June 19, 2019

June 19, 2019

Subscribe to Latest Legal News and Analysis

June 18, 2019

Subscribe to Latest Legal News and Analysis

June 17, 2019

Subscribe to Latest Legal News and Analysis

FinCEN Dispenses Law Enforcement Awards Based on BSA Reporting

Director Blanco Stresses Importance of BSA Filings to Criminal Investigations and Prosecutions

As we have blogged, Kenneth Blanco, the Director of Financial Crimes Enforcement Network (“FinCEN”), has publically and repeatedly stressed the value of Suspicious Activity Reports (“SARs”) and other Bank Secrecy Act (“BSA”) filings in the context of discussing anti-money laundering (“AML”) enforcement — arguably, partly in order to provide a counter-narrative to a reform movement which questions the investigatory utility to governments and the mounting costs to the financial industry of the current BSA reporting regime.

Last week, and consistent with this approach and a general desire to “message” the importance of the BSA, Director Blanco hosted FinCEN’s fifth annual awards ceremony to recognize the efforts of Federal, state, local, and tribal law enforcement agencies in using the BSA to pursue and prosecute financial crimes.

In his remarks, Blanco credited the BSA for mandating or encouraging information-sharing and reporting, which “provides leads, helps expand cases, identifies networks of criminal and other bad actors, and often helps to alert the regulatory and law enforcement communities to trends in illicit activity, making our communities safer.” Under Secretary for Terrorism and Financial Intelligence Sigal P. Mandelker also made remarks, observing that the success stories underlying the awards “make clear that BSA data is critical in the fight against financial crime.”

FinCEN offers seven award categories: (1) significant fraud; (2) cyber threats; (3) SAR review team; (4) state and local law enforcement; (5) third-party money launderers; (6) transnational organized crime; and (7) transnational security threats. The recipients of the awards included the Internal Revenue Service-Criminal Investigation (“IRS-CI”), the U.S. Attorney’s Office for the Southern District of New York (“USAO-SDNY”), Immigration and Customs Enforcement-Homeland Security Investigations (“ICE-HSI”), the Wilmette Police Department in Wilmette, Illinois, and the Federal Bureau of Investigations (“FBI”). The USAO‑SDNY and IRS-CI took home two awards each.

Indeed, the accomplishments of the enforcement agencies recognized are significant. IRS-CI received commendations for identifying a significant fraud scheme exploiting biodiesel tax credits; IRS-CI used transaction records reflecting large cash withdrawals atypical for the scheming entity to prosecute successfully nine people. IRS-CI also was awarded for its detection of professional third-party money launderers from the Mexican Sinaloa cartel who used Mexican and U.S. shell companies to acquire counterfeit and obsolete cell phones to obtain fraudulent VAT refunds from the Mexican government.

The USAO-SDNY was recognized for its fruitful multi-year investigations into an illegal bitcoin exchange and a large-scale cocaine and heroin trafficking scheme. ICE-HIS used data obtained through the BSA to identify members of a large Mexican cocaine distribution network laundering money through the U.S. financial system. The Wilmette Police Department detected a stolen property fencing ring that recruited heroin addicts to steal specified goods from various stores. The case concluded with the discovery of over $150,000 in stolen merchandise and the seizure of over $140,000 in bulk currency and criminally-derived property. Finally, the FBI busted a Singapore-based commodities company illicitly entering into million-dollar commodities contracts for money laundering and making payments on behalf of sanctioned North Korean banks.

Acknowledging the key role of the regulated community, the press release for the ceremony also carefully noted that “FinCEN’s annual awards program underscores the importance of a successful partnership between the financial industry that provides BSA information and the law enforcement agencies that use it.”

Finally, and although the motive of rewarding law enforcement agents for using BSA filings to pursue successful investigations and prosecutions is entirely understandable, there is potentially a slight ironic tension between this approach to motivating law enforcement officers and the general prohibition against disclosing the existence or non-existence of a SAR filing to the subject of the filing — because SAR filings presumably serve as the primary genesis of the investigations and prosecutions being lauded by FinCEN.  Of course, the awards ceremony is generic in its descriptions and no specific SAR filings are referenced.

Copyright © by Ballard Spahr LLP

TRENDING LEGAL ANALYSIS


About this Author

Juliana Carter, Litigator, Civil, Criminal Disputes, Philadelphia, Ballard Spahr Law Firm
Associate

Juliana B. Carter is an associate in the Litigation Department. Ms. Carter has trial experience with a range of civil and criminal disputes. She has also defended clients in tort litigation and arbitration proceedings.

Ms. Carter completed internships in the offices of the Philadelphia District Attorney, the Education Law Center of Pennsylvania, and the Southeastern Pennsylvania Transportation Authority (SEPTA). Ms. Carter was also appointed a mediator within the Philadelphia Municipal Court, helping to facilitate the settlement of small-claims and landlord-tenant disputes between...

215-864-8112