Money Laundering:

FinCEN's Law Enforcement Support Role Is Evolving

GGD-98-117: Published: Jun 19, 1998. Publicly Released: Jun 19, 1998.

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Pursuant to a congressional request, GAO reviewed the Financial Crimes Enforcement Network's (FinCEN) products and services in support of law enforcement, focusing on: (1) trends in the types and quantities of products and services provided by FinCEN to the law enforcement community; (2) the extent to which FinCEN's products and services have been considered useful by the law enforcement community in identifying, developing, or prosecuting money laundering and other financial crime cases; (3) the extent to which FinCEN evaluates the states' compliance with applicable controls over access to and use of information when state law enforcement officials directly access FinCEN's resources; and (4) FinCEN's efforts to provide Internal Revenue Service (IRS) Form 8300 information to the law enforcement community.

GAO noted that: (1) FinCEN has expanded the types of products and services it provides to the law enforcement community; (2) in recent years, FinCEN has issued fewer tactical, strategic, and artificial intelligence products and has encouraged, trained, and increasingly relied on federal agencies to use the platform concept and state and local agencies to use Project Gateway to support cases that do not require FinCEN's expertise; (3) according to FinCEN, one significant reason for the decrease in the number of products issued was that its staffing levels have remained fairly constant over the years, while its overall mission has expanded to include: (a) responsibility for promulgating Bank Secrecy Act regulations; and (b) a leadership role in international efforts to combat money laundering; (4) respondents to surveys indicated that FinCEN's tactical products have been useful and assisted law enforcement investigations in ways not previously identified; (5) officials that had requested few or no tactical products from FinCEN generally did not indicate dissatisfaction with it; (6) some respondents were not aware of the various products and services offered, and FinCEN has neither developed nor widely disseminated general criteria or guidelines on when law enforcement officials should request its support; (7) according to federal and state officials, the platform concept and Project Gateway are useful tools for helping agencies combat money laundering and other financial crimes; (8) FinCEN data show that an increasing number of federal, state, and local agencies are using these self-help mechanisms to support their investigations; (9) while Project Gateway is designed to enhance the capabilities of state and local law enforcement agencies, this technological advancement increases the potential risk that sensitive information could be inappropriately accessed, used, or disclosed; (10) although FinCEN has established policies and procedures designed to limit access to and use of information obtained through the Gateway system, it has not evaluated the states' compliance with these controls; (11) in an effort to enhance its investigative support, FinCEN is seeking IRS approval to provide IRS Form 8300 information to law enforcement officials; and (12) however, several issues must still be resolved before FinCEN can obtain approval from IRS to disseminate this information.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: Reportedly, consideration of the matter at Treasury was postponed pending completion of the general studies of the confidentiality of tax return information called for by section 3802 of the Internal Revenue Service Restructuring and Reform Act of 1998. Those studies were to be conducted separately by the Joint Committee on Taxation and the Department of the Treasury and were expected to be completed during 2000. However, as of July 2003, no action had been taken on the GAO recommendation. Update (June 24, 2009): No action taken or likely to be taken.

    Recommendation: The Secretary of the Treasury should take action to identify and resolve any administrative issues related to FinCEN's dissemination of Form 8300 information to the law enforcement community.

    Agency Affected: Department of the Treasury

  2. Status: Closed - Not Implemented

    Comments: Further consideration of the matter at Treasury has been postponed pending completion of the general studies of the confidentiality of tax return information called for by section 3802 of the Internal Revenue Service Restructuring and Reform Act of 1998. Those studies are being conducted separately by the Joint Committee on Taxation and the Department of the Treasury. They are yet to be completed. No action taken or likely to be taken.

    Recommendation: If FinCEN is given approval to disseminate Form 8300 information, the Secretary of the Treasury should, prior to such dissemination, ensure that sufficient access and disclosure controls over FinCEN's programs and systems are in place and operating as intended. That is, these controls should be sufficient to protect against unauthorized access to and disclosure of sensitive information.

    Agency Affected: Department of the Treasury

  3. Status: Closed - Implemented

    Comments: In response to GAO's work, to more widely communicate its capabilities to potential customers, FinCEN updated its Internet site to include information on the types of support it provides to the law enforcement community and to offer viewers the opportunity to send comments or questions via electronic mail.

    Recommendation: The Acting Director, FinCEN, should incorporate into the agency's communications with potential customers general criteria or guidance on the types of cases that FinCEN can best support and the most appropriate uses of FinCEN's capabilities. At a minimum, for example, such criteria or guidance could be included in information on FinCEN's site on the Internet.

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

  4. Status: Closed - Implemented

    Comments: FinCEN published a Gateway Coordinators Handbook, developed a plan for randomly auditing states, and developed guidelines for staff to use in reviewing the compliance of state coordinators.

    Recommendation: The Acting Director, FinCEN, should develop and implement a program for on-site evaluations of the states' compliance with control policies and procedures related to Project Gateway. Such a program should include periodic testing of the controls and summary reports for management attention.

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

 

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