Bank Secrecy Act:

Treasury Can Improve Implementation of the Act

GGD-86-95: Published: Jun 11, 1986. Publicly Released: Jun 11, 1986.

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In response to a congressional request, GAO: (1) reviewed the Department of the Treasury's management of the Bank Secrecy Act of 1970; (2) studied how law enforcement personnel use the act; and (3) examined the collection, analysis, and dissemination of data compiled as a result of the act.

GAO noted that the law requires individuals and institutions to file reports on: (1) currency transactions exceeding $10,000; (2) the movement of currency over $10,000 into or out of the United States; and (3) those having a financial interest in, or signature authority over, bank accounts, securities, accounts, or other financial accounts in a foreign country. GAO found that: (1) Treasury lacks information about how supporting agencies carry out their delegated duties; (2) Treasury does not know the extent to which agencies use the act in their criminal investigations and prosecutions; (3) between January 1985 and March 1986, the Internal Revenue Service (IRS) experienced a major backlog of unprocessed reports; (4) the Customs Service processed its reports within a month of receipt; (5) Customs now provides feedback forms with reports sent to law enforcement agents and has proposed revised guidelines for disseminating data that would decrease the time law enforcement officials spend on obtaining certain types of data; (6) Customs and IRS are the primary users of the act and its data in Florida and California; (7) the Federal Bureau of Investigation and the Drug Enforcement Administration use the act and its data in investigations and prosecutions of crimes other than currency violations; and (8) Treasury and the Department of Justice are considering amending the act's implementing regulations to clarify the reporting requirements.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: Events since this report have brought the act and related areas to the forefront of public debate. In addition, the Anti-Drug Abuse Act of 1988 directed negotiations with foreign governments to enhance cooperative anti-money laundering activities and provided for sanctions against governments failing to cooperate. GAO is currently reviewing the status of international money laundering activities.

    Recommendation: The Secretary of the Treasury, through the Assistant Secretary for Enforcement, should establish management controls aimed at providing more information to Treasury headquarters about the activities of the agencies and bureaus to which it has delegated authority to implement the Bank Secrecy Act of 1970. Such controls would help its headquarters to improve the implementation of the act and would provide assurance to its headquarters that the primary purpose of the act, aiding law enforcement officials in the detection, investigation, and prosecution of criminal activities, is being met.

    Agency Affected: Department of the Treasury

  2. Status: Closed - Not Implemented

    Comments: Events since this report have brought the act and related areas to the forefront of public debate. In addition, the Anti-Drug Abuse Act of 1988 directed negotiations with foreign governments to enhance cooperative anti-money laundering activities and provided for sanctions against governments failing to cooperate. GAO is currently reviewing the status of international money laundering activities.

    Recommendation: The Secretary of the Treasury, to improve implementation of the act, should establish formal reporting procedures for agencies and bureaus with act-related duties, which will ensure that Treasury headquarters regularly receives significant and comparable information about compliance and enforcement efforts.

    Agency Affected: Department of the Treasury

  3. Status: Closed - Not Implemented

    Comments: Events since this report have brought the act and related areas to the forefront of public debate. In addition, the Anti-Drug Abuse Act of 1988 directed negotiations with foreign governments to enhance cooperative anti-money laundering activities and provided for sanctions against governments failing to cooperate. GAO is currently reviewing the status of international money laundering activities.

    Recommendation: The Secretary of the Treasury, to improve implementation of the act, should develop procedures for referring financial institutions found in violation of the act to Treasury for consideration for a civil review leading to possible civil penalties.

    Agency Affected: Department of the Treasury

  4. Status: Closed - Not Implemented

    Comments: Events since this report have brought the act and related areas to the forefront of public debate. In addition, the Anti-Drug Abuse Act 1988 directed negotiations with foreign governments to enhance cooperative anti-money laundering activities and provided for sanctions against governments failing to cooperate. GAO is currently reviewing the status of international money laundering activities.

    Recommendation: The Secretary of the Treasury, to improve implementation of the act, should obtain information from law enforcement agencies, which would identify cases when the act or its data is used in criminal investigations and prosecutions.

    Agency Affected: Department of the Treasury

  5. Status: Closed - Not Implemented

    Comments: Events since this report have brought the act and related areas to the forefront of public debate. In addition, the Anti-Drug Abuse Act of 1988 directed negotiations with foreign governments to enhance cooperative anti-money laundering activities and provided for sanctions against governments failing to cooperate. GAO is currently reviewing the status of international money laundering activities.

    Recommendation: The Secretary of the Treasury, to improve implementation of the act, should require Customs to establish a system for planning its analytical activities and modifying these plans based on feedback from law enforcement officials to ensure that Customs' analyses are meeting the needs of the law enforcement community.

    Agency Affected: Department of the Treasury

  6. Status: Closed - Implemented

    Comments: Treasury approved those guidelines that Customs submitted. Customs provided copies of the guidelines to appropriate offices. Treasury will monitor the application of the guidelines and provide guidance to Customs on modifications in dissemination policy that may be appropriate in the future.

    Recommendation: The Secretary of the Treasury, to improve implementation of the act, should expedite the approval and implementation of the revised dissemination guidelines submitted by Customs.

    Agency Affected: Department of the Treasury

 

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