WASHINGTON (2/25/08)—The Bank Secrecy Act (BSA) has been under the microscope of the Government Accountablilty Office (GAO) and is the subject of two recently released reports. One of the reports was an attempt by GAO to determine the usefulness to federal, state and local law enforcement officials of currency transaction reports (CTRs) filed by depository institutions and the costs to financial institutions related to those filings. For its report, the GAO studied CTR data from 2004 to 2006 provided by the Financial Crimes Enforcement Network (FinCEN) and surveyed 115 state and local law enforcement agencies, 680 financial institutions, as well as industry trade associations. Also, the Credit Union National Association met last year with the GAO last year to discuss the burdens CTR filing requirements place on credit unions. The resultant determination by the GAO is that the information provided by CTRs is of importance to law enforcement. The report made a number of recommendations to FinCEN in an effort to ease some of the burdens of and misunderstandings concerning CTR filing requirements. The GAO recommended that FinCEN consider publishing "summary information on CTR use,” something similar to the Suspicious Activity Report (SAR) Activity Review it currently issues that analyzes data gathered by those reports. The second recent GAO report on BSA is a 95-page tome entitled “Bank Secrecy Act: Increased Use of Exemption Provisions Could Reduce Currency Transaction Reporting While Maintaining Usefulness to Law Enforcement Efforts.” The GAO study found that, as reasons for not exempting eligible customers, institutions cited uncertainty about the documentation required to demonstrate that some customers are in fact eligible. Financial institutions also noted concerns that federal regulators in charge of compliance examinations, would find fault with the institution's exemption. Institutions also cited as deterrents the need to meet FinCEN's regulatory requirements to:
* File an exemption form, and annually review the supporting data, particularly for hundreds of customers that are specifically exempted by statute; and * Biennially renew eligibility for some customers--a process that as a practical matter duplicates the required annual reviews for those customers.
Institution officials indicated that additional guidance from FinCEN, as well as Web-based material to help train their staff in making exemption determinations, could increase the use of exemptions, the report said. For more on both reports, use the resource link below.