Action Needed to Improve DOJ Statistics on Use of Reports on Suspicious Financial Transactions
- Source: gao.gov
Treliant Takeaway:
The United States Government Accountability Office reports that financial institutions are requiring more feedback in regards to the effectiveness of their BSA reports in mitigating illicit financial activity from FinCEN. Treliant’s Global Financial Crimes Compliance Team is well-equipped to assist you with building customized solutions in response to anti-money laundering (AML) sanctions and financial crimes that blend investigative expertise and experience with specialized technology and data analytics capabilities in conducting lookbacks, fraud investigations, AML testing, transaction monitoring, suspicious activities, trade surveillance, and maintaining BSA/AML compliance.
Highlights:
The United States Government Accountability Office conducted a study in order to assess the relationship between financial institutions, the BSA reports they have filed, and the usefulness of these reports for law enforcement agencies to investigate illegal financial activity, as well as:
- The 2019 report showed that few law enforcement agencies were generating useful metrics to determine the effectiveness of BSA reporting. It also brought to light that the Financial Crimes Enforcement Network (FinCEN) had not consistently communicated metrics from the agencies that generated them. It was stated that these metrics were issued on an ad-hoc basis and were not provided at an institution-level.
- Currently, FinCEN cannot provide exhaustive feedback on the impact of BSA reports because agencies do not provide comprehensive data on the effects of the reporting.
- The Department of Justice (DOJ) is required to provide annual statistics on the use of BSA reports and how they are utilized to result in arrests and convictions. The DOJ has recently begun implementing a more comprehensive strategy for data collection and infrastructure, but has excluded the data related to BSA reporting thus far.
- The DOJ lacks providing statistics to financial institutions regarding the effectiveness of the BSA reports in detecting and deterring illicit activity. The DOJ’s first statistical report showed weaknesses in its methodology, such as exclusion of data from two agencies that tracked some uses of BSA reports and lack of collaboration with key players including the DOJ’s Chief Information Officer or Statistical Official in regards to the reports design.
- In other countries, such as Canada, the United Kingdom, and Australia practices were used to determine the similarities and differences among feedback collection practices in regards to BSA reports in the United States. FinCEN and the three other FIUs had many similarities, including that none provide comprehensive statistics on the relationship between suspicious activity filings and legal outcomes. However, there are many differences among the countries that limit the ability to compare them, such as size of their regulated industries, legal framework and their resources and responsibilities.
In conclusion, it was determined that some progress has been made by FinCEN to improve its ability to provide feedback to financial institutions in the filing of BSA reports. However, FinCENs’ abilities are limited given its reliance on other agencies tracking their usage of these reports and the ability to track the reports to actual outcomes. An identified action step is to facilitate the data collection to provide comprehensive feedback on the value of BSA reporting.