Saturday, April 6, 2024

Report on IRS CI Use of BSA Filings in Financial Crime Investigations (4/6/24)

The IRS has posted this report on the use of the BSA filings.  IRS CI, Primary subject in nearly 88% of investigations opened by CI in FY23 had a BSA filing, here(1/17/24; last reviewed or updated 1/18/24 and viewed 4/6/24). The posting mentions specifically third-party reports such as suspicious activity reports and currency transaction reports. The report is short but I copy and paste a couple of key paragraphs:

The primary subject in nearly 88% of investigations opened by CI during fiscal year 2023 (FY23) had a BSA filing. From FY21 to FY23, BSA data was instrumental in securing average prison sentences of 39 months and seizing $7.4 billion in assets tied to criminal investigations. BSA data during this same timeframe also resulted in restitution orders totaling $434 million and forfeited assets totaling $629 million, nearly double and triple the amounts, respectively, from FY20 to FY22.

* * * *

Under the BSA, financial institutions must notify the federal government when they encounter instances of potential money laundering or tax evasion. Of the CI investigations that originated from BSA data in FY23, 77% used information from suspicious activity reports, and 63.6% used information from currency transaction reports. Additionally, 16.5% involved fraudulent Small Business Association loans tied to COVID relief programs, 7.1% involved skimming where the primary subject steals funds from a business or charity and 4.7.% involved employment tax fraud where taxes due were not paid.

The key information relates to “financial crime investigations” which is defined at the end to include “tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more.” (Bold-face supplied by JAT.) I wonder whether the data set from which the 88% figure derives includes garden-variety tax crimes. My question is whether garden-variety tax crimes would generate such a high number of third-party BSA reports. Or, maybe the 12% remainder accounts for most of the garden-variety tax crimes.

A similar report came out last year. BSA data serves key role in investigating financial crimes, here (1/18/23, last reviewed or updated 11/9/23, and viewed 4/6/24),. That report showed an 83% figure over the past 3 years. The FY23 report mentioned above was at 88% but only related to a single year.

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