Washington, DC- Financial Services Committee Chairman Barney Frank (D-MA), Ranking Member Spencer Bachus (R-AL), and Congressman Stephen Lynch (D-MA) sent a letter today to the Government Accountability Office (GAO), calling for a report on the mission and operational capacity of the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), and on the increasing volume of Bank Secrecy Act (BSA) filings—including Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs). The GAO report requested today was prompted by issues raised at a May 10, 2007 hearing held in the Subcommittee on Oversight and Investigations—the first of a series of hearings on the subject of balancing law enforcement utility and regulatory requirements of BSA reporting. 

The full text of the letter follows:

July 19, 2007


The Honorable David M. Walker

Comptroller General of the United States

U.S. Government Accountability Office

441 G Street NW

Washington, D.C.  20548


Dear Mr. Walker:


The Subcommittee on Oversight and Investigations recently held a hearing on the actions being taken by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), federal law enforcement agencies, and depository institutions pursuant to the Bank Secrecy Act (BSA).  This hearing and other events have raised questions about the efficiency and effectiveness of BSA administration and enforcement.  As you know, GAO is currently reviewing one aspect of this process—the filing and use of Currency Transaction Reports, or CTRs—in response to a mandate in the Financial Services Regulatory Relief Act of 2006 (Public Law 109-351).  We are asking for your assistance in looking more comprehensively at the current framework for achieving the goals of the BSA.


One area of concern is the mission and operational capacity of FinCEN, which was established in 1990 as a government-wide, service-oriented, financial information-sharing agency.  FinCEN’s general mission is to help safeguard the U.S. financial system from financial crimes, including money laundering and the financing of terrorist activities, but its specific roles and responsibilities have grown and evolved over time.  FinCEN is responsible for collecting, maintaining, analyzing, and disseminating financial information reported by financial institutions, as required by the BSA, but relies heavily on support from the Internal Revenue Service (IRS) for data collection, processing, and storage.  FinCEN conducts its own analyses of BSA data and also responds to requests from law enforcement agencies for BSA data or information pertaining to specific investigations or activities.  Several federal law enforcement agencies—including the Federal Bureau of Investigation; the Department of Homeland Security’s Immigration and Customs Enforcement; the Drug Enforcement Administration; and the Bureau of Alcohol, Tobacco, Firearms, and Explosives—have recently acquired the capability and authority to download BSA data in bulk form, in order to make more effective use of the data.  While potentially providing benefits, this situation also raises the possibility of duplication of effort.


Specific questions warranting GAO’s review in this area include the following:


1.      How has FinCEN’s mission evolved in response to statutory, technological, or other changes?  Have the agency’s management, staffing, and operations kept pace with changes in role/mission?


2.      In what ways does FinCEN currently serve law enforcement agencies?  How should it be serving them, in terms of both "proactive" efforts (analysis of BSA data) and "reactive" efforts (responding to requests for data on specific cases)?


3.      What constraints, if any, on FinCEN’s ability to achieve its mission arise from the cooperative arrangements with IRS in maintaining BSA data?


4.      Are the BSA data systems secure?  Are the systems for filing and aggregating BSA data sufficiently timely to meet the goal of assisting law enforcement efforts?


A second area of concern is the Suspicious Activity Report (SAR) process.  According to FinCEN, over one million SARs were filed in 2006, and depository institutions and firms in the securities and futures industries accounted for over half of them.  At the May hearing, a number of banking industry witnesses commented that they lacked clear guidance on what law enforcement is looking for and finds u