The Financial Crimes Enforcement Network (FinCEN) issued its Year in Review for FY 2022. The year in review is intended to help stakeholders gain insight into both FinCEN’s efforts to support law enforcement and national security agencies, and how financial information filed according to the BSA is used.
Although the data released doesn’t go into detail on the exact nature of the criminal activity that was ultimately prosecuted, it does help reinforce the purpose behind all the important yet sometimes burdensome regulatory filings your financial institution has to submit.
You may be feeling some regulatory filing fatigue due to all the suspicious activity reports (SARs), currency transaction reports and beneficial ownership forms you’ve had to complete consistently. You may have even decided to forgo a SAR filing because the activity seemed inconsequential.
However, the data suggests that your FinCEN filing does make an impact. A breakdown of the fiscal year 2022 data shows how your financial institution’s work can often be a piece of a bigger puzzle.
IRS criminal investigations
The review noted that 15.8% of IRS criminal investigations were a direct result of a regulatory filing. Assuming the threshold for starting an investigation is high, the fact that regulatory filings were the primary driver for so many investigations shows that the information provided matters.
Another statistic that stands out is that 84.2% of all investigations have BSA filings related to the primary subject.
Although you may not have heard from the IRS with follow-up questions related to a filing, the fact that there are filings for subjects in the vast majority of investigations suggests that your efforts have helped support a case at some point.
It’s a good reminder that, even if you don’t receive a callback, your forms may be supporting an investigation into specific individuals or similar behavior at another institution.
U.S. Department of Justice
Statistics released by the DOJ indicate just how much each type of investigation is supported by the regulatory filings you submit on a regular basis:
- 46% of transnational organized crime investigations
- 39.6% of active Organized Crime Drug Enforcement Task Force investigations (with FBI participation)
- 36.3% of active complex financial crimes investigations
- 27.5% of active public corruption investigations
- 20.6% of active international terrorism investigations
- 15.7% of active FBI investigations
As criminal organizations and their crime schemes become more sophisticated and complex, investigators are going to rely more and more on information pulled from multiple financial institutions, and not just big banks in major markets.
With such a complex puzzle to solve, each piece of information can be helpful, emphasizing the need to report suspected criminal activity with all available information.
314(a) and 314(b) information sharing programs
The release gave several statistics indicating the usage and results from 314(a) and 314(b) requests. One stat that stood out was that only 0.61% of SARs filed in FY22 referenced 314(b), based on the number of SARs filed.
A common theme on BSA audits is that a client is registered for 314(b) but has never requested information or had information requested from them.
Section 314(b) can be a useful tool for gaining a better understanding of the scope of the suspicious activity in question. Automated surveillance systems have also worked to integrate 314(b) into their systems to allow you to identify other relevant participating institutions.
Next time you feel like you are missing an important piece of information and you know another financial institution being utilized by the subject, reach out via 314(b) to see if you can strengthen your SAR narrative.
FY23 and beyond
Criminal enterprises have moved into much more sophisticated and complex schemes that make identifying and prosecuting the culprits more and more difficult.
The different types of scams and criminal enterprises keeps growing, and smart criminals understand the need to layer and bounce transactions through multiple institutions. It’s unlikely that you will ever see the full scheme run through your institution, just small pieces of it.
The best way to combat these crimes is through accurate and detailed reporting that law enforcement and the SAR review teams can use to piece together the ever-expanding number of fraud cases. The process of monitoring and filing can be very burdensome, especially to smaller institutions with limited resources. But these statistics show just how much weight the reporting done by you impacts law enforcement’s ability to identify, charge and successfully prosecute the criminals.
How Wipfli can help
Let Wipfli support your filing efforts with our regulatory compliance services. Our specialists can help strengthen your compliance programs so that you can be confident that you’re meeting customer due diligence requirements, and we’ll continue to work with you as federal regulations are updated. Contact us to learn more.
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