Money Laundering

State Efforts To Fight It Are Increasing But More Federal Help Is Needed Gao ID: GGD-93-1 October 15, 1992

Although more and more states recognize that attacking money laundering can take the profit out of crime, only a few states use both legislation and financial transaction reports as federal law enforcement agencies do. Almost half the states have statutes on money laundering, but the laws differ vastly as to the elements of the offense and the penalties provided for. Most states are making only limited use of the Bank Secrecy Act data available from the Treasury Department. Six states receive information directly from the Treasury already on magnetic tape, enabling them to process and analyze it the same way federal agencies do. Other states rely on a more cumbersome process of writing to Treasury and asking for information on individual suspects on a case-by-case basis. Although Internal Revenue Service (IRS) Form 8300 provides the same basic information as the Bank Secrecy Act reports, the IRS code does not allow disclosure of the data to other than federal agencies for law enforcement purposes. In an effort to obtain the data, several states require that copies of the form also be filed with the state. Compliance with such requirements, however, has been very low and has limited the data's usefulness.

GAO found that: (1) few states use legislation and financial transaction reports as federal law enforcement agencies do; (2) six states have agreements with the Treasury that permit them to receive Bank Secrecy Act (BSA) data relevant to their states on magnetic media, enabling them to process the data at their own computer facilities; (3) four states use computers to process and analyze the data in the same manner the federal government does; (4) four other states obtain BSA data by requesting that Treasury provide information on individual suspects on a case-by-case basis; (5) federal funding for state initiatives to attack money laundering is provided through formula and discretionary grants awarded and administered by the Justice Department's Bureau of Justice Assistance; and (6) the Financial Crimes Enforcement Network is providing strategic intelligence reports and training seminars to a growing number of states.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Team: Phone:


The Justia Government Accountability Office site republishes public reports retrieved from the U.S. GAO These reports should not be considered official, and do not necessarily reflect the views of Justia.