Implementation of Bank Secrecy Act's Reporting Requirements

The Bank Secrecy Act was intended to provide Federal law enforcement agencies with recordkeeping and reporting tools to investigate the financial resources connected with illegal activities, such as narcotics trafficking and tax evasion. The Act's recordkeeping requirements were designed to standardize the documentation and retention of all significant individual account transactions. Its reporting requirements were designed to document the movement of large amounts of cash, domestically and internationally. The Department of the Treasury has overall responsibility for (1) initiating and coordinating the implementation of the Act, (2) assuring compliance with the Act's requirements, and (3) assuring that reports generated under the Act are disseminated. The reports are still largely untested and unknown tools in the law enforcement field. Treasury has been slow in promoting the use of the Act's reports, in making them available to law enforcement agencies, and in assessing their usefulness. Failure to push the use of the reports delayed focusing attention on the problems of vague regulations which permitted broad interpretations by financial institutions and bank regulatory agencies, and the generally cursory examination practices of the regulatory agencies. Any evaluation of the effectiveness of the Act's reporting requirements or decisions regarding its future should be delayed until Treasury's recent initiatives have been adequately tested. The reports have been useful in identifying investigative targets, determining the extent and location of financial assets, establishing secondary criminal violations, and developing stronger court cases. The reports can be used to initiate investigations and used to identify previously unknown suspects. The Act provides substantial criminal penalties for noncompliance. Present examination procedures are insufficient to fully test reporting compliance, but the test procedures did detect significantly more reporting violations than did past procedures. Presently there are no indications of wholesale noncompliance by financial institutions which would justify widespread adoption of the test procedures.