Money Laundering

The Treasury Department's Financial Crimes Enforcement Network (FinCEN) receives civil penalty referrals for violations of the Bank Secrecy Act from several sources, including the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and other federal banking regulatory agencies. The problem of lengthy processing times for civil penalty cases is growing worse. According to FinCEN data for 1985 through 1991, the average processing time to close a case was 1.77 years, and the most lengthy time was 6.44 years. In comparison, FinCEN data for 1992 through 1997 show an average processing time of 3.02 years; the most lengthy time was 10.14 years. For cases closed in the two most recent years--1996 and 1997--the average processing times were 3.57 years and 4.23 years, respectively. Lengthy processing can negatively affect the public's perception of the government's efforts to enforce the Bank Secrecy Act, undermining the law's credibility and deterrent effects. Another result is that the six-year statute of limitations for Bank Secrecy Act civil penalties could expire. FinCEN has issued neither a notice of proposed rulemaking nor a final regulation to delegate civil penalty assessment authority to the banking regulatory agencies. FinCEN's current strategic plan indicates that such delegation may not occur before 2002, making FinCEN responsible for processing civil penalty referrals for several more years. Therefore, GAO recommends that FinCEN set timeliness goals for evaluating and disposing of each civil penalty case and monitor the progress of managers and staff responsible for meeting these goals.

GAO noted that: (1) except for the May 1994 delegation to FinCEN, Treasury's policies and procedures for processing civil penalty cases generally have not changed since 1992; (2) also, the number of staff processing civil penalty cases has remained fairly constant, at about six, before and after the May 1994 delegation to FinCEN; (3) the problem of lengthy processing times for civil penalty cases is growing worse; (4) for example, according to FinCEN's data for cases closed in calendar years 1985 through 1991, the average processing time to close a case was 1.77 years, and the most lengthy time was 6.44 years; (5) in comparison, FinCEN's data for calendar years 1992 through 1997 indicate an average processing time was 3.02 years, and the most lengthy time was 10.14 years; (6) for cases closed in the 2 most recent years, 1996 and 1997, the average processing times were 3.57 years and 4.23 years, respectively; (7) lengthy processing can negatively affect the public's perception of the government's efforts to enforce the BSA, thereby lessening the credibility and deterrent effects of the act's provisions; (8) another result is that the 6-year statute of limitations for BSA civil penalties could expire; (9) according to FinCEN's data, for the period January 1, 1992, through March 27, 1998, a total of 16 cases had one or more BSA violations that could not be pursued because the statute of limitations had expired; (10) insufficient management attention is a significant cause of the lengthy processing times for civil penalty cases; (11) FinCEN officials told GAO, for example, that the agency has never set timeliness goals for processing civil penalty cases; (12) FinCEN has issued neither a notice of proposed rulemaking nor a final regulation to delegate civil penalty assessment authority to the banking regulatory agencies; (13) FinCEN officials told GAO they have been working with the federal banking regulatory agencies for some time to devise an appropriate plan for delegating civil penalty assessment authority, but some issues still required resolution; (14) FinCEN's current strategic plan indicates that such delegation may not occur before 2002; and (15) for several more years, FinCEN could still be responsible for processing civil penalty referrals.

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.

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