GAO: Make FinCEN Data Available to Financial Institutions

Credit union stance on Suspicious Activity Reports echoed in new Government Accountability Office report.

Credit union trade groups have long argued that financial institutions should receive some feedback about how Suspicious Activity Reports (SARs) filed under anti-money laundering laws are used.

Now, the Government Accountability Office (GAO) agrees.

But the Financial Crimes Enforcement Network (FinCEN) says it cannot provide comprehensive data because network officials are not sure how other law enforcement agencies use SARs.

The debacle is revealed in a new GAO report assessing how well FinCEN provides feedback on how SARs are used.

Inside the Report

The GAO said that the FY21 defense authorization law requires FinCEN to provide new types of feedback on the use of SARs.

That would be difficult, FinCEN officials told the GAO.

“FinCEN cannot currently provide comprehensive feedback on the impact of BSA [Bank Secrecy Act] reports because agencies do not provide FinCEN with comprehensive data on their use of those reports or the effect they had,” the GAO said. “As a result, according to FinCEN officials, the agency cannot connect their data on report searches to the impact of those reports on case outcomes.”

The Justice Department said that agencies use reports filed under the Bank Secrecy Act in ways that make it difficult to link a specific report to a specific action, such as an arrest, according to the GAO.

“Investigators typically use BSA reports at the beginning of an investigation to develop leads and identify potential evidence, according to several law enforcement officials,” the report stated.

GAO Recommendations

The watchdog agency recommended that Justice Department officials incorporate data on the use of BSA reports into their ongoing efforts to improve the department’s data collection in an effort to determine if there are ways to report how they are used.

In response, federal law enforcement officials said that they would have to “dedicate substantial resources” to reviewing documentation at the end of a case.

“They also said that using limited resources for this purpose might affect an agency’s ability to fulfill its core mission,” the GAO noted.

Response From Credit Union Groups

However, credit union trade groups said that data is necessary to provide financial institutions incentive to file those reports.

“Currently, credit unions file reports that disappear into a black hole,” Elizabeth Sullivan, CUNA’s senior director of advocacy and counsel, told FinCEN earlier this year.

“Credit unions have repeatedly expressed a desire to understand how much of their reports are reviewed by law enforcement, contribute to investigations, and lead to prosecution,” she explained to FinCEN officials, who were soliciting comment on agency guidance. “Generally, credit unions are under the impression that the filings are of little use to law enforcement.”

A former NAFCU official agreed.

“It is difficult to determine whether the reports currently required by a credit union are highly useful since there is often a lack of transparency from FinCEN and law enforcement,” Kaley Schafer, who was then the trade group’s senior regulatory affairs counsel, wrote in a letter to FinCEN.