Money Laundering

Historically, the Department of the Treasury's Office of Financial Enforcement has not processed Bank Secrecy Act civil penalty cases in a timely manner. GAO found that the Office has allowed cases to remain inactive for months, causing some cases to be closed because the statute of limitations had expired. Overall, data from the Office revealed declining numbers of referrals and penalties assessed between 1985 and 1991; however, GAO could not determine the cause of this decline. Case processing times averaged 21 months and ranged from four days to more than six years, processing times that officials of other federal agencies characterized as excessive. In the past, staff shortages and inadequate case management contributed to delays in processing civil penalty cases. The Office did not have systems in place to ensure that decisions had been reached, recommendations acted upon, and requested information received or followed up on. The Office has recently added staff and taken steps to improve case management.

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.