FinCEN annual report: How DOJ, IRS use SARs to aid probes

If you work at a financial institution, you’ve likely wondered whether these SARs are ever even read, no less acted upon.

The Bank Secrecy Act (BSA) requires approximately 260,000 financial institutions to have policies and procedures in place to identify and report suspicious activity within their transactions. Suspicious activity consists of money laundering, terrorist financing, or financing of weapons of mass destruction (proliferation financing).

In its year in review for fiscal year 2022, published Tuesday, FinCEN laid out the law enforcement investigations derived from the 4.3 million SARs filed in FY2022. The period covered began Oct. 1, 2021, and ended Sept. 30.

Collectively, 472 federal, state, and local law enforcement, regulatory, and national security agencies have access to BSA reports and can run queries in FinCEN’s database—a total of more than 25,000 authorized personnel—the report said.

Over the past six years, the Department of Justice has run millions of queries in the FinCEN database, which contains information from the SARs filed by financial institutions.

“BSA data, when combined with other investigative information, can illuminate crimes committed by transnational criminal organizations: child exploitation, cybercrime, narcotics, human smuggling, weapons trafficking, and various financial crimes,” said Steve Francis, acting executive associate director of Homeland Security Investigations (HSI), in the report. The HSI is the principal investigative arm of the Department of Homeland Security.

From October 2020 to July 2022, SARs provided investigators with support for 46 percent of active transnational organized crime investigations, nearly 40 percent of active Organized Crime Drug Enforcement Task Force investigations with Federal Bureau of Investigation participation, more than 36 percent of active complex financial crimes investigations, nearly 28 percent of active public corruption investigations, nearly 21 percent of active international terrorism investigations, and nearly 16 percent of active FBI investigations, the report said.

Nearly 16 percent of all Internal Revenue Service investigations in FY22 were launched using BSA data, FinCEN said, while more than 83 percent of all IRS criminal investigations from FY2020-22 had a primary subject with a related BSA filing.

The BSA, under Section 314(b) of the Patriot Act, allows financial institutions to work collaboratively with one another to identify and report potential suspicious activities occurring across their networks to FinCEN. More than 7,600 institutions voluntarily participated in the program in FY22, which resulted in more than 26,400 SARs that mentioned Section 314(b), the report said.