Money Laundering:

Needed Improvements for Reporting Suspicious Transactions Are Planned

GGD-95-156: Published: May 30, 1995. Publicly Released: Jun 20, 1995.

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Pursuant to a congressional request, GAO provided information on money laundering activities, focusing on: (1) how suspicious transactions are reported; (2) how currency transactions reports are used by law enforcement agencies; and (3) whether the reporting process can be improved.

GAO found that: (1) financial institutions file reports of suspicious transactions each year on various forms to various agencies, leading to the initiation of major investigations into various types of criminal activity; (2) there is no way of ensuring that the information is being used to its full potential, since there is no overall control or coordination of the reports; (3) the form that is filed most frequently is filed with the Internal Revenue Service (IRS) and kept on a centralized database, but the form is only useful in providing additional information on an investigation that has already been initiated; (4) other forms used to report suspicious transactions contain more useful information but, since they are filed with six different agencies and are not kept on a centralized database, they cannot be used on a reactive basis; (5) IRS has not developed agencywide procedures for managing suspicious transaction reports, resulting in varied use of the reports among 35 district offices; (6) 9 of the 15 states that receive copies of suspicious transaction reports use the information to initiate criminal investigations; and (7) the Department of the Treasury and IRS have agreed to substantial changes regarding how suspicious transactions are to be reported, how the information is to be used, and how to improve the reports' contributions at both the federal and state levels.

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