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A new report has found that Bank Secrecy Act (BSA) data is now a "critical element" of complex financial crime cases and is "significantly advancing" the work of US law enforcement.
The US Financial Crimes Enforcement Network (FinCEN) has published its Year in Review for FY 2023, which covers the period from October 2022 to September 2023.
The review includes information from other regulators and law enforcement agencies on their use of BSA data in enforcement activity.
The Internal Revenue Service (IRS) said that almost 90 percent of its criminal cases recommended for prosecution in FY2021-23 involved a primary subject related to a BSA filing. Together, these prosecutions resulted in $629m in forfeitures and $434m in restitution.
Similarly, the Federal Bureau of Investigation (FBI) said almost 15 percent of all active investigations in FY2023 were linked to suspicious activity reports (SARs) and currency transaction reports (CTRs) filed under the BSA.
Moreover, a third of the FBI’s complex financial crime investigations during the same period were directly linked to SARs and CTRs.
In the words of FinCEN, the report demonstrates the “usefulness” of BSA data in the context of enforcement activity.
As in previous years, the review also found high satisfaction among users of the FinCEN Portal and FinCEN Query — tools that regulatory and law enforcement staff use to explore BSA data.
During the review, FinCEN sent a survey to approximately 14,100 users and received 1,518 responses.
The results show that 92 percent of respondents found BSA data to be “valuable” in the detection and deterrence of illicit activity.
Moreover, 94 percent of respondents said this data had supported their existing examinations or investigations, and 84 percent said it was used to open new investigations or examinations.
Source: FinCEN Year in Review FY 2023
What makes this data 'useful'?
As per Section 6201 of the Anti-Money Laundering Act 2020, FinCEN is required to file a yearly report assessing the collection and use of BSA data in enforcement activity.
The BSA, first adopted in 1970, is a key anti-money laundering (AML) law that requires financial institutions to assist US government agencies in detecting and preventing money laundering.
Following the adoption of the USA PATRIOT Act in 2001, the BSA was amended to include counter-terrorist financing (CTF) and know your customer (KYC) requirements.
Data collected under the BSA, including SARs and CTRs, is submitted to and compiled by FinCEN.
Each SAR includes five “essential elements”, namely details about the filing institution, the subject(s) and account(s) of the SAR, the date range of the suspicious activity and the total value of the suspicious activity.
CTRs are reports of cash transactions exceeding $10,000 made by or on behalf of a single individual on a single day.
In FY2024, both Binance and its former CEO, Changpeng Zhao, pleaded guilty to criminal violations of the BSA for failing to maintain an effective AML programme.
Another crypto firm, Bittrex, was on the receiving end of FinCEN’s largest enforcement action in FY2023.
In October 2022, FinCEN issued a $29m civil monetary penalty against Bittrex for “wilful violations” of the BSA. This one penalty made up almost half of FinCEN’s $60m in civil monetary penalties issued to four financial institutions in FY2023.
Background to the FinCEN Portal
The FinCEN Portal is the gateway for regulators and authorised federal, state and local law enforcement officers to access BSA and FinCEN financial data.
Launched in 2012, the FinCEN Portal provides access to FinCEN Query, reports, secure email, training, help resources and an Electronic Knowledge Library (EKL).
FinCEN Query is a tool designed to improve users' ability to access and analyse FinCEN and BSA data.
Unlike its predecessor, it allows users to apply filters, narrow search results and import lists of data, such as names, identification numbers and addresses, for cross-checking.
When it was first launched, FinCEN Query replaced the Web Based Currency and Banking Retrieval System (WebCBRS).
The new system, part of FinCEN’s IT modernisation programme, was built using modern web search technology similar to that of Google, allowing users to make more complex queries and receive more accurate results.
To maintain access to the system, users must log in at least once every 90 days and must also complete mandatory BSA Compliance Program training every two years.
