Anti-Money Laundering:

Improved Communication Could Enhance the Support FinCEN Provides to Law Enforcement

GAO-10-141, Dec 14, 2009

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Financial investigations are used to combat money laundering and terrorism financing, crimes that can destabilize national economies and threaten global security. The Financial Crimes Enforcement Network (FinCEN) within the Department of the Treasury supports law enforcement agencies (LEAs) in their efforts to investigate financial crimes by providing them with services and products, such as access to financial data, analysis, and case support. As requested, GAO examined the extent to which the law enforcement community finds FinCEN's support useful in its efforts to investigate and prosecute financial crimes. GAO analyzed statutes governing FinCEN's mission and documentation describing the support it provides to LEAs, such as annual reports. Using FinCEN data, GAO selected a sample of 29 LEAs, including primary users of FinCEN's services and products, and obtained their opinions through a survey and interviews. While the results of the survey and interviews are not generalizable, they provide insights about the usefulness of FinCEN's support.

The majority of LEAs GAO surveyed reported finding FinCEN's support useful in their efforts to investigate and prosecute financial crimes, but FinCEN could enhance its support by better informing LEAs about its services and products and actively soliciting their input. Of the 20 LEAs that responded to a question GAO posed about which FinCEN services they found most useful, 16 LEAs cited direct access to Bank Secrecy Act data--records of financial transactions possibly indicative of money laundering that FinCEN collects--as the most valuable service FinCEN provides. Additionally, 11 federal LEAs cited a tool that allows federal LEAs to reach out, through FinCEN, to financial institutions nationwide to locate financial information related to ongoing investigations as a key service offered by FinCEN. To further enhance the value and relevance of its analytic work to LEAs, FinCEN has sought to increase development of complex analytic products, such as reports identifying trends and patterns in money laundering. Sixteen law enforcement agencies GAO surveyed reported that they generally found these complex analytic products useful. However, three of five LEAs that FinCEN identified as its primary federal customers reported that FinCEN does not provide detailed information about the various types of products it can provide. They also stated that they would like more information about when completed products become available. Communicating more detailed information to LEAs could help FinCEN ensure that it is effectively carrying out its mission to support the investigation and prosecution of financial crimes. Moreover, two of these LEAs reported that FinCEN does not communicate to LEAs why it accepts some requests for support and rejects others. Furthermore, FinCEN does not actively seek LEAs' input about ongoing or planned analytic work, though doing so could improve the quality and relevance of its products to its LEA customers. Actively soliciting stakeholder input and providing transparency with regard to decision making are GAO-identified best practices for effectively meeting stakeholder needs. Incorporating these best practices could help FinCEN maximize the usefulness of its support. In October 2009, senior officials in one of the divisions that provides support to LEAs reorganized the division in order to realign resources to better serve law enforcement. The division also developed a planning guide to improve communication with LEAs which includes general descriptions of the types of processes to be implemented. While the development of this guide is a step in the right direction, it does not include detailed information on the specific actions FinCEN plans to take to become more transparent to their law enforcement customers about the division's operations. Completing the plan, including identifying the specific actions FinCEN plans to take to better assess law enforcement's needs, could help FinCEN ensure that its operations are designed in a way so as to maximize their usefulness to its law enforcement customers.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To help ensure that FinCEN maximizes the relevance and usefulness of the support it provides, the Director of FinCEN should work in conjunction with its law enforcement customers to establish a systematic process for actively soliciting input from law enforcement agencies and incorporating this input into the selection and development of its analytic products.

    Agency Affected: Department of the Treasury: Financial Crimes Enforcement Network

    Status: Open

    Comments: FinCEN agreed with our recommendation and committed to addressing communication with law enforcement at three levels: analytic products, workflow process, and outreach. The FinCEN teams assessing workflow processes and outreach efforts planned to make recommendations that would include provisions for better assessment of law enforcement needs and more insight into FinCEN's decision-making process on complex analytic products. FinCEN expected its internal teams' recommendations to be implemented during the course of fiscal year 2010 and assessed and revised throughout the fiscal year. FinCEN's September 30, 2010 transmittal of documentation addressing the status of Recommendations 1 & 2 did not include information related to Recommendation 3. However, as part of its review of the status of Recommendations 1 & 2, the team will follow-up with the agency to clarify the status of Recommendation 3.

    Recommendation: To help ensure that FinCEN maximizes the relevance and usefulness of the support it provides, the Director of FinCEN should work in conjunction with its law enforcement customers to complete a plan, including identifying the specific actions FinCEN will take, to better assess law enforcement needs, and make the division's operations more transparent to FinCEN's law enforcement customers. This plan should include a mechanism for FinCEN to communicate to law enforcement agencies its decision-making process for selecting complex analytic products to pursue and why FinCEN rejects a request.

    Agency Affected: Department of the Treasury: Financial Crimes Enforcement Network

    Status: Open

    Comments: FinCEN agreed with our recommendation and committed to addressing communication issues and assessing workflow processes and outreach efforts though out fiscal year 2010. These efforts included developing provisions for better assessing law enforcement needs and providing more insight into FinCEN's decision-making process on complex analytic products. On September 30, 2010, the agency provided GAO with additional documentation to address the implementation status of this recommendation. The team plans to evaluate this information and request additional information as needed to assess whether this recommendation can be closed.

    Recommendation: To help ensure that FinCEN maximizes the relevance and usefulness of the support it provides, the Director of FinCEN should work in conjunction with its law enforcement customers to clarify and communicate to law enforcement agencies the various types of complex analytic products FinCEN can provide and establish a process for informing law enforcement agencies about the availability of these products.

    Agency Affected: Department of the Treasury: Financial Crimes Enforcement Network

    Status: Open

    Comments: FinCEN agreed with our recommendation and committed to: 1) compiling an inventory of analytical products including those requested by law enforcement, 2) consulting with its law enforcement partners to refine its recommendations and categorize and describe the types of products for law enforcement, and 3) developing plans for regular, structured communication with law enforcement about the products, services, and capabilities FinCEN offers. The agency expected to complete these actions by the end of fiscal year 2010. On September 30, 2010, the agency provided GAO with additional documentation to address the implementation status of this recommendation. The team plans to evaluate this information and request additional information as needed to assess whether this recommendation can be closed.

    Recommendation: To help ensure that FinCEN maximizes the relevance and usefulness of the support it provides, the Director of FinCEN should work in conjunction with its law enforcement customers to develop a mechanism to collect law enforcement sensitive information from law enforcement agencies during the public comment period of the Notice of Proposed Rulemaking (NPRM) process.

    Agency Affected: Department of the Treasury: Financial Crimes Enforcement Network

    Status: Closed - Implemented

    Comments: In December 2009, we examined the extent to which the law enforcement community finds FinCEN's support useful in its efforts to investigate and prosecute financial crimes (GAO-10-141). In the report, we noted that FinCEN has no mechanism to collect law enforcement sensitive information in a nonpublic rulemaking docket that could be pertinent to making decisions regarding proposed regulatory changes. Regulatory changes instituted by FinCEN can affect the content or structure of Bank Secrecy Act (BSA) data used in law enforcement investigations as well as law enforcement's efforts to indict and prosecute financial crimes. However, liaisons from four of FinCEN's top five federal law enforcement customers reported that the public record is not always the most appropriate venue for providing comments on proposed regulatory changes because their comments often contain law enforcement sensitive information. According to these officials, raising these concerns in a public forum may compromise key investigative techniques or strategies used in ongoing investigations. As a result, we recommended that FinCEN develop a mechanism to collect law enforcement sensitive information from law enforcement agencies during the public comment period of the notice of proposed rulemaking (NPRM) process. FinCEN agreed with this recommendation and in July 2010, FinCEN officials reported that they developed a mechanism that involves a two-pronged approach for collecting law enforcement sensitive information during the public notice and comment period of a NPRM without making the comments publicly available. According to written documents provided by FinCEN, the two-pronged approach involves: (1) providing law enforcement stakeholders with notice that a NPRM has been published in the Federal Register and advising them that they can provide law enforcement sensitive (LES) information without FinCEN making the comments publicly available and (2) using the Federal Docket Management System to ensure that LES information is not posted publicly. The revised protocol is consistent with our recommendation and should help FinCEN provide an appropriate means for law enforcement to submit law enforcement sensitive information as part of the public comment period for proposed regulatory changes and subsequently improve FinCEN's efforts to receive important information necessary to make decisions about the implementation of these changes.