Recommendation: The Director of FinCEN should develop and implement written policies and procedures to help promote the greater use of BSA reports by law enforcement agencies that do not have direct access to the BSA database. Such policies and procedures could include outreach strategies and educational or training materials. (Recommendation 1)

Agency: Department of the Treasury: Financial Crimes Enforcement Network
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Division Director for Risk Management Supervision (RMS) should require case managers to document how high-risk areas in the scoping plan were considered by the examination team if they were not addressed in the examination report. (Recommendation 1)

Agency: Federal Deposit Insurance Corporation
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Division Director for RMS should implement policies to require that higher-level managers review case managers' documentation that describes whether banks have fully addressed MRBAs. (Recommendation 2)

Agency: Federal Deposit Insurance Corporation
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Division Director for RMS should revise examination documentation retention policies to increase the retention period beyond one examination cycle for banks with satisfactory or better composite ratings. (Recommendation 3)

Agency: Federal Deposit Insurance Corporation
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The FDIC Chairman should direct RMS and the Legal Division Ethics Unit to develop a process for systematically requesting and collecting information on where departing examiners, including examiners-in-charge, enter into employment after leaving FDIC. (Recommendation 4)

Agency: Federal Deposit Insurance Corporation
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of the Treasury should ensure that the Office of Foreign Assets Control provides its partner agencies more specific guidance regarding Kingpin Act–related expenditure data to improve the consistency of data submitted by these agencies. This could include, for example, how agencies account for expenditures that support Kingpin Act investigations when they are not the lead and for what types of activities resource expenditure data are required. (Recommendation 1)

Agency: Department of the Treasury: Office of the Secretary
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of the Treasury should ensure that the Office of Foreign Assets Control discloses information about limitations in the consistency and reliability of the agency expenditure data in its annual reports to Congress. (Recommendation 2)

Agency: Department of the Treasury: Office of the Secretary
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Board of Governors of the Federal Reserve System should, in coordination with the other federal banking regulators, and with input from BSA/AML examiners and other relevant stakeholders, take steps to improve examiners' ability to evaluate the effectiveness of banks' BSA/AML compliance controls with respect to money transmitter accounts. Steps may include providing updates to examination procedures, examiner training, or a combination of methods. (Recommendation 1)

Agency: Federal Reserve System
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Comptroller of the Currency should, in coordination with the other federal banking regulators, and with input from BSA/AML examiners and other relevant stakeholders, take steps to improve examiners' ability to evaluate the effectiveness of banks' BSA/AML compliance controls with respect to money transmitter accounts. Steps may include providing updates to examination procedures, examiner training, or a combination of methods. (Recommendation 2)

Agency: Department of the Treasury: Office of the Comptroller of the Currency
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Chairman of the Federal Deposit Insurance Corporation should, in coordination with the other federal banking regulators, and with input from BSA/AML examiners and other relevant stakeholders, take steps to improve examiners' ability to evaluate the effectiveness of banks' BSA/AML compliance controls with respect to money transmitter accounts. Steps may include providing updates to examination procedures, examiner training, or a combination of methods. (Recommendation 3)

Agency: Federal Deposit Insurance Corporation
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Chairman of the National Credit Union Administration should, in coordination with the other federal banking regulators, and with input from BSA/AML examiners and other relevant stakeholders, take steps to improve examiners' ability to evaluate the effectiveness of banks' BSA/AML compliance controls with respect to money transmitter accounts. Steps may include providing updates to examination procedures, examiner training, or a combination of methods. (Recommendation 4)

Agency: National Credit Union Administration
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Director of the Division of Risk Management Supervision of FDIC should take steps to improve the completeness of matters requiring board attention (MRBA) data in its tracking system, in particular, by developing a structure that allows examiners to record MRBAs at progressively more granular levels (from a broad level such as examination area to more specific levels, including risk or concern type). (Recommendation 3)

Agency: Federal Deposit Insurance Corporation
Status: Open

Comments: FDIC agreed that a structure should be enhanced to allow staff to further categories MRBAs at the point of entry into the system. As of March 2020, no action has been taken on this recommendation. GAO will continue to monitor for any updates to FDIC procedures.

Recommendation: Congress should consider amending the law to provide the Secretary of the Treasury with the authority to alter the metal composition of circulating coins if the new metal compositions reduce the cost of coin production and do not affect the size, weight, appearance, or electromagnetic signature of the coins. (Matter for Consideration 1)

Agency: Congress
Status: Open

Comments: As of July 2020, the Currency Evolution Now to Save Act (the CENTS Act) has been introduced in the Senate. This bill authorizes the Department of the Treasury to prescribe a different composition of materials in the half-dollar, quarter-dollar, dime, or five-cent coin if such action reduces the overall cost of minting the coin and does not affect (1) the diameter and weight of the coin; or (2) the functionality of the coin, including the electromagnetic signature for accepting it.

Recommendation: The Senior Deputy Comptroller for Large Bank Supervision should revise Large Bank Supervisions policy to require documentation of examination teams internal deliberations that lead to consequential decisions for the bank, such as the decision whether to issue a Matter Requiring Attention, among others. (Recommendation 1)

Agency: Department of the Treasury: Office of the Comptroller of the Currency
Status: Open

Comments: As of July 2020, OCC continued to disagree with GAO's recommendation and stated that it neither has taken nor plans to take any actions to address it. We maintain that consistently documenting internal deliberations that lead to consequential decisions for the bank could increase the transparency and accountability of examination teams' findings and decisions.

Recommendation: The Senior Deputy Comptroller for Large Bank Supervision should revise Large Bank Supervisions policy to require that bank examination teams retain drafts of key documents, including the conclusion memorandum and supervisory letter, that record the supervisory review process. (Recommendation 2)

Agency: Department of the Treasury: Office of the Comptroller of the Currency
Status: Open

Comments: As of July 2020, OCC continued to disagree with GAO's recommendation and stated that it neither has taken nor plans to take any actions to address it. We maintain that revising the policy to ensure that drafts of key documents are not deleted will help OCC increase the transparency and accountability of the supervisory review process.

Recommendation: The Senior Deputy Comptroller for Large Bank Supervision should revise Large Bank Supervisions policy to require documentation of communications with banks, including those between executive and senior management and banks, that inform supervisory decisions. (Recommendation 3)

Agency: Department of the Treasury: Office of the Comptroller of the Currency
Status: Open

Comments: As of July 2020, OCC continued to disagree with GAO's recommendation and stated that it neither has taken nor plans to take any actions to address it. We maintain that having meeting minutes and other documentation of key communications would provide OCC with a more complete and transparent record of the information banks provide to examiners and how that information impacts supervisory decisions.

Recommendation: The Senior Deputy Comptroller for Large Bank Supervision should systematically track and monitor Large Bank Supervisions use of informal recommendations. (Recommendation 4)

Agency: Department of the Treasury: Office of the Comptroller of the Currency
Status: Open

Comments: As of July 2020, OCC continued to disagree with GAO's recommendation and stated that it neither has taken nor plans to take any actions to address it. We maintain that tracking and monitoring the use of informal recommendations could increase transparency of the supervisory process, which could help Large Bank Supervision mitigate the risk of regulatory capture.

Recommendation: The Chief Counsel should develop a policy for Large Bank Supervision (1) to check employees active conflicts of interests during the staffing process for examinations and other supervisory activities and (2) to document the results of this check. (Recommendation 6)

Agency: Department of the Treasury: Office of the Comptroller of the Currency
Status: Open

Comments: As of July 2020,, OCC continued to disagree with GAO's recommendation and does not plan to develop a policy to check if employees have active conflicts of interest during the staffing process for examinations and other supervisory activities. OCC noted in its December 2018 response letter to the report that they believed such a policy would shift the responsibility for ensuring compliance with recusal requirements from employees to those responsible for staffing. We maintain that this recommendation does not aim to alleviate the personal responsibility all employees have to comply with recusal requirements. Rather, our recommendation aims to strengthen the due diligence of those responsible for staffing by requiring an independent, preliminary check of active conflicts of interest.

Recommendation: The Director of the Bureau of Consumer Financial Protection should, in coordination with the federal banking regulators and with input from relevant stakeholders, communicate in writing to fintech lenders on the appropriate use of alternative data in the underwriting process, including issues to consider when selecting types of alternative data to use. (Recommendation 1)

Agency: Consumer Financial Protection Bureau
Status: Open

Comments: In December 2019, the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency (the agencies) issued an interagency statement on the use of alternative data in credit underwriting. The statement broadly highlights some potential benefits and risks of using alternative data and encourages firms to responsibly use alternative data, but does not provide firms or banks with specific direction on the appropriate use of alternative data, including issues to consider when selecting types of alternative data to use. We will continue to monitor the agencies' actions related to this recommendation.

Recommendation: The Chair of the Board of Governors of the Federal Reserve System should, in coordination with the other federal banking regulators and the Bureau of Consumer Financial Protection and with input from relevant stakeholders, communicate in writing to banks that engage in third-party relationships with fintech lenders on the appropriate use of alternative data in the underwriting process, including issues to consider when selecting types of alternative data to use. (Recommendation 2)

Agency: Federal Reserve System
Status: Open
Priority recommendation

Comments: In December 2019, the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency (the agencies) issued an interagency statement on the use of alternative data in credit underwriting. The statement broadly highlights some potential benefits and risks of using alternative data and encourages firms to responsibly use alternative data, but does not provide firms or banks with specific direction on the appropriate use of alternative data, including issues to consider when selecting types of alternative data to use. We will continue to monitor the agencies' actions related to this recommendation.

Recommendation: The Chairman of the Federal Deposit Insurance Corporation should, in coordination with the other federal banking regulators and the Bureau of Consumer Financial Protection and with input from relevant stakeholders, communicate in writing to banks that engage in third-party relationships with fintech lenders on the appropriate use of alternative data in the underwriting process, including issues to consider when selecting types of alternative data to use. (Recommendation 3)

Agency: Federal Deposit Insurance Corporation
Status: Open
Priority recommendation

Comments: In December 2019, the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency (the agencies) issued an interagency statement on the use of alternative data in credit underwriting. The statement broadly highlights some potential benefits and risks of using alternative data and encourages firms to responsibly use alternative data, but does not provide firms or banks with specific direction on the appropriate use of alternative data, including issues to consider when selecting types of alternative data to use. We will continue to monitor the agencies' actions related to this recommendation.

Recommendation: The Comptroller of the Currency should, in coordination with the other federal banking regulators and the Bureau of Consumer Financial Protection and with input from relevant stakeholders, communicate in writing to banks that engage in third-party relationships with fintech lenders on the appropriate use of alternative data in the underwriting process, including issues to consider when selecting types of alternative data to use. (Recommendation 4)

Agency: Department of the Treasury: Office of the Comptroller of the Currency
Status: Open
Priority recommendation

Comments: In December 2019, the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency (the agencies) issued an interagency statement on the use of alternative data in credit underwriting. The statement broadly highlights some potential benefits and risks of using alternative data and encourages firms to responsibly use alternative data, but does not provide firms or banks with specific direction on the appropriate use of alternative data, including issues to consider when selecting types of alternative data to use. We will continue to monitor the agencies' actions related to this recommendation.

Recommendation: The Director of CFPB should issue public information on its plans for reviewing regulations applicable to banks and credit unions, including information describing the scope of regulations the timing and frequency of the reviews, and the extent to which the reviews will be coordinated with the federal depository institution regulators as part of their periodic EGRPRA reviews. (Recommendation 2)

Agency: Consumer Financial Protection Bureau
Status: Open

Comments: CFPB staff noted in a letter in April 2018 that CFPB had issued requests for information (RFI) on the regulations their agency had adopted and inherited from other agencies. These requests seek public comment on the need to amend these regulations. They noted that they included in their spring and fall 2017 Semiannual Regulatory Agenda descriptions of two initiatives intended to review their regulations to identify opportunities to modernize and streamline provisions. In addition, they noted they had created an internal task force to coordinate and bolster continuing efforts to identify and relieve regulatory burdens. They stated that they would continue to publish information on their plans for reviewing regulations as appropriate. We plan to continue following up with CFPB to determine the extent to which they have published information on their plans to review the burden of their agency's regulations.

Recommendation: To strengthen the scenario design process, the Federal Reserve should assess--and adjust as necessary--the overall level of severity of its severely adverse scenario by expanding consideration of the trade-offs associated with different degrees of severity.

Agency: Federal Reserve System
Status: Open
Priority recommendation

Comments: In January 2019, the Federal Reserve said it had initiated two projects that would allow a more efficient evaluation of multiple scenarios, including assessing trade-offs associated with different levels of scenario severity. In December 2019, Federal Reserve staff provided updates on these projects, which remain in progress. We will continue to monitor the Federal Reserve's completion and implementation of these projects and any additional actions it takes that may be responsive to our recommendation.

Recommendation: To improve understanding of the range of potential crises against which the banking system would be resilient and the outcomes that might result from different scenarios, the Federal Reserve should assess whether a single severe supervisory scenario is sufficient to inform CCAR decisions and promote the resilience of the banking system. Such an assessment could include conducting sensitivity analysis involving multiple severe supervisory scenarios--potentially using CCAR data for a cycle that is already complete, to avoid concerns about tailoring the scenario to achieve a particular outcome.

Agency: Federal Reserve System
Status: Open
Priority recommendation

Comments: In January 2019, the Federal Reserve said it had initiated two projects that would allow a more efficient evaluation of multiple scenarios. In December 2019, Federal Reserve staff provided updates on these projects, which remain in progress. We will continue to monitor the Federal Reserve's completion and implementation of these projects and any additional actions it takes that may be responsive to our recommendation.

Recommendation: To improve the Federal Reserve's ability to manage model risk and ensure that decisions based on supervisory stress test results are informed by an understanding of model risk, the Federal Reserve should design and implement a process to test and document the sensitivity and uncertainty of the model system's output--the post-stress capital ratios used to make CCAR quantitative assessment determinations--including, at a minimum, the cumulative uncertainty surrounding the capital ratios and their sensitivity to key model parameters, specifications, and assumptions from across the system of models.

Agency: Federal Reserve System
Status: Open
Priority recommendation

Comments: In January 2019, the Federal Reserve said it had previously initiated multiple projects to fully respond to our recommendation, several of which were now complete. In December 2019, Federal Reserve staff provided updates on the remaining projects, which remain in various stages of completion. We will continue to monitor the Federal Reserve's completion and implementation of these projects and, once we receive documentation demonstrating the completion of responsive actions, we will update the status of this recommendation.

Recommendation: To improve the Federal Reserve's ability to manage model risk and ensure that decisions based on supervisory stress test results are informed by an understanding of model risk, the Federal Reserve should design and implement a process to communicate information about the range and sources of uncertainty surrounding the post-stress capital ratio estimates to the Board during CCAR deliberations.

Agency: Federal Reserve System
Status: Open
Priority recommendation

Comments: In January 2019, the Federal Reserve said it had previously initiated a project to fully respond to our recommendation. In December 2019, Federal Reserve staff provided updates on the project, but as of February 2020, had not provided documentation fully supporting implementation of a process consistent with our recommendation. We will continue to monitor the Federal Reserve's completion and implementation of this project, and we will update the status of this recommendation once we receive documentation demonstrating the completion of responsive actions.

Recommendation: To improve the Federal Reserve's ability to manage model risk and ensure that decisions based on supervisory stress test results are informed by an understanding of model risk, the Federal Reserve should design and implement a process for the Board and senior staff to articulate tolerance levels for key risks identified through sensitivity testing and for the degree of uncertainty in the projected capital ratios.

Agency: Federal Reserve System
Status: Open
Priority recommendation

Comments: In January 2019, the Federal Reserve said it had previously initiated a project to fully respond to our recommendation. In December 2019, Federal Reserve staff provided updates on the project, but as of February 2020, had not provided documentation fully supporting implementation of a process consistent with our recommendation. We will continue to monitor the Federal Reserve's completion and implementation of this project, and we will update the status of this recommendation once we receive documentation demonstrating the completion of responsive actions.

Recommendation: The Acting Commissioner of the Internal Revenue Service should direct appropriate officials to develop a long-term strategy to improve web services provided to taxpayers, in accordance with Howto.gov and other federal guidance outlined in our report. To accomplish this, the IRS should establish a numerical or other measureable goal to improve taxpayer satisfaction and a timeframe for achieving it.

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: IRS has made progress in improving its online services strategy, as we recommended, but as of February 2020, IRS has not yet completed its efforts. IRS's strategy has evolved from a singular focus on on-line services to a more comprehensive strategy of taxpayer interaction through all service channels. In February 2016, IRS announced an agency-wide Future State Initiative, which in part, aims to deliver service improvements across different taxpayer interactions such as individual online accounts assistance, exams, and collections. In July 2016, the official responsible for IRS's on-line office reported that the agency is working towards developing an overall customer service satisfaction goal as part of the IRS Future State Initiative. The official said that this goal is broadly meant to cover various ways the public interacts with IRS, including web, phone, correspondence and walk in. In November 2016, IRS provided documentation on the goals of the Future State Initiative. However, this documentation does not include specific numerical targets for the performance measures that IRS expects to achieve for each goal or a timeline to achieve those goals. IRS officials stated they will incorporate a customer service satisfaction goal in its upcoming strategic plan. IRS released the Fiscal Year 2018-2022 Strategic Plan, however a numerical or other measureable goal to improve taxpayer satisfaction with the website was not included in it. We are currently following up with IRS to determine their next steps.

Recommendation: The Commissioner of Internal Revenue should develop a new refund timeliness measure and goal to more appropriately reflect current capabilities.

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: As of March 2020, IRS had not developed a new measure for refund timeliness. In early 2019, Treasury announced that it would discontinue reporting the refund timeliness measure beginning with fiscal year 2019 because it was based on paper returns, which account for approximately 10 percent of returns. Nevertheless, as of January 2020, IRS continues to use this measure internally to monitor performance. During the 2019 tax filing season, taxpayers filed about 90 percent of returns electronically, and as a means to set taxpayer expectations, IRS publicly reported that about 90 percent of taxpayers owed a refund received it in less than 21 days. Accordingly, we continue to believe that IRS's sole performance measure of issuing paper-filed refunds within 40 days is outdated and does not acknowledge advances in technology that allow IRS to issue refunds faster. We agree with IRS that the environment has changed considerably since we made this recommendation--the growth in identity theft refund fraud has increased the need for additional scrutiny of tax refunds, which can add to the time needed to process tax returns. IRS can take into account its concerns and set a performance measure and goal that would be both challenging and obtainable. Without a measure and goal to assess refund timeliness that includes both paper and electronically filed returns and is reflective of IRS's current capabilities, IRS is missing opportunities to provide optimum levels of taxpayer service while also ensuring that taxpayers receive accurate refunds. As such, we believe that our recommendation remains valid.