Compliance Blog

GAO Report Confirms Too Little Feedback on BSA Filings

The U.S. Government Accountability Office (GAO) released a 94-page report on the Financial Crimes Enforcement Network’s (FinCEN) collection and dissemination of Bank Secrecy Act (BSA) data.  As we all know, the BSA requires credit unions and other financial institutions to submit reports (such as suspicious activity reports (SARs)) that law enforcement may use to assist with investigations into illegal financial activity.   The GAO noted that industry has questioned the usefulness of these reports since SARs are labor-intensive and feedback on the value of BSA reporting has not been regularly provided.  In its study, the GAO found that although FinCEN and law enforcement agencies gave some metrics and institution-specific feedback to the financial industry that BSA reporting leads to investigations and indictments, such feedback was not provided broadly or regularly.

As a result of its examination, the GAO made four recommendations.  Of the four, two of the recommendations concern consistently communicating summary data and providing institution-specific feedback on BSA reporting:

“Recommendation 3 - The Director of FinCEN should review options for FinCEN to more consistently and publicly provide summary data on the usefulness of BSA reporting. This review could either be concurrent with FinCEN's BSA value study or through another method.

"Recommendation 4 - The Director of FinCEN should review options for establishing a mechanism through which law enforcement agencies may provide regular and institution-specific feedback on BSA reporting. Options should take into consideration providing such feedback to cover different types of financial institutions and those with significant financial activity. This review could either be part of FinCEN's BSA value study or through another method.” See, pp. 63-63, GAO-19-582.

Concerning GAO’s Recommendation 4, FinCEN Director Kenneth A. Blanco responded that although FinCEN agrees with the spirit of the recommendation that law enforcement feedback is important, unless this is mandated by Congress, law enforcement feedback will be voluntary.  He stated, “...FinCEN regularly takes necessary steps to review options for establishing additional mechanisms through which law enforcement agencies can provide regular feedback.  FinCEN also provides a consolidated view of law enforcement feedback as well as feedback on the value and usefulness of institution-specific BSA information.  However, it is important to note that unless mandated by Congress, law enforcement feedback will be voluntary.  FinCEN cannot compel law enforcement compliance with feedback initiatives.” See, p. 89, GAO-19-582.

The National Credit Union Administration (NCUA) provided its comments in support of the GAO recommendations.  It states the agency “believes the recommendations will enhance coordination and collaboration, and increase visibility of the value of current BSA reporting requirements.” See, p. 94, GAO-19-582.

About the Author

Shari Pogach, NCCO, NCBSO, Regulatory Paralegal, NAFCU

 Shari Pogach, NCCO, NCBSO, Regulatory Paralegal

Shari R. Pogach, NCCONCBSO, has served as Regulatory Paralegal for NAFCU's Regulatory Compliance and Regulatory Affairs divisions since 2007.

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