FEDERAL 

AGENCY 

DATA 

MINING 

REPORT 

(2008) 

Department of the Treasury 

March 2009 
REPORT TO CONGRESS ON DATA MINING ACTIVITIES WITHIN 

THE DEPARTMENT OF THE TREASURY 

This report has been prepared in compliance with the Federal Agency Data Mining Reporting 

Act of 2007. As required, this is an update to the Department of the Treasury’s 2007 data mining 

activities.1

 For purposes of this report, data mining activities are defined as pattern-based 

queries, searches, or analyses of one or more electronic databases to discover or locate a 

predictive pattern or anomaly indicative of terrorist or criminal activities. The report, therefore, 

does not include “subject-based” query and analysis activities that use personal identifiers or 

inputs associated with a specific individual or group of individuals, to retrieve information from 

the database(s). 

Two bureaus of the Department of the Treasury are engaged in data mining activities: the 

Internal Revenue Service (IRS) and the Financial Crimes and Enforcement Network (FinCEN). 

The IRS conducts data mining activities by using two internal software programs and one 

Commercial-off-the-Shelf product: 1) Reveal, 2) Web Currency and Banking Retrieval System, 

and 3) the Electronic Fraud Detection System Clementine, respectively. The IRS data mining 

programs focus on the identification of financial crimes including tax fraud, money laundering, 

terrorism, and offshore abusive trust schemes. IRS maintains the pursuit of these pattern-based 

searches to identify potential criminal activity. In February 2008, IRS retired the Operation Wire 

Link program that was reported in the Department’s 2007 report. FinCEN’s data mining 

activities focus on money laundering activities and other financial crimes. 

The Bureau of the Public Debt (BPD) no longer performs the activity, Bank Information Change, 

which was included in the Department’s 2007 report. The BPD template is updated for this 

report. 

 

1 Section 804 of Title VIII, Privacy and Civil Liberties, Public Law 110–53, 121 STAT. 363, requires that the head 

of each department or agency of the Federal Government that is engaged in any activity to use or develop data 

mining shall submit a report to Congress on all such activities of the department or agency under the jurisdiction of 

that official. 

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TABLE OF CONTENTS 

1.0 INTERNAL REVENUE SERVICE (IRS) ......................................................................... 3

2.0 FINANCIAL CRIMES AND ENFORCEMENT NETWORK (FinCEN) ......................... 8

3.0 BUREAU OF PUBLIC DEBT (BPD) .............................................................................. 17 

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1.0 INTERNAL REVENUE SERVICE (IRS) 

A. Data mining activity, goals, and target dates for the deployment of data mining 

activity, where appropriate 

Internal Revenue Service–Criminal Investigation (IRS-CI) Operations Policy and 

Support uses two software programs that can perform sophisticated search and analytical 

tasks: Reveal and Web Currency & Banking Retrieval System (Web-CBRS). These 

programs can be used to search databases of internal and external information. IRS-CI 

uses these software applications to search for specific characteristics that have been 

identified as potential indicators of criminal activity. 

Reveal is a data query and visualization tool that provides CI analysts and agents with the 

capability to query and analyze large and potentially disparate sets of data through a 

single access point, enhancing the user’s ability to develop a unified overall picture of 

suspicious or criminal activity. Information is presented to the user visually, exposing 

associations between entities in the data that might otherwise remain undiscovered. 

Visualization diagrams are built by the VisuaLinks tool and are based on the data 

queried. The analyst is not required to manually construct the link analysis charts. The 

system is used in IRS-CI Lead Development Centers (LDC), Fraud Detection Centers 

(FDC), and field offices to identify and develop leads in the areas of counterterrorism, 

money laundering, offshore abusive trust schemes, and other financial crime. 

Web-CBRS is a web-based application that accesses a database containing Bank Secrecy 

Act (BSA) forms and information. IRS-CI access the database for research in tax cases, 

tracking money-laundering activities, investigative leads, intelligence for the tracking of 

currency flows, corroborating information, and probative evidence. 

The Criminal Investigations Electronic Fraud Detection System (EFDS) uses a 

Commercial-off-the-Shelf (COTS) software product known as Clementine to determine 

data mining scores. This program runs during the nightly load process and assigns a score 

of probability factor to each refund return. These scores range from 0-1; the higher the 

score, the higher the potential for fraud on that return. 

B. Data mining technology that is being used or will be used, including the basis for 

determining whether a particular pattern or anomaly is indicative of terrorist or 

criminal activity 

With Reveal and Web-CBRS, IRS-CI does not have any specific artificial intelligence 

capabilities to search for indicators of terrorist or criminal activity. Special agents and 

investigative analysts have developed “canned queries” based on their experiences. 

These queries can be as simple as searching for individuals that have had five or more 

suspicious activity reports filed on them by financial institutions in a six month period 

using the Reveal database. The fraudulent behavior is determined from previous 

successful investigations of money laundering, counterterrorism, and BSA violations. 

Accepted Electronic Filing System (ELF) returns are received via ELF 1001 and loaded 

into EFDS daily. Returns meeting refund and data mining score tolerances are placed into 

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the EFDS Prescan queue which allows our Fraud Detection Center (FDC) employees to 

view these returns for suspicious activities. With the implementation of data mining for 

paper returns, EFDS generates a Returns Charge-out (RCO) that is sent to Files at the 

paper processing sites to pull the actual paper tax return which is also viewed for 

suspicious activities. 

Each FDCs inventory is determined by state code/zip code assignments. If a tax return 

meets the data mining tolerance and the refund amount tolerance, it is assigned a value 

and placed into inventory of the FDC assigned to that specific state. 

C. Data sources that are being or will be used 

a. IRS: Third Party Data Store (TPDS); Business Master File (BMF); Individual Master 

File (IMF); Information Returns Master File (IRMF) and Questionable Refund 

Program (QRP). 

b. Taxpayer: The source is the electronically/paper filed return. 

c. Employee: Source of employee information is the Online 5081. 

d. Other Federal agencies: Federal Bureau of Prisons; Bank Secrecy Act data. 

e. State and local agencies: All states and the District of Columbia prisons deliver 

prisoner listing information annually to CI in electronic format. 

f. Other third party sources: Commercial public business telephone directory 

listings/databases are purchase by CI to contact employers for employment and wage 

information, e.g., Accurint. 

D. Assessment of the efficacy or likely efficacy of the data mining activity in providing 

accurate information consistent with, and valuable to, the stated goals and plans for 

the use or development of the data mining activity 

The data uncovered during the query searches is only a lead and requires additional 

investigative steps be taken to verify the quality of the information. There is no 

empirical data on the efficacy of these searches. Statistics provided throughout the 

filing season outlines the fraud trends and increases in fraud detection, which may be 

used in the development of future data mining activity. 

E. Assessment of the impact, or likely impact, of the implementation of the data mining 

activity on the privacy and civil liberties of individuals, including a thorough 

description of the actions that are or will be taken with regard to the property, privacy, 

or other rights or privileges of any individual as a result of implementing the data 

mining activity 

IRS-CI is tasked to protect IRS revenue streams by detecting current fraudulent activity 

and preventing future recurrences. Results of data uncovered using these systems may be 

reflected in indictments and criminal prosecutions, the same as other information 

uncovered during the investigative process. Once fraud is determined, laws and 

administrative procedures, policies and controls, govern the ensuing actions. Except for a 

few periods in our history, tax information generally has not been available to the public 

– its disclosure has been restricted. Before 1977, tax information was considered a 

“public record.” Tax information was only open to inspection under Treasury 

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regulations approved by the President or under Presidential Order. Under this approach, 

the rules regarding disclosure were essentially left to the Executive Branch. 

By the mid-1970’s, there was increased Congressional and public concern about the 

widespread use of tax information by government agencies for purposes unrelated to tax 

administration. This concern culminated with a complete revision of Section 6103 in the 

Tax Reform Act of 1976. Congress eliminated Executive discretion regarding what 

information could be disclosed to which Federal and state agencies and established a new 

statutory approach that treated tax information as confidential and not subject to 

disclosure except to the extent explicitly provided by the Code. .In each area of 

allowable disclosure, Congress attempted to balance the specific agency or office’s need 

for the information with the citizen’s right to privacy, as well as the impact of the 

disclosure upon the continuation of compliance with the voluntary tax assessment system. 

Further, Congress undertook direct responsibility for determining the types and manner 

of permissible disclosures. 

Although there have been many amendments to the law since that time, the basic 

statutory approach established in 1976 remains in place today. Congress recognized that 

the IRS had more information about citizens than any other Federal agency and that other 

agencies routinely sought access to that information. Congress also recognized that 

citizens reasonably expected that the tax information they were required to provide to the 

IRS would be private. If the IRS abused that reasonable expectation of privacy, the loss 

of public confidence could seriously impair the tax system. There are four basic parts to 

this statutory approach: 

• The general rule that makes tax returns and tax return information confidential 

except as expressly authorized in the Code; 

• The exceptions to the general rule detailing permissible disclosures. Disclosures 

for purposes other than tax administration are more limited than disclosures for 

purposes of tax administration. This is consistent with the policy underlying 

Section 6103 which is that the need for a particular item of tax information must 

be balanced against the taxpayer’s reasonable expectation of privacy in 

information provided to the IRS as well as the effect on continued compliance 

with our voluntary system of self-assessment; 

• Technical, administrative, and physical safeguard provisions to prevent the 

recipients of tax information from using or disclosing the information in an 

unauthorized manner, and accounting, recordkeeping and reporting requirements 

that detail what disclosures are made for what purposes to assist in Congressional 

oversight; and 

• Criminal penalties including a: (1) felony for the willful unauthorized disclosure 

of tax information, (2) misdemeanor for the unauthorized inspection of tax 

information, and (3) civil cause of action for the taxpayer whose information has 

been inspected or disclosed in a manner not authorized by Section 6103.

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F. A list and analysis of the laws and regulations that govern the information being 

collected, reviewed, gathered, analyzed, or used in the data mining activity 

The use of all tax data is governed by 26 U.S.C. 6103. Subsection (a) sets out the 

general rule of confidentiality. Subsection (b) sets forth definitions of terms commonly 

used throughout Section 6103. Subsections (c) through (o) of Section 6103 contain 

exceptions to the general rule of confidentiality. These Subsections permit disclosures as 

described generally below: 

• Section 6103(c) – Disclosures to taxpayer’s designees (consent); 

• Section 6103(d) – Disclosures to state tax officials; 

• Section 6103(e) – Disclosures to the taxpayer and persons having a material 

interest; 

• Section 6103(f) – Disclosures to committees of Congress; 

• Section 6103(g) – Disclosures to the President and White House; 

• Section 6103(h) – Disclosures to Federal employees and the courts for tax 

administration purposes; 

• Section 6103(i) – Disclosures to Federal employees for non-tax criminal law 

enforcement purposes and to combat terrorism, as well as the Government 

Accountability Office; 

• Section 6103(j) – Disclosures for statistical purposes; 

• Section 6103(k) – Disclosures for certain miscellaneous tax administration 

purposes; 

• Section 6103(l) – Disclosures for purposes other than tax administration; 

• Section 6103(m) – Disclosures of taxpayer identity information (generally for 

Federal debt collection purposes); 

• Section 6103(n) – Disclosures to contractors for tax administration purposes; and 

• Section 6103(o) – Disclosures with respect to wagering excise taxes. 

In addition to disclosures permitted under provisions of Section 6103, other provisions of 

the Code also authorize disclosure of tax information. For example, Section 6104 

authorizes disclosure of certain tax information regarding tax exempt organizations, trusts 

claiming charitable deductions, and qualified pension plans. Section 6110 authorizes 

disclosure of certain written determinations and their background files. The information 

contained in Web-CBRS is gathered under the guidelines dictated by the Bank Secrecy 

Act, 31 U.S.C. 5311. 

G. Policies, procedures, and guidelines that are in place or that are to be developed and 

applied in the use of such data mining activity in order to: 

a. Protect the privacy and due process rights of individuals, such as redress 

procedures 

All tax information is protected as required in 26 U.S.C. 6103 (see E Above). 

The use of Bank Secrecy Act information is strictly controlled under the statute that 

directed its collection. 

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b. Ensure that only accurate and complete information is collected, reviewed, 

analyzed, or used, and guard against any harmful consequences of potential 

inaccuracies 

Tax data is self-reported by the individual/entity submitting the information to the 

government. Web-CBRS data is gathered from information compiled by the 

investigator based on information provided by their customer or based on the 

investigator’s personal experience. Investigators scrutinize the SARs filed by the 

subject companies and request grand jury subpoenas for the underlying 

documentation. The supporting records are examined and individuals of interest are 

identified. 

IRS-CI applications are required to have internal auditing capabilities. The internal 

audits track user access and queries performed with checks to validate against 

misuse. In addition, the data is a read-only extract that is validated for missing or 

duplicative data before entering the CI systems and remains unchanged in the CI 

systems. 

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2.0 FINANCIAL CRIMES AND ENFORCEMENT NETWORK (FinCEN) 

A. Data mining activity, goals, and target dates for the deployment of the data mining 

activity, where appropriate 

The Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the 

Treasury is statutorily obligated to analyze information to “determine emerging trends 

and methods in money laundering and other financial crimes.” 31 U.S.C. § 

310(2)(C)(v). These trend analyses typically involve querying the database FinCEN 

maintains that contains information reported largely by financial institutions under the 

Bank Secrecy Act (BSA), 31 U.S.C. 5311, et seq. This information (BSA information or 

BSA reports) is collected where it has a “high degree of usefulness in criminal, tax, or 

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

counterintelligence activities, including analysis, to protect against international 

terrorism,” 31 U.S.C. 5311. 

FinCEN conducts analyses to determine emerging trends and methods in money 

laundering in three ways: (1) by examining reports filed on specific violations (e.g., 

terrorism financing) or filed on specific industries or geographic areas and conducting 

analyses on these subsets to determine whether they contain any identifiable trends, 

patterns or methods; (2) by conducting statistical analyses of currency flows over time 

to determine whether the data contains anomalous trends, patterns or methods; and (3) 

identifying trends, patterns or specific activities indicative of money laundering or 

financial crimes through the review and evaluation of reports as part of ongoing review 

processes. 

FinCEN also engages in efforts that result in the identification of subjects for 

investigation either as a result of trend, statistical or strategic analyses or via other past, 

current or future tactical proactive efforts using link analysis driven software systems 

(see item B below) and includes the search for unknown subjects by establishing a 

search criteria based on previously established suspicious or illicit patterns. Other 

proactive methods include identifying subjects connected through the same addresses or 

telephone numbers and searching for subjects with the largest number of BSA reports 

filed on their financial activities. 

B. Data mining technology that is being used or will be used, including the basis for 

determining whether a particular pattern or anomaly is indicative of terrorist or 

criminal activity 

FinCEN utilizes several systems to accomplish its mission. 

There is a link analysis-driven FinCEN system that allows users to query several data 

sets based on user-defined text patterns or data parameters. The following data sets are 

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available for query within that system: all BSA reports authorized by statute or 

regulation maintained in report specific files and FinCEN’s case management system. 

This system also enables users to define alert notices based on user-defined data 

parameters. 

There is a large BSA data system hosted by the IRS. Users with access to this system 

are able to query the BSA data set based on user-defined text patterns or data 

parameters. 

There is a FinCEN system that provides users with the ability to query user-entered case 

information. 

There is a FinCEN system that allows users to query for records based on user-defined 

text patterns or data parameters. 

The basis for determining whether particular patterns or anomalies are indicative of 

terrorist or criminal activity varies. Because many BSA reports do not reveal the 

potential underlying criminal activity leading to the reported financial activity, FinCEN 

attempts to infer illicit cause for suspicious trends, patterns or methods by querying law 

enforcement databases on subjects or by identifying other financial or commercial 

records that may reinforce indications of anomalous or illicit activities. 

C. Data sources that are being or will be used 

The underlying data for FinCEN’s manual and automated proactive search methods and 

trend analysis activities are the reports provided under the Bank Secrecy Act (BSA) 

administered by FinCEN, e.g., a report by a financial institution of a suspicious 

transaction relevant to a possible violation of law or regulation (31 U.S.C. 5318(g)). 

Commercially available databases are used to support or further identify information 

that aid in the identification of the illicit cause for suspicious trends, patterns, or 

methods. FinCEN’s trend analysis utilizes any records available to FinCEN, including 

subpoenaed financial records, public source information, commercial database 

information, Federal Reserve data, etc., and is used to support or amplify conclusions or 

hypotheses derived from the analysis of BSA data. The authorities governing the filing 

requirements for such reports are detailed in item F below. 

D. Assessment of the efficacy or likely efficacy of the data mining activity in providing 

accurate information consistent with, and valuable to, the stated goals and plans for 

the use or development of the data mining activity 

FinCEN has occasionally experienced difficulty in assessing the efficacy of its proactive 

activities due to a lack of feedback from law enforcement, not only in reference to 

numbers of investigations opened but also to the quality of the potential targets 

identified, e.g., whether the identified activity was in fact related to illicit activities. 

FinCEN has, however, produced recent products in support of law enforcement and 

regulatory efforts to combat terrorism financing, mortgage loan fraud, and Southwest 

Border narcotics and bulk cash smuggling that received positive feedback. 

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Since FinCEN redirected its analytical efforts toward specialized analysis of BSA 

records in Fiscal Year (FY) 2005, FinCEN has produced proactive products for its law 

enforcement clients that are both strategic and tactical in nature. 

In FY 2005-2007, proactive tactical products were produced in two categories: (1) 

terrorism financing referrals based on review and evaluation of Suspicious Activity 

Reports and, (2) investigative lead information that complemented or arose from 

strategic assessments of geographic areas, industries or issues. In both categories, 

FinCEN received feedback indicating positive follow-up to the tactical referrals. 

• For example, a senior federal law enforcement official commented on FinCEN’s 

ongoing efforts to proactively identify nodes of suspicious remittance activity on 

the Southwest Border from BSA reports, saying that leads developed from the 

“very productive and helpful program” resulted in the opening of several cases 

found to have probable criminal nexus. FinCEN continually receives 

complimentary feedback from senior law enforcement managers on the usefulness 

of its products in support of this law enforcement effort to interdict and 

investigate drug and alien smuggling organizations on the Southwest Border. 

• In an example related to a terrorism financing referral that was associated with an 

ongoing case, a law enforcement official commented that the referral contained 

“outstanding information and analysis” and provided “excellent leads.” 

• A State law enforcement agency that received a terrorism financing referral 

reported that “this particular proactive report from the [FinCEN] ... team is 

valuable as it updated the [State agency] on the connection to corrupt banks and 

terrorist organizations . . .” 

In FY 2005-2007, FinCEN produced strategic-level proactive (self-initiated) threat 

assessments of geographic areas, industries and terrorism financing issues. FinCEN 

received feedback demonstrating that these types of products are useful to law 

enforcement. For example: 

• In responding to a FinCEN terrorism financing assessment of suspicious currency 

flows, a senior law enforcement official engaged in counterterrorism 

investigations commented that the “analysis was initially helpful in helping . . . 

Headquarters, and individually the case agents in our various involved Field 

Offices, gauge the overall scope of financial activity of groups and individuals 

who were involved in previously known suspicious financial activity. “ The 

official added that “. . .your analysis which covered five years provided a long 

term look at a problem which could not have been fully understood without the 

‘macro’ approach you utilized.” 

• Since publishing a report on The Role of Domestic Shell Corporations in 

Financial Crime and Money Laundering, FinCEN continues to receive positive 

feedback from, and to interact with, Federal and state law enforcement and 

regulatory agencies on this issue. FinCEN’s Offices of Law Enforcement and 

Global Support continue to support FBI and International Financial Intelligence 

Unit (FIU) efforts to investigate corrupted corporate service providers and to 

10
identify shell corporations facilitating international money laundering. FinCEN’s 

Regulatory Policy and Programs Division has initiated outreach to state agencies 

and trade groups to explore the feasibility of Anti-Money Laundering (AML) 

programs or other options. 

E. Assessment of the impact, or likely impact, of the implementation of the data mining 

activity on the privacy and civil liberties of individuals, including a thorough 

description of the actions that are or will be taken with regard to the property, privacy, 

or other rights or privileges of any individual as a result of implementing the data 

mining activity 

The impact of FinCEN’s congressionally mandated mission on the privacy and civil 

liberties of individuals has been and will continue to be small, and is within the confines 

of the law. As a threshold matter, the financial information that FinCEN collects and 

analyzes pursuant to its authority under the Bank Secrecy Act (BSA), 31 U.S.C. 5311, et

seq., (discussed in more detail in item (F) below) has been found by the Supreme Court 

to trigger no constitutionally protected “expectation of privacy” in the subjects of those 

records. U.S. v. Miller, 425 U.S. 435, 442 (1976). The Right to Financial Privacy Act 

of 1978, 12 U.S.C. 3401, et seq., similarly does not reflect a federally protected 

expectation of privacy regarding financial information that is required to be filed under 

federal law, which would include, by extension, information contained in BSA reports. 

See 12 U.S.C. 3413(d). 

Significantly, FinCEN takes no adverse actions against individuals based on the 

existence of, or information contained in, BSA data. Rather, FinCEN provides the data, 

or analytical products analyzing the data, to outside agencies where the information may 

be relevant to current or potential investigations or proceedings under the jurisdiction of 

those agencies. Since a BSA report itself is not necessarily indicative of criminal 

activity, it is only the use of that report in conjunction with other evidence that makes 

the report useful. BSA information filed by financial institutions is generally used as 

lead information, which user agencies are instructed to verify with underlying financial 

institution or other records before relying upon the information. There is thus an 

inherent system of “checks and balances” with respect to the use of BSA information 

that ensures the protection of individual rights. 

The Bank Secrecy Act, the Constitutionality of which has been upheld by the Supreme 

Court (see California Bankers Association v. Schultz, 416 U.S. 21 (1974)), provides 

standards for proper use of the financial data authorized to be collected. The collected 

information is also generally subject to the Privacy Act of 1974, 5 U.S.C. 552a, 

discussed in more detail under item (F) below. FinCEN has developed extensive 

policies and procedures to ensure, to the extent reasonably possible, that (1) the 

analyzed information is used for purposes authorized by applicable law and (2) the 

security of the information is adequately maintained. Analytical products produced by 

FinCEN are subject to clearly specified restrictions regarding use and further 

dissemination of the products to ensure that the products will only be used by 

appropriate agencies for statutorily authorized purposes. To the extent such products 

reference information collected pursuant to the BSA, FinCEN’s Re-Dissemination 

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Guidelines for Bank Secrecy Act Information (the Re-Dissemination Guidelines) will 

apply, requiring user agencies to attach warning language to such reports and to follow 

the detailed procedures specified in the Guidelines when user agencies wish to further 

disseminate the information. These procedures aim to ensure that (1) only appropriate 

agencies will have access to the materials; (2) the materials will be used for statutorily 

authorized purposes; (3) agencies with access are aware of the sensitivities of the 

material; and (4) FinCEN will be able to keep track of which agencies have such 

materials in their possession. 

F. A list and analysis of the laws and regulations that govern the information being 

collected, reviewed, gathered, analyzed, or used in the data mining activity 

I. The Bank Secrecy Act, 31 U.S.C. 5311, et seq. (BSA) and Implementing 

Regulations, 31 C.F.R. 103.11, et seq. 

31 U.S.C. 5311. Declaration of Purpose 

This section specifies that the reports collected pursuant to the BSA (BSA 

information) may be used where they have a “high degree of usefulness in criminal, tax, 

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

counterintelligence activities, including analysis, to protect against international 

terrorism.” This provision sets out the areas in which BSA information may be used, 

and FinCEN strives to ensure that all uses and users fall within these parameters. 

31 C.F.R. 103.12. Determination by the Secretary 

 

This regulation provides the determination that the reports collected pursuant to 

the BSA are “highly useful” in the areas covered by 31 U.S.C. 5311. 

31 U.S.C. 5319. Availability of Reports

 This section makes it clear that, upon request, the Secretary (as delegated to 

FinCEN) is required to provide BSA information for the purposes specified in 31 U.S.C. 

5311, to agencies including state financial institutions supervisory agencies, United 

States intelligence agencies, or self-regulatory organizations registered with the 

Securities and Exchange Commission or the Commodity Futures Trading Commission. 

This list of types of agencies is not exhaustive, but those listed are clearly covered. This 

section also provides that reports collected pursuant to the BSA are exempt from 

disclosure under the Freedom of Information Act, 5 U.S.C. 552. 

31 C.F.R. 103.53. Availability of Information 

This section authorizes the Secretary to make BSA information available to 

appropriate agencies for purposes specified in the BSA, and specifies that the 

information provided is to be received “in confidence” by the requesting agency. 

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31 U.S.C. 5313. Reports on domestic coins and currency transactions 

This section provides for the reporting by financial institutions of reports of 

certain currency transactions involving more than an amount specified by the Secretary 

(as delegated to FinCEN). 

31 C.F.R. 103.22. Reports of transactions in currency 

This regulation implements the reporting requirement of 31 U.S.C. 5313 and 

specifies the amount of reportable transactions in currency at more than $10,000. 

 31 U.S.C. 5316. Reports on exporting and importing monetary instruments 

 

This section requires reports by those that transport currency or other monetary 

instruments of more than $10,000 from outside the U.S. into the U.S., or from the U.S. 

outside the U.S. 

31 C.F.R. 103.23. Reports of transportation of currency or monetary 

 instruments 

 

This regulation implements the reporting requirement of 31 U.S.C. 5316 with 

respect to currency or other monetary instruments of more than $10,000 imported into 

the U.S. or exported outside the U.S. 

31 U.S.C. 5314. Records and reports on foreign financial agency transactions 

This section authorizes the Secretary (as delegated to FinCEN) to prescribe 

regulations requiring the reporting of certain types of foreign transactions and 

relationships with foreign institutions. 

31 C.F.R. 103.24. Reports of foreign financial accounts 

This regulation, implementing 31 U.S.C. 5314, requires that U.S. persons file 

reports of foreign bank accounts. 

31 U.S.C. 5318(g). Reporting of suspicious transactions 

This section authorizes the Secretary (as delegated to FinCEN), to require the 

reporting of suspicious transactions relevant to a possible violation of law. The section 

also provides for the confidentiality of such reports, barring financial institutions from 

notifying anyone involved in the transaction that the transaction has been reported. 

Government employees are subject to the same confidentiality restrictions, except as 

“necessary to fulfill the official duties” of such employees. The policies and procedures 

detailed above in response to item (E) are aimed, in large part, at maintaining the 

confidentiality of these reports. 

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31 C.F.R. 103.15 – 103.21. Reports of Suspicious Transactions 

These regulations implement 31 U.S.C. 5318(g), requiring covered financial 

institutions to file suspicious activity reports and requiring the maintaining of strict 

confidentiality of the reports. 

31 U.S.C. 5331. Reports relating to coins and currency received in 

 nonfinancial trade or business 

This section provides for the reporting of currency transactions of more than 

$10,000 by businesses other than financial institutions. 

31 C.F.R. 103.30. Reports related to currency in excess of $10,000 received 

 in a trade or business 

This regulation implements 31 U.S.C. 5331. 

II. The Privacy Act of 1974 (Privacy Act), 5 U.S.C. 552a, and Systems of 

Records Notices 

Generally, the reports that FinCEN collects pursuant to the BSA are protected by 

the Privacy Act, in that they are “records” contained in a “system of records” as defined 

by the Privacy Act. 5 U.S.C. 552a (a)(4),(5). The Privacy Act provides that covered 

records may be disclosed without the written permission of the individual to whom the 

record pertains if they are disclosed pursuant to a “routine use.” 5 U.S.C. 552a (b)(3). 

FinCEN has included sets of “routine uses” in its published Systems of Records Notices, 

required by the Privacy Act, that cover the areas in which FinCEN routinely shares BSA 

information. These areas (and specified recipients) are consistent with the purposes for 

which the information is collected, as specified in the BSA. 

 FinCEN has three Systems of Records Notices that cover the information it 

collects. These notices are: Treasury/FinCEN .001 - FinCEN Data Base (70 FR 45756), 

Treasury FinCEN .002 - Suspicious Activity Report System (70 FR 45757), and 

Treasury/FinCEN .003 – Bank Secrecy Act Reports System (70 FR 45760). In all cases, 

FinCEN shares covered information in accordance with these notices and the Routine 

Uses specified therein. 

III. Other Relevant Provisions 

31 U.S.C. 310. Financial Crimes Enforcement Network 

This section, added by the USA PATRIOT Act of 2001, establishes FinCEN as a 

bureau in the Treasury Department, sets out the duties and powers of the Director, and 

empowers the Director to administer the BSA to the extent delegated by the Secretary of 

the Treasury (see below). The section requires FinCEN to maintain a “government-wide 

data access service” for the information it collects. FinCEN is required to “analyze and 

14
disseminate” the data for a broad range of purposes consistent with the BSA. See 31 

U.S.C. 310 (b)(2)(C)(i-vii). These purposes include identifying possible criminal 

activity and supporting domestic and international criminal investigations (and related 

civil proceedings), determining emerging trends and methods in money laundering and 

other financial crimes, supporting the conduct of intelligence and counterintelligence 

activities, including analysis, to protect against international terrorism, and supporting 

government initiatives against money laundering. Id. 

 The section further provides, for example, that FinCEN furnish research, 

analytical, and informational services to financial institutions and domestic and foreign 

law enforcement agencies for the “detection, prevention, and prosecution of terrorism, 

organized crime, money laundering and other financial crimes” and provide “computer 

and data support and data analysis to the Secretary of the Treasury for tracking and 

controlling foreign assets.” 31 U.S.C. 310 (b)(2)(E), (G). In addition, the section 

provides for the establishment of standards for making the information available through 

efficient means, and to screen appropriate users and appropriate uses. See 31 U.S.C. 310 

(c)(1-2). The activities and procedures described in this document adhere to the tenets of 

this section. 

Treasury Order 180-01 (September 26, 2002)

 This document establishes FinCEN as a bureau in the Treasury Department and 

delegates authority to administer, implement, and enforce the Bank Secrecy Act to the 

Director of FinCEN. 

G. Policies, procedures, and guidelines that are in place or that are to be developed and 

applied in the use of such data mining activity in order to: 

a. Protect the privacy and due process rights of individuals, such as redress 

procedures 

A description of the policies, procedures, and guidance in place to protect the 

analyzed reports and any privacy and property interests of the individuals that are 

the subject of the reports in question have been discussed in Item (E) above. With 

respect to redress procedures, due the sensitivity of reports collected pursuant to the 

BSA, these reports have been exempted from such procedures in accordance with 5 

U.S.C. 552a (j)(2) and (k)(2). See FinCEN’s Systems of Records Notices (citations 

under item F (II) above) for further discussion. Specifically, such reports are 

exempt, for example, from the provisions in the Privacy Act allowing for: a 

subject’s access to the reports, notification to the subject when reports shall be 

shared, the contesting of the contents of such reports by the subject, and the civil 

remedies covering these areas. 

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b. Ensure that only accurate and complete information is collected, reviewed, 

analyzed, or used and guard against any harmful consequences of potential 

inaccuracies 

As discussed in item (E) above, FinCEN itself does not take adverse actions against 

individuals (outside the context of enforcing the requirements of the BSA itself) 

based on the information contained in BSA reports. In addition, because BSA 

information is only relevant in a particular proceeding based on the existence of 

other evidence, a BSA report in itself is generally not the basis for adverse actions 

by user agencies. There is thus an inherent system of “checks and balances” in the 

use of BSA information, guarding against harmful consequences from inaccuracies 

that may be contained in BSA reports. Moreover, FinCEN, through its data 

perfection procedures, ensures that the information contained in the database of 

BSA reports is accurate and complete. 

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3.0 BUREAU OF PUBLIC DEBT (BPD) 

A. Data mining activity, goals, and target dates for the deployment of the data mining 

activity, where appropriate 

BANK INFORMATION CHANGE: We now require paper documentation to support 

bank information changes and certain other potentially high-risk transactions as a risk 

mitigation measure for our customers. Procedures have been changed requiring 

customers to complete a paper document which is signed and certified showing the 

information to be changed or the transaction requested. Once received the paper 

document is reviewed by operations staff and the requested action is processed. 

B. Data mining technology that is being used or will be used, including the basis for 

determining whether a particular pattern or anomaly is indicative of terrorist or 

criminal activity 

Not Applicable. The above procedure change requires customers provide a properly 

signed and certified paper document requesting bank information changes and certain 

other potentially high-risk transactions. 

C. Data sources that are being or will be used 

Not Applicable. 

D. Assessment of the efficacy or likely efficacy of the data mining activity in providing 

accurate information consistent with, and valuable to, the stated goals and plans for 

the use or development of the data mining activity 

Not Applicable. 

E. Assessment of the impact, or likely impact, of the implementation of the data mining 

activity on the privacy and civil liberties of individuals, including a thorough 

description of the actions that are or will be taken with regard to the property, privacy, 

or other rights or privileges of any individual as a result of implementing the data 

mining activity 

Not Applicable. 

F. A list and analysis of the laws and regulations that govern the information being 

collected, reviewed, gathered, analyzed, or used in the data mining activity 

Not Applicable. 

G. Policies, procedures, and guidelines that are in place or that are to be developed and 

applied in the use of such data mining activity in order to: 

a. Protect the privacy and due process rights of individuals, such as redress 

procedures 

Not Applicable. 

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b. Ensure that only accurate and complete information is collected, reviewed, 

analyzed, or used, and guard against any harmful consequences of potential 

inaccuracies 

Not Applicable.