Money Laundering:

Treasury Civil Case Processing of Bank Secrecy Act Violations

GGD-92-46: Published: Feb 6, 1992. Publicly Released: Apr 6, 1992.

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Pursuant to a congressional request, GAO reviewed the Department of the Treasury's Office of Financial Enforcement's (OFE) processing of civil penalty referrals of alleged Bank Secrecy Act violations, focusing on the: (1) OFE civil penalty work load; and (2) time it takes OFE to process referrals.

GAO found that between 1986 and 1991, the: (1) number of civil penalty referrals that OFE received decreased by 85 percent, from 136 to 21; (2) primary referral sources shifted from voluntary submissions to Internal Revenue Service submissions; (3) number of closed cases fluctuated; and (4) number of cases awaiting resolution remained relatively constant. GAO also found that: (1) of the 421 cases OFE closed since 1985, 11 percent of those cases resulted in a penalty assessment; (2) between 1985 and 1991, the proportion of cases in which OFE assessed penalties decreased from 15 percent of cases in 1986 to 1 percent in 1991, and OFE attributed this decrease to financial institutions' improved compliance with reporting requirements; (3) since 1985, 54 percent of the cases OFE closed resulted in warning letters, and OFE closed 35 percent of cases without making any type of contact; (4) OFE lacked adequate systems to ensure that it had reached decisions, acted on recommendations, and requested or followed up on received information; (5) in January 1990, Treasury's Inspector General (IG) reported that, as of February 1989, OFE had a backlog of 220 civil penalty cases and attributed the backlog to a lack of staffing, insufficient priority given to processing cases, and inadequate written procedures; (6) in response to the IG report, OFE hired additional staff and took actions to improve case management; (7) OFE case processing time averaged 21 months and ranged from 4 days to 6.5 years; and (8) the reason for closure in 11 of 20 cases that OFE closed without penalty between April and September 1990 was the expiration of the statute of limitations.

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