The Financial Crimes Enforcement Network (FinCEN), a bureau within the Department of the Treasury (Treasury), is the U.S. financial intelligence unit (FIU). As an FIU, FinCEN is responsible for receiving, analyzing, and disseminating disclosures from financial institutions concerning suspected proceeds of crime and potential financing of terrorism. Through an international network of FIUs called the Egmont Group, FinCEN shares financial intelligence data with FIUs globally as it relates to ongoing law enforcement efforts.
In addition, FinCEN is the administrator of the Bank Secrecy Act of 1970 (BSA) and regulates the financial industry for anti-money laundering and countering the financing of terrorism. Financial institutions covered by the BSA are required to establish anti-money laundering programs, customer identification programs, and processes and systems for data reporting and recordkeeping related to certain kinds of transactions. These requirements are designed to increase transparency within the financial system to prevent criminal access to financial services and products, whether to fund terrorist operations or to hide the proceeds of other crimes such as drug trafficking..
FinCEN plays four key roles: (1) performing analysis in support of law enforcement; (2) issuing regulations and enforcing compliance; (3) facilitating information-sharing of Bank Secrecy Act (BSA) data; and (4) coordinating with foreign counterparts.
FinCEN activities include:
- Providing analysis was FinCEN’s original mission when it was established in 1990, a role that it continues to perform.
- In its capacity as regulator, FinCEN develops regulations and delegates authority to eight other federal agencies to perform compliance examinations for BSA reporting requirements for referral to FinCEN, which retains enforcement authority.
- In terms of information-sharing, sections 361 and 362 of the USA PATRIOT Act mandate that FinCEN create and maintain networks to enable electronic filing of BSA reports and facilitate dissemination of the data to law enforcement and regulatory agencies.
- In addition, FinCEN participates in and promotes international collaboration and information-sharing among its foreign counterparts to detect and deter illicit financial activities. Between fiscal years 2002 and 2007, FinCEN’s budget grew from $47.5 million to $73.2 million. According to FinCEN, this growth has taken place primarily because of the expansion of its regulatory functions.
FinCEN relies extensively on its own information systems, as well as on systems located at the Treasury components of the Internal Revenue Service (IRS) and the Treasury Communications System (TCS) to manage, store, and disseminate the data that financial institutions are required to report under the BSA.
These data contain sensitive information, including transaction amounts, account numbers, and social security numbers, and are used by law enforcement agencies investigating financial crimes, including terrorist financing and money laundering. The computer systems that support FinCEN’s mission must be properly protected through strong information security controls because a security breach could place sensitive financial and personally identifiable information at risk and allow criminals to subvert law enforcement’s ability to detect illegal activity.
FinCEN relies on information submitted under BSA reporting requirements to fulfill its mission. Specifically, FinCEN collects information submitted and disseminates it to law enforcement and regulatory agencies. The information primarily consists of Currency Transaction Reports (CTR) and Suspicious Activity Reports (SAR) that are filed by financial institutions.
Currency Transaction Reports (CTR) must be filed for any account cash withdrawals and deposits, currency exchanges, and wire transfers purchased with cash exceeding $10,000. Suspicious Activity Reports (SAR) must be filed by financial institutions if a transaction involves or aggregates a minimum threshold of funds or other assets and the institution knows, suspects, or has reason to suspect that the transaction is a violation of law. Law enforcement agencies use the information in these reports in combination with other information that they collect to link individuals and their activities, hinder activities, and prosecute criminals. Financial regulators, such as the Federal Deposit Insurance Corporation and the National Credit Union Administration, use the information to examine financial institutions for compliance with the BSA.
CTRs and SARs contain highly sensitive, detailed information about the financial activity of private individuals that is intended to help federal, state, and local law enforcement agencies in their investigations and, thus, potentially hinder criminal activity. Inappropriate disclosure, modification, or misuse of this information could undermine the ability of the federal government, financial institutions, and law enforcement agencies to combat money laundering and terrorist financing.
- Application of FinCEN's Regulations to Persons Administering, Exchanging, or Using Virtual Currencies
- Application of FinCEN's Regulations to Virtual Currency Mining Operations
- Application of FinCEN's Regulations to Virtual Currency Software Development and Certain Investment Activity
- 31 U.S.C. §5318(g)(1) and 31 C.F.R. §§ 103.15–103.21. Depending on the type of financial institution, the threshold amount may vary. For example, money services businesses generally must file an SAR if a transaction involves or aggregates $2,000 in funds or other assets. SAR forms must be filed for certain suspicious transactions involving possible violations of law or regulation, including transactions that are broken up for the purpose of evading the BSA reporting and record-keeping requirements.
- In addition to the dollar amount of the cash transaction, these reports may record other sensitive information, including the name of the account owner; the name of the person actually conducting the transaction (if not the account holder); social security numbers; driver’s license or identification numbers; and account numbers.