Money Laundering

FinCEN's Law Enforcement Support Role Is Evolving Gao ID: GGD-98-117 June 19, 1998

Although the magnitude of money laundering is unknown, law enforcement officials have estimated that between $100 billion and $300 billion in U.S. currency is laundered each year. Money laundering allows drug dealers, terrorists, arms dealers, and other criminals to operate and expand their activities. The Financial Crimes Enforcement Network (FinCEN), part of the Treasury Department, was establish in 1990 to help combat money laundering and other financial crimes. In earlier work, GAO discussed FinCEN's various roles, including its progress in promulgating Bank Secrecy Act regulations and its efforts to administer civil penalties for violating them. (See GAO/GGD-98-18, Feb. 1998, and GAO/T-GGD-98-83, Apr. 1998). This report focuses on FinCEN's products and services in support of law enforcement. GAO discusses (1) trends in the types and quantities of products and services FinCEN provides to the law enforcement community; (2) the extent to which law enforcement agencies consider FinCEN's products and services useful in identifying, developing, or prosecuting money laundering and other financial crime cases; (3) the extent to which FinCEN evaluates the states' compliance with applicable controls over access to and use of information when state law enforcement officials directly access FinCEN's resources; and (4) FinCEN's efforts to provide Internal Revenue Service Form 8300 information (Report of Cash Payments Over $10,000 Received in a Trade or Business) to law enforcement agencies. GAO found that FinCEN gets good marks from law enforcement agencies that use its tactical support information and its self-help systems that enable law enforcement agencies access to financial information.

GAO noted that: (1) FinCEN has expanded the types of products and services it provides to the law enforcement community; (2) in recent years, FinCEN has issued fewer tactical, strategic, and artificial intelligence products and has encouraged, trained, and increasingly relied on federal agencies to use the platform concept and state and local agencies to use Project Gateway to support cases that do not require FinCEN's expertise; (3) according to FinCEN, one significant reason for the decrease in the number of products issued was that its staffing levels have remained fairly constant over the years, while its overall mission has expanded to include: (a) responsibility for promulgating Bank Secrecy Act regulations; and (b) a leadership role in international efforts to combat money laundering; (4) respondents to surveys indicated that FinCEN's tactical products have been useful and assisted law enforcement investigations in ways not previously identified; (5) officials that had requested few or no tactical products from FinCEN generally did not indicate dissatisfaction with it; (6) some respondents were not aware of the various products and services offered, and FinCEN has neither developed nor widely disseminated general criteria or guidelines on when law enforcement officials should request its support; (7) according to federal and state officials, the platform concept and Project Gateway are useful tools for helping agencies combat money laundering and other financial crimes; (8) FinCEN data show that an increasing number of federal, state, and local agencies are using these self-help mechanisms to support their investigations; (9) while Project Gateway is designed to enhance the capabilities of state and local law enforcement agencies, this technological advancement increases the potential risk that sensitive information could be inappropriately accessed, used, or disclosed; (10) although FinCEN has established policies and procedures designed to limit access to and use of information obtained through the Gateway system, it has not evaluated the states' compliance with these controls; (11) in an effort to enhance its investigative support, FinCEN is seeking IRS approval to provide IRS Form 8300 information to law enforcement officials; and (12) however, several issues must still be resolved before FinCEN can obtain approval from IRS to disseminate this information.


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