Bank Secrecy Act: Action Needed to Improve DOJ Statistics on Use of Suspicious Financial Transaction Reports


What the GAO found

The Financial Crimes Enforcement Network (FinCEN) is responsible for administering the Bank Secrecy Act (BSA), which requires financial institutions to file suspicious financial transaction reports. FinCEN provides access to BSA reports to law enforcement agencies, who use these reports to support investigations. FinCEN receives limited data from law enforcement agencies on their use of BSA reports or the impact of the reports on case outcomes, as the agencies do not typically collect this data. Therefore, FinCEN cannot provide full feedback to financial institutions on the usefulness of the BSA reports they file.

Feedback Loop for Bank Secrecy Act (BSA) Reporting

The National Defense Authorization Act (NDAA) of 2021 directs the Department of Justice (DOJ) to provide annual statistics, metrics, and other information to the Secretary of the Treasury on the use of BSA reports by agencies, including the frequency with which reports contributed to arrests and convictions. . But none of the agencies contacted by the DOJ, including the constituent agencies of the DOJ, provided the statistics described in the NDAA. The DOJ’s first annual report focused on qualitative information and statistics already available to FinCEN. The DOJ said agencies are having difficulty collecting data that links their use of BSA reports to case outcomes using current data systems.

The DOJ has an opportunity to leverage existing initiatives and expertise to improve its annual statistical report on the use of BSA reports by agencies.

  • The DOJ has implemented a comprehensive, agency-wide data strategy to improve its data collection and infrastructure, but BSA-related data has not been included in agency efforts. Including this data would give the DOJ an opportunity to consider how to improve its component agencies’ data collection on their use of BSA reports.
  • The DOJ’s first annual statistical report on the BSA reflected some methodological flaws. For example, it did not include data from two agencies that track certain uses of BSA reports because the DOJ did not have procedures for tracking its data requests. The DOJ office that authored the report did not collaborate with the DOJ chief information officer or statistics officer in designing the report. By involving the expertise of these DOJ offices in the development of future annual reports, the DOJ could better ensure a rigorous methodology for collecting and presenting the statistics required for the report.

Why GAO Did This Study

The BSA’s provisions for reporting suspicious financial transactions are intended to assist law enforcement in detecting and investigating illicit financial activity. In GAO-19-582, GAO reported that financial institutions wanted more feedback on the usefulness of the BSA reports they file with FinCEN.

The 2021 NDAA directs the DOJ to report statistics on law enforcement‘s use of BSA reports annually and directs FinCEN to provide additional comments. The 2021 NDAA also contains a provision for the GAO to report on practices that could improve BSA-related commentary. Among its objectives, this report examines the steps the DOJ and FinCEN have taken to implement these provisions.

GAO reviewed applicable laws, regulations, and agency documents, and interviewed officials from FinCEN, DOJ, other law enforcement agencies, and industry associations.


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