V $500,000 $800,000 $1,300,000

C & A Contract Support $300,000 $300,000

FinCEN FTE $754,110 $933,660 $1,687,770

Web Hosting $1,200,000 $1,200,000

Grand Totals $1,117,710 $12,524,683 $18,966,252 $32,608,645
Financial Crimes Enforcement Network

Feasibility of a Cross-Border Electronic Funds Transfer Reporting System under the Bank Secrecy Act

160 U.S. Department of the Treasury Job Title Unit Price Labor Cost Labor Cost Labor Cost Program  $179.85 560 $105,752 920 $182,422 1,480 $288,174 Project  $162.66 2,520 $430,398 3,120 $559,518 5,640 $989,916 Lead  $280.00 2,520 $740,880 2,940 $907,578 5,460 $1,648,458 DBA/Data  $175.00 2,520 $463,050 2,840 $547,943 5,360 $1,010,993 Systems  $78.10 2,300 $188,612 3,340 $287,592 5,640 $476,203 Lead  $133.37 2,200 $308,085 3,260 $479,352 5,460 $787,436 Data  $175.00 2,200 $404,250 2,960 $571,095 5,160 $975,345 Web  $135.32 900 $127,877 3,960 $590,794 4,860 $718,671 Web  $101.84 900 $96,239 3,580 $401,957 4,480 $498,196 Web  $101.84 900 $96,239 3,580 $401,957 4,480 $498,196 EAI/ETL  $148.20 1,200 $186,732 3,960 $647,026 5,160 $833,758 EAI/ETL  $110.99 1,200 $139,847 3,580 $438,072 4,780 $577,919

EAI/ETL  $87.39 1,200 $110,111 3,580 $344,924 4,780 $455,035EAI/ETL  $87.39 1,200 $110,111 3,580 $344,924 4,780 $455,035Business  $125.00 900 $118,125 3,980 $548,494 4,880 $666,619Business  $96.75 900 $91,429 3,880 $413,867 4,780 $505,296Business  $92.48 900 $87,394 3,880 $395,602 4,780 $482,995Software  $85.65 2,520 $226,630 2,840 $268,179 5,360 $494,809Report  $99.30 1,200 $125,118 3,910 $428,060 5,110 $553,178Report  $73.85 1,200 $93,051 3,710 $302,067 4,910 $395,118Usability  $73.85

0 $0 160 $13,027 160 $13,027

Operations  $85.65 1,600 $143,892 3,280 $309,728 4,880 $453,620Operations  $85.03 1,600 $142,850 3,280 $307,485 4,880 $450,336Test  $72.43 900 $68,446 3,000 $239,562 3,900 $308,009Tester 1 $70.31 900 $66,443 2,800 $217,047 3,700 $283,490Tester 2 $70.31 900 $66,443 2,500 $193,792 3,400 $260,235Tester 3 $70.31 900 $66,443 2,500 $193,792 3,400 $260,235Network  $65.39 1,800 $123,587 3,260 $235,021 5,060 $358,609CM Lead $90.01 1,400 $132,315 2,600 $258,014 4,000 $390,328SQA Lead $90.01 1,400 $132,315 2,600 $258,014 4,000 $390,328Security  $98.07 200 $20,595 1,200 $129,747 1,400 $150,341Help Desk  $74.07 400 $31,109 1,680 $137,192 2,080 $168,302Help Desk  $59.89 400 $25,154 1,680 $110,928 2,080 $136,082Tech Writer $94.21 600 $59,352 1,780 $184,882 2,380 $244,235Training  $54.67 400 $22,961 1,350 $81,369 1,750 $104,331Training  $54.67 400 $22,961 1,350 $81,369 1,750 $104,331Totals 43,740 $5,374,797 102,420 $12,012,392 146,160 $17,387,189

Phase One 1 Phase Two 

2 Total

Job Title Unit Price Labor Cost Labor Cost Labor Cost

Program  $179.85 560 $105,752 920 $182,422 1,480 $288,174Project  $162.66 2,520 $430,398 3,120 $559,518 5,640 $989,916Lead  $280.00 2,520 $740,880 2,940 $907,578 5,460 $1,648,458DBA/Data  $175.00 2,520 $463,050 2,840 $547,943 5,360 $1,010,993Systems  $78.10 2,300 $188,612 3,340 $287,592 5,640 $476,203Lead  $133.37 2,200 $308,085 3,260 $479,352 5,460 $787,436Data  $175.00 2,200 $404,250 2,960 $571,095 5,160 $975,345Web  $135.32 900 $127,877 3,960 $590,794 4,860 $718,671Web  $101.84 900 $96,239 3,580 $401,957 4,480 $498,196Web  $101.84 900 $96,239 3,580 $401,957 4,480 $498,196EAI/ETL  $148.20 1,200 $186,732 3,960 $647,026 5,160 $833,758EAI/ETL  $110.99 1,200 $139,847 3,580 $438,072 4,780 $577,919EAI/ETL  $87.39 1,200 $110,111 3,580 $344,924 4,780 $455,035EAI/ETL  $87.39 1,200 $110,111 3,580 $344,924 4,780 $455,035Business  $125.00 900 $118,125 3,980 $548,494 4,880 $666,619Business  $96.75 900 $91,429 3,880 $413,867 4,780 $505,296Business  $92.48 900 $87,394 3,880 $395,602 4,780 $482,995Software  $85.65 2,520 $226,630 2,840 $268,179 5,360 $494,809Report  $99.30 1,200 $125,118 3,910 $428,060 5,110 $553,178Report  $73.85 1,200 $93,051 3,710 $302,067 4,910 $395,118Usability  $73.85

0 $0 160 $13,027 160 $13,027

Operations  $85.65 1,600 $143,892 3,280 $309,728 4,880 $453,620Operations  $85.03 1,600 $142,850 3,280 $307,485 4,880 $450,336Test  $72.43 900 $68,446 3,000 $239,562 3,900 $308,009Tester 1 $70.31 900 $66,443 2,800 $217,047 3,700 $283,490Tester 2 $70.31 900 $66,443 2,500 $193,792 3,400 $260,235Tester 3 $70.31 900 $66,443 2,500 $193,792 3,400 $260,235Network  $65.39 1,800 $123,587 3,260 $235,021 5,060 $358,609CM Lead $90.01 1,400 $132,315 2,600 $258,014 4,000 $390,328SQA Lead $90.01 1,400 $132,315 2,600 $258,014 4,000 $390,328Security  $98.07 200 $20,595 1,200 $129,747 1,400 $150,341Help Desk  $74.07 400 $31,109 1,680 $137,192 2,080 $168,302Help Desk  $59.89 400 $25,154 1,680 $110,928 2,080 $136,082Tech Writer $94.21 600 $59,352 1,780 $184,882 2,380 $244,235Training  $54.67 400 $22,961 1,350 $81,369 1,750 $104,331Training  $54.67 400 $22,961 1,350 $81,369 1,750 $104,331Totals 43,740 $5,374,797 102,420 $12,012,392 146,160 $17,387,189

Phase One 1 Phase Two 

2 Total

Labor Cost by Phase
Financial Crimes Enforcement Network

Feasibility of a Cross-Border Electronic Funds Transfer Reporting System under the Bank Secrecy Act

U.S. Department of the Treasury 161 Job Title Unit Price Hours Cost Hours Cost Hours Cost Hours Cost Hours Cost Program  $179.85 120 $21,582 480 $90,644 480 $95,177 400 $83,280 1,480 $290,683 Project  $162.66 480 $78,077 2,080 $355,249 2,080 $373,012 1,000 $188,299 5,640 $994,637 Lead  $280.00 480 $134,400 2,080 $611,520 2,080 $642,096 820 $265,791 5,460 $1,653,807 DBA/Data  $175.00 432 $75,600 2,080 $382,200 2,080 $401,310 768 $155,585 5,360 $1,014,695 Systems  $78.10 480 $37,488 2,080 $170,570 2,080 $179,099 1,000 $90,411 5,640 $477,568 Lead  $133.37 480 $64,018 2,080 $291,280 2,080 $305,844 820 $126,602 5,460 $787,744 Data  $175.00 480 $84,000 2,080 $382,200 2,080 $401,310 520 $105,344 5,160 $972,854 Web  $135.32 288 $38,972 2,080 $295,539 2,080 $310,316 412 $64,540 4,860 $709,367 Web  $101.84 288 $29,330 2,080 $222,419 1,800 $202,101 312 $36,782 4,480 $490,632 Web  $101.84 288 $29,330 2,080 $222,419 1,800 $202,101 312 $36,782 4,480 $490,632 EAI/ETL  $148.20 384 $56,909 2,080 $323,669 2,080 $339,852 616 $105,681 5,160 $826,111 EAI/ETL  $110.99 384 $42,620 2,080 $242,402 1,900 $232,496 416 $53,450 4,780 $570,968 EAI/ETL  $87.39 384 $33,558 2,080 $190,860 1,900 $183,060 416 $42,085 4,780 $449,562 EAI/ETL  $87.39 384 $33,558 2,080 $190,860 1,900 $183,060 416 $42,085 4,780 $449,562 Business  $125.00 384 $48,000 2,080 $273,000 1,900 $261,844 516 $74,667 4,880 $657,511 Business  $96.75 384 $37,152 2,080 $211,302 1,900 $202,667 516 $57,792 4,880 $508,913 Business  $92.48 384 $35,512 2,080 $201,976 1,900 $193,722 416 $44,536 4,780 $475,747 Software  $85.65 480 $41,112 2,080 $187,060 2,080 $196,413 720 $71,388 5,360 $495,973 Report  $99.30 360 $35,748 2,080 $216,871 2,080 $227,715 590 $67,822 5,110 $548,156 Report  $73.85 360 $26,586 2,080 $161,288 2,080 $169,353 390 $33,341 4,910 $390,569 Usability  $73.85 0 $0 80 $6,203 80 $6,514 0 $0 160 $12,717 Operations  $85.65 350 $29,978 1,600 $143,892 2,080 $196,413 850 $84,278 4,880 $454,560 Operations  $85.03 350 $29,761 1,600 $142,850 2,080 $194,991 850 $83,668 4,880 $451,270 Test  $72.43 96 $6,953 1,600 $121,682 2,000 $159,708 204 $17,105 3,900 $305,449 Tester 1 $70.31 0 $0 1,600 $118,121 1,800 $139,530 300 $24,418 3,700 $282,069 Tester 2 $70.31 0 $0 1,600 $118,121 1,800 $139,530 0 $0 3,400 $257,651 Tester 3 $70.31 0 $0 1,600 $118,121 1,800 $139,530 0 $0 3,400 $257,651 Network  $65.39 336 $21,971 1,800 $123,587 2,080 $149,952 844 $63,888 5,060 $359,399 CM Lead $90.01 336 $30,243 1,600 $151,217 1,600 $158,778 464 $48,348 4,000 $388,586 SQA Lead $90.01 336 $30,243 1,600 $151,217 1,600 $158,778 464 $48,348 4,000 $388,586 Security  $98.07 48 $4,707 400 $41,189 800 $86,498 152 $17,256 1,400 $149,651 Help Desk  $74.07 0 $0 444 $34,531 800 $65,330 480 $41,158 1,724 $141,019 Help Desk  $59.89 0 $0 800 $50,308 800 $52,823 480 $33,278 2,080 $136,409 Tech Writer $94.21 144 $13,566 1,000 $98,921 1,000 $103,867 236 $25,738 2,380 $242,091 Training  $54.67 0 $0 550 $31,572 1,000 $60,274 200 $12,657 1,750 $104,503 Training  $54.67 0 $0 550 $31,572 1,000 $60,274 200 $12,657 1,750 $104,503 Totals 9,700 $1,150,974 58,424 $6,706,432 60,680 $7,175,336 17,100 $2,259,059 145,904 $17,291,802 Total Fiscal Year One Fiscal Year Two Fiscal Year Three Fiscal Year Four 

Labor Cost by Fiscal Year
Financial Crimes Enforcement Network

Feasibility of a Cross-Border Electronic Funds Transfer Reporting System under the Bank Secrecy Act

162 U.S. Department of the Treasury Unit Price Hours Cost Hours Cost Hours Cost Hours Cost Hours Cost $179.85 300 $53,955 480 $90,644 480 $95,177 220 $45,804 1,480 $285,580 $162.66 1,000 $162,660 2,080 $355,249 2,080 $373,012 480 $90,384 5,640 $981,305 $280.00 1,000 $280,000 2,080 $611,520 2,080 $642,096 300 $97,241 5,460 $1,630,857 $175.00 900 $157,500 2,080 $382,200 2,080 $401,310 300 $60,775 5,360 $1,001,785 $78.10 1,000 $78,100 2,080 $170,570 2,080 $179,099 480 $43,397 5,640 $471,166 $133.37 1,000 $133,370 2,080 $291,280 2,080 $305,844 300 $46,318 5,460 $776,812 $175.00 1,000 $175,000 2,080 $382,200 2,080 $401,310

0 $0 5,160 $958,510

$135.32 600 $81,192 2,080 $295,539 2,080 $310,316 100 $15,665 4,860 $702,712$101.84 600 $61,104 2,080 $222,419 1,800 $202,101

0 $0 4,480 $485,624

$101.84 600 $61,104 2,080 $222,419 1,800 $202,101

0 $0 4,480 $485,624

$148.20 800 $118,560 2,080 $323,669 2,080 $339,852 200 $34,312 5,160 $816,393$110.99 800 $88,792 2,080 $242,402 1,900 $232,496

0 $0 4,780 $563,690

$87.39 800 $69,912 2,080 $190,860 1,900 $183,060

0 $0 4,780 $443,832

$87.39 800 $69,912 2,080 $190,860 1,900 $183,060

0 $0 4,780 $443,832

$125.00 800 $100,000 2,080 $273,000 1,900 $261,844 100 $14,470 4,880 $649,314

$96.75 800 $77,400 2,080 $211,302 1,900 $202,667 100 $11,200 4,880 $502,569$92.48 800 $73,984 2,080 $201,976 1,900 $193,722

0 $0 4,780 $469,683

$85.65 1,000 $85,650 2,080 $187,060 2,080 $196,413 200 $19,830 5,360 $488,952$99.30 750 $74,475 2,080 $216,871 2,080 $227,715 200 $22,990 5,110 $542,051$73.85 750 $55,388 2,080 $161,288 2,080 $169,353

0 $0 4,910 $386,029

$73.85

0 $0 80 $6,203 80 $6,514

0 $0 160 $12,717

$85.65 720 $61,668 1,600 $143,892 2,080 $196,413 480 $47,592 4,880 $449,565$85.03 720 $61,222 1,600 $142,850 2,080 $194,991 480 $47,248 4,880 $446,311$72.43 200 $14,486 1,400 $106,472 2,000 $159,708 300 $25,154 3,900 $305,820$70.31 200 $14,062 1,400 $103,356 1,800 $139,530 300 $24,418 3,700 $281,366$70.31 200 $14,062 1,400 $103,356 1,800 $139,530

0 $0 3,400 $256,948

$70.31 200 $14,062 1,400 $103,356 1,800 $139,530

0 $0 3,400 $256,948

$65.39 700 $45,773 1,800 $123,587 2,080 $149,952 480 $36,335 5,060 $355,647$90.01 700 $63,007 1,600 $151,217 1,600 $158,778 100 $10,420 4,000 $383,421$90.01 700 $63,007 1,600 $151,217 1,600 $158,778 100 $10,420 4,000 $383,421$98.07 100 $9,807 400 $41,189 800 $86,498 100 $11,353 1,400 $148,847$74.07

0 $0 800 $62,219 800 $65,330 480 $41,158 2,080 $168,706

$59.89

0 $0 800 $50,308 800 $52,823 480 $33,278 2,080 $136,409

$94.21 300 $28,263 1,000 $98,921 1,000 $103,867 80 $8,725 2,380 $239,775$54.67 150 $8,201 400 $22,961 1,000 $60,274 200 $12,657 1,750 $104,093$54.67 150 $8,201 400 $22,961 1,000 $60,274 200 $12,657 1,750 $104,093

21,140 $2,463,877 57,680 $6,657,393 60,680 $7,175,336 6,760 $823,801 146,260 $17,120,407

Total Year 0ne 1 Year Two 2 Year Three 3 Year Four 4

Unit Price Hours Cost Hours Cost Hours Cost Hours Cost Hours Cost

$179.85 300 $53,955 480 $90,644 480 $95,177 220 $45,804 1,480 $285,580$162.66 1,000 $162,660 2,080 $355,249 2,080 $373,012 480 $90,384 5,640 $981,305$280.00 1,000 $280,000 2,080 $611,520 2,080 $642,096 300 $97,241 5,460 $1,630,857$175.00 900 $157,500 2,080 $382,200 2,080 $401,310 300 $60,775 5,360 $1,001,785

$78.10 1,000 $78,100 2,080 $170,570 2,080 $179,099 480 $43,397 5,640 $471,166

$133.37 1,000 $133,370 2,080 $291,280 2,080 $305,844 300 $46,318 5,460 $776,812$175.00 1,000 $175,000 2,080 $382,200 2,080 $401,310

0 $0 5,160 $958,510

$135.32 600 $81,192 2,080 $295,539 2,080 $310,316 100 $15,665 4,860 $702,712$101.84 600 $61,104 2,080 $222,419 1,800 $202,101

0 $0 4,480 $485,624

$101.84 600 $61,104 2,080 $222,419 1,800 $202,101

0 $0 4,480 $485,624

$148.20 800 $118,560 2,080 $323,669 2,080 $339,852 200 $34,312 5,160 $816,393$110.99 800 $88,792 2,080 $242,402 1,900 $232,496

0 $0 4,780 $563,690

$87.39 800 $69,912 2,080 $190,860 1,900 $183,060

0 $0 4,780 $443,832

$87.39 800 $69,912 2,080 $190,860 1,900 $183,060

0 $0 4,780 $443,832

$125.00 800 $100,000 2,080 $273,000 1,900 $261,844 100 $14,470 4,880 $649,314

$96.75 800 $77,400 2,080 $211,302 1,900 $202,667 100 $11,200 4,880 $502,569$92.48 800 $73,984 2,080 $201,976 1,900 $193,722

0 $0 4,780 $469,683

$85.65 1,000 $85,650 2,080 $187,060 2,080 $196,413 200 $19,830 5,360 $488,952$99.30 750 $74,475 2,080 $216,871 2,080 $227,715 200 $22,990 5,110 $542,051$73.85 750 $55,388 2,080 $161,288 2,080 $169,353

0 $0 4,910 $386,029

$73.85

0 $0 80 $6,203 80 $6,514

0 $0 160 $12,717

$85.65 720 $61,668 1,600 $143,892 2,080 $196,413 480 $47,592 4,880 $449,565$85.03 720 $61,222 1,600 $142,850 2,080 $194,991 480 $47,248 4,880 $446,311$72.43 200 $14,486 1,400 $106,472 2,000 $159,708 300 $25,154 3,900 $305,820$70.31 200 $14,062 1,400 $103,356 1,800 $139,530 300 $24,418 3,700 $281,366$70.31 200 $14,062 1,400 $103,356 1,800 $139,530

0 $0 3,400 $256,948

$70.31 200 $14,062 1,400 $103,356 1,800 $139,530

0 $0 3,400 $256,948

$65.39 700 $45,773 1,800 $123,587 2,080 $149,952 480 $36,335 5,060 $355,647$90.01 700 $63,007 1,600 $151,217 1,600 $158,778 100 $10,420 4,000 $383,421$90.01 700 $63,007 1,600 $151,217 1,600 $158,778 100 $10,420 4,000 $383,421$98.07 100 $9,807 400 $41,189 800 $86,498 100 $11,353 1,400 $148,847$74.07

0 $0 800 $62,219 800 $65,330 480 $41,158 2,080 $168,706

$59.89

0 $0 800 $50,308 800 $52,823 480 $33,278 2,080 $136,409

$94.21 300 $28,263 1,000 $98,921 1,000 $103,867 80 $8,725 2,380 $239,775$54.67 150 $8,201 400 $22,961 1,000 $60,274 200 $12,657 1,750 $104,093$54.67 150 $8,201 400 $22,961 1,000 $60,274 200 $12,657 1,750 $104,093

21,140 $2,463,877 57,680 $6,657,393 60,680 $7,175,336 6,760 $823,801 146,260 $17,120,407

Total Year 0ne 1 Year Two 2 Year Three 3 Year Four 4

Labor Cost by Calendar Year
Financial Crimes Enforcement Network

Feasibility of a Cross-Border Electronic Funds Transfer Reporting System under the Bank Secrecy Act

U.S. Department of the Treasury 163 Acquisition Costs Salary Hourly Costs Base Fully Loaded Work Hours Fully Loaded Base Full Loaded GS-14 Daily Rate: $91,407 32.00% $179,942.00 $95.71 $57.81 Hours 2,087 1,880 Full Loaded GS-15 Daily Rate: $107,521 $202,767.00 $107.85 $68.01 Acquisition Planning Hours FTE Cost Contract Administration Grand Totals GS-15 160 $17,257 $17,257 GS-14

2 80 $15,314 $15,314

 SubTotal $32,571 $32,571Develop SOW

GS-15 320 $34,514 $34,514GS-14

2 320 $61,257 $61,257

Contract Support $425,000 $425,000

 SubTotal $95,770 $425,000 $520,770Source Selection

GS-15

3 320 $103,541 $103,541

GS-14

3 320 $91,885 $91,885

Contract Support $230,000 $230,000

 SubTotal $195,426 $230,000 $425,426Award

GS-15 80 $8,628 $8,628GS-14

2 80 $15,314 $15,314

Contract Support $115,000 $115,000

 SubTotal $23,943 $115,000 $138,943Totals $347,710 $770,000 $1,117,710
Financial Crimes Enforcement Network

Feasibility of a Cross-Border Electronic Funds Transfer Reporting System under the Bank Secrecy Act

164 U.S. Department of the Treasury
U.S. Department of the Treasury Financial Crimes Enforcement Network 165

Appendix L – Project Management and 

Information Technology Processes

FinCEN is an agency whose mission is dependent on the effective collection, dissemination, and meaningful analysis of large quantities of data. As such, 

FinCEN must manage its information technology effectively in order to ensure 

the most effective use of the data. To properly position itself to implement 

and deploy a system like the one contemplated in the Intelligence Reform and 

Terrorism Prevention Act of 2004, FinCEN would have to: (1) fully define its 

overall enterprise architecture (a blueprint for its current and future information 

technology environment); (2) employ a life cycle management technique to 

govern all aspects of individual information technology projects; (3) establish 

clear procedures for a technical investment review board to ensure management 

control of information technology projects and ensure consistency of such 

projects with both its overall enterprise architecture and OMB’s requirements 

for sound capital planning investment control.

Enterprise Architecture Issues

Whether or not FinCEN implements a cross-border funds transfer reporting 

system, FinCEN will continue to develop a comprehensive enterprise 

architecture, or a blueprint for its current and future technology environment. 

The enterprise architecture will include documentation of FinCEN’s 

information technology development methodology, in order to ensure that every 

project within FinCEN is managed according to the same set of guidelines. 

Implementation of an enterprise architecture significantly minimizes the risk of 

investing in duplicative or poorly integrated technology.

Under Treasury Department guidance, FinCEN is currently completing its 

enterprise architecture. The final form of FinCEN’s enterprise architecture 

must provide the basis for the final decisions FinCEN makes in developing the 

cross border electronic funds transfer system. 

FinCEN began this effort by completing the “As Is” phase of the Enterprise 

Architecture in 2003. According to the Treasury Enterprise Architecture 

Framework (TEAF), Enterprise Architecture is “a strategic information asset 

base, which defines the agency’s mission and business activities supporting 

the mission, the information necessary for agency operations, the technologies 

necessary to support operations and the transitional processes necessary for 

implementing new technologies in response to changing business needs. An 

enterprise architecture is an integrated model or representation.” 
Financial Crimes Enforcement Network

Feasibility of a Cross-Border Electronic Funds Transfer Reporting System under the Bank Secrecy Act

166 U.S. Department of the Treasury

FinCEN recognizes this as stated in the “As Is” Enterprise Architecture 

documentation: “Data is a crucial FinCEN resource. It has real and measurable 

value; and does not belong to a particular business unit or individual. Data 

must be carefully managed to ensure it is accurate, current, available, and 

properly protected across FinCEN functions and organization and with 

supported external organizations. An enterprise data architecture is needed to 

ensure the information ownership is vested in FinCEN as a whole.”

Life Cycle Management Policy

A life cycle management policy governs all aspects of an information technology 

project, including planning, acquisition, development, testing, operations, 

and maintenance. As a result, a life cycle management policy provides the 

framework for standardized, repeatable, and sustainable processes and best 

practices within the agency for developing information technology systems. 

Implementation of such a policy also enhances guidance for information 

technology projects, leverages existing technology, builds institutional 

knowledge, and ensures that development is consistent with industry- and 

government-wide best practices.

A life cycle management policy defines phases of the life cycle through which 

project managers seek senior management review and approval for each 

progressive step in the development and deployment of a project. This approach 

provides a framework for ensuring compliance of a given project with the overall 

enterprise architecture of the agency. The management review at the various 

stages is based on detailed analysis of the steps taken to accomplish a specific 

phase and the impact those steps have on the project and the overall information 

technology environment. The need to obtain management approval necessitates 

the development of detailed documentation throughout the progressive stages 

of a project. Life cycle management also ensures that management oversight is 

applied at important junctures in the progress of a technology project and that 

agency management adequately supports the project.

FinCEN includes within its life cycle management policy each of the steps 

required by the Privacy Act, FISMA, the E-Government Act of 2002, and OMB 

Circular A-11,85 including (1) publication of notice of the development of new 

systems of records; (2) risk assessment to identify potential vulnerabilities 

in the planned system architecture and development of countermeasures; (3) 

development of a security plan for the system; (4) certification and accreditation 

by management; (5) a response and contingency plan for any compromise of the 

security or operation of the system; (6) regular testing and evaluation of the 

system during development and throughout the life of the system; and (7) steps 

taken to ensure the quality and accuracy of the data contained in the system. 

85 See http://www.whitehouse.gov/omb/circulars/a11/2002/may03_memo76.pdf
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Technical Investment Review Board

In 2005, FinCEN established its Technical Investment Review Board in order 

to meet the demands of managing its IT investment portfolio and providing a 

concentrated level of executive oversight for a growing array of IT management 

issues. A technical investment review board functions as the management 

review and approval mechanism at identified phases of an information 

technology project. At each phase of the project, the project manager prepares 

documentation related to the project development and presents the relevant 

information to the board. Review by the board ensures that the project is 

progressing consistently with the enterprise architecture established by the 

agency and life cycle management policy. In addition, the close review by 

management within the agency ensures that the project receives adequate 

support from a fully informed management structure.

Quality Assurance/Risk Management

All IT projects, regardless of size or scope, entail some level of risk. The key to 

effective project management is to properly identify and mitigate those risks 

that threaten the successful outcome of the project. An essential tool in this 

aspect of an IT project is the risk management plan, a document that establishes 

the procedures employed to manage risk at all stages of a project. A welldeveloped risk management plan documents the standard approach the agency 

takes to risk identification and management and the roles and responsibilities 

of the members of the project team and contractors. A risk management plan 

also provides for the tracking and documentation of risks and contingency plans 

throughout the life of the project. 

The project manager is ultimately responsible for reviewing the identified risks 

and managing the overall response. 

Project Management

Project Management Team 

To implement the proposed reporting system, FinCEN would establish a project 

management team specifically dedicated to the development and implementation 

of this project. A well functioning project management team can significantly 

reduce the risks that threaten successful implementation of an information 

technology project. The project management team should be directly responsible 

for all program execution tasks, including: (1) cost, schedule, and performance 

oversight; (2) life cycle project reviews; (3) award fee evaluations; (4) primary 

review and acceptance of contractor documentation; (5) requirements analysis 

and risk management; and (6) project budget and financial management.

A project management team must be fully staffed with sufficiently skilled 

employees, stable, and capable of monitoring and managing the project on a 

daily basis. The objective in staffing the project management office should be 
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to form an integrated team of subject matter experts to maximize the oversight 

of the project. The staff of the project management team should be dedicated 

entirely to the management of this particular project and insulated from other 

duties that might detract from the time and attention they can give to the effort. 

The project management team should be comprised of the project manager, 

administrative support, systems engineers including a database administrator 

and network engineer, technical assistance personnel including security experts, 

budget personnel, a government contracting specialist, and subject matter 

experts from within FinCEN or from other government agencies and contractors. 

It is critical that the project management team have stable leadership. The 

project manager must have sufficient experience, training, and certification in 

project management.

Project Management Office

FinCEN is currently working to establish an umbrella Project Management 

Office (PMO) within the Bureau. We have prepared an internal preliminary 

assessment report of the Strategic Project Office with Plan of Action and 

Milestones (POA &M) with the goal of implementing the Office in fiscal year 

2007. The concept proposes to centralize project management throughout the 

bureau. FinCEN’s PMO will control and oversee projects and initiatives as well 

as monitor their success.

We also have commenced initial recruitment efforts to staff the PMO in the 

fourth quarter of fiscal year 2006. The Senior Project Management Officer 

will provide guidance and oversight to all projects within FinCEN. The 

Senior Project Management Officer will possess experience in government 

programs, training in project management principles and certification in project 

management. A Contract Consultant will give project support to establish the 

PMO and prepare a report with a detailed action plan and supporting milestones 

to achieve implementation beginning September 30, 2006. Short-term initiatives 

for the PMO will afford existing staff Basic Project Management training. 

The outline of the potential Strategic PMO will encompass a team support 

structure of:

PMO Manager/Director (Assistant Director)

Program Manager (groups of projects)

Project Manager

Project Administrator

Project Scheduler

•

•

•

•

•
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The PMO will provide a structure to standardize project management practices, 

facilitate IT project portfolio management, provide project planning tools and 

methods, and perform review and analysis of projects. The PMO can incorporate 

a view of all projects and help manage cross project resources and dependencies. 

Additionally, since FinCEN has engaged external service providers to outsource 

most of its application development and operations and maintenance work, the 

PMO should include processes for vendor acquisition and management.

Departmental and External Oversight 

FinCEN participates in regular reviews of its IT investments as part of the 

Treasury Department’s capital planning investment control (CPIC) process. 

These formal reviews occur on a quarterly basis in which schedule and cost 

variances data is reported and assessed as part of the Department’s portfolio 

management approach. The Department has assigned a desk officer to work 

with FinCEN’s project management staff in order to facilitate an understanding 

of the requirements that OMB has levied on the agencies and bureaus in the 

management of major and non-major IT investments. FinCEN submitted an 

exhibit 300 business case for the Cross Border Electronic Funds Transfer project 

to OMB for the FY 2007 budget cycle.

Acquisition Planning and Control

In keeping with OMB’s iterative process described in its Capital Programming 

Guide, FinCEN will form an integrated project team during the planning phase 

of the project. The Integrated Project Team, or IPT, brings together program 

officials, IT managers, budget, and procurement officials in order to effectively 

plan and orchestrate each stage of a complex project such as the subject of this 

report. The IPT will play a major role in the pre-solicitation phase in developing 

the statement of work, the release of the RFP, and the evaluation of vendor 

responses.

Earned Value Management

The standard (and required) approach to evaluating progress and analyzing 

schedule and performance measures is to apply “earned value management” 

(EVM) principles in monitoring a project. EVM enables a project manager 

to track and report progress in a project and compare actual performance to 

initial baselines. Simply put, EVM provides a disciplined method of ensuring 

accountability for a project and identifying potential risks to success while there 

is still an opportunity to take corrective action. 

In a memorandum dated August 4, 2005, the Office of Management and 

Budget required federal Chief Information Officers to manage and measure all 

information technology projects to within 10 percent variations from the project’s 

baseline goals by applying EVM principles to tracking the project. OMB 

required each agency to develop agency policies for full implementation of EVM 
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for information technology projects by December 31, 2005. FinCEN is adhering 

to the Treasury Department’s Earned Value Management Guideline in the 

management of all of its IT investments. Furthermore, any potential contractor 

for this project will be required to adhere to an EVM system that is compliant 

with ANSI/EIA STD -748.86

86 See http://www.whitehouse.gov/omb/memoranda/fy2005/m05-23.pdf
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Appendix M – Acronyms

ACS – Australian Customs Service

AFMLS - Asset Forfeiture and Money Laundering Section, Department of 

Justice

AFP – Australian Federal Police

ATO – Australian Taxation Office

AUSTRAC – Australian Transaction Reports and Analysis Centre

CBP - Customs and Border Protection, Department of Homeland Security

CSIS – Canadian Security Intelligence Service

DEA - Drug Enforcement Administration, Department of Justice

DHS – Department of Homeland Security

FBI - Federal Bureau of Investigation, Department of Justice

FDIC - Federal Deposit Insurance Corporation

FinCEN - Financial Crimes Enforcement Network, Department of the Treasury

FINTRAC – Financial Transaction Reports and Analysis Centre

HIDTA - High Intensity Drug Trafficking Area

HUD – U.S. Department of Housing and Urban Development

ICE - Bureau of Immigration and Customs Enforcement, Department of 

Homeland Security

IDW – Investigative Data Warehouse, Federal Bureau of Investigation

IRS - Internal Revenue Service, Department of the Treasury

IRS-CI - Internal Revenue Service - Criminal Investigations,

IRS-SBSE – Internal Revenue Service – Small Business/Self-Employed

JTTF – Joint Terrorism Task Force

NCUA - National Credit Union Administration

OCC - Office of the Comptroller of the Currency, Department of the Treasury

OCDETF - Organized Crime Drug Enforcement Task Force

OIG – Office of Inspector General

ONDCP - Office of National Drug Control Policy

OTS - Office of Thrift Supervision, Department of the Treasury

RCMP – Royal Canadian Mounted Police

TFOS - Terrorism Financing Operations Section, Federal Bureau of 

Investigation

TTIC - Terrorist Threat Integration Center

SEC - United States Securities and Exchange Commission

USDA – U.S. Department of Agriculture

USSS - United States Secret Service, Department of Homeland Security

U.S. Statutes, Laws, and Reports

BSA - Bank Secrecy Act

C.F.R. - Code of Federal Regulations

UCC - Uniform Commercial Code

U.S.C. - United States Code
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Organizations and Related Terms

ABA - American Bankers Association

APEC - Asia Pacific Economic Cooperation

APG - Asia Pacific Group on Money Laundering

BSAAG - Bank Secrecy Act Advisory Group

FATF - Financial Action Task Force on Money Laundering

FIU - Financial Intelligence Unit

GCC - Gulf Cooperation Council

ICBA - Independent Community Bankers Association 

IMF - International Monetary Fund

OAS - Organization of American States

OECD - Organization for Economic Cooperation and Development

SWIFT - Society for Worldwide Interbank Financial Telecommunications

General Terminology

ADP - Automatic Data Processing

AML - Anti-Money Laundering

BIC - Bank Identification Code

BMPE - Black Market Peso Exchange

EFT – Electronic Funds Transfer Report (Canada)

EDI - Electronic Data Interchange

GIS – Geographic Information Systems

GTO - Geographic Targeting Order

IFTI – International Funds Transfer Instruction Report (Australia)

LCTR – Large Currency Transaction Report (Australia and Canada)

STR – Suspicious Transaction Report (Australia and Canada)

MOU - Memorandum of Understanding

MSB - Money Services Business

BSA Forms

CMIR - Report of International Transportation of Currency or Monetary 

Instruments

CTR - Currency Transaction Report

CTRC - Currency Transaction Report by Casinos

CTRC-N - Currency Transaction Report by Casinos - Nevada

FBAR - Foreign Bank Account Report

SAR - Suspicious Activity Report

SAR-C - Suspicious Activity Report for Casinos and Card Clubs

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

SAR-MSB - Suspicious Activity Report for Money Services Businesses