FinCen's Electronic Filing to Enhance Data Quality and Significantly Reduce Costs
By: Steve Hudak
7/2/2012
A new requirement to electronically file Financial Crimes Enforcement Network (FinCEN) forms became effective on July 1, 2012. This will result in significant savings for the U.S. Government, financial institutions, and ultimately for the U.S. taxpayers. Mandatory E-Filing will also enhance the quality of FinCEN’s electronic data, improve its analytical capabilities, and ultimately it will make it quicker and easier for law enforcement to track criminal money.
Over the past 20 years, banks, casinos, brokerages, and many other financial businesses have filed millions of paper forms with FinCEN. Many large and sophisticated firms eventually started using magnetic tape, but even with these advances millions of paper forms still had to be reviewed and manually keyed into the FinCEN Database. Last year alone, financial institutions and individuals filed more than 17 million separate reports with FinCEN and more than 2 million of those were on paper. Although a variety of reports are required under FinCEN’s regulations, the majority of these fall into two categories. The first category covers Currency Transaction Reports (CTRs), which are filed in connection with cash transactions involving currency exceeding $10,000. The second category focuses on Suspicious Activity Reports (SARs) which are filed in connection with transactions that financial institutions know, or have reason to suspect, may be related to illicit activity. FinCEN reports create a financial trail that law enforcement and intelligence agencies use to track criminal and terrorist networks, and their activities and assets. These reports help detect and deter illicit activity, including money laundering, the financing of terrorist activity, and many other types of fraud.
Several years ago, FinCEN started encouraging financial institutions to use its free, Web-based system known as the Bank Secrecy Act Electronic Filing System (BSA E-Filing) in an attempt to cut down on paper reports. In September 2011, FinCEN proposed that nearly all FinCEN reports be electronically filed. After an extensive review of comments and suggestions from the industry and the public, FinCEN reaffirmed this requirement in February 2012. As of July 1, 2012, FinCEN is no longer accepting most paper filings, and has considered extensions and exemptions only in certain circumstances.
Mandatory E-Filing supports Treasury’s flagship initiative of moving toward a paperless Treasury. It also allows for greater data security and privacy compared with paper forms, ensures compatibility with future versions of FinCEN reports, and allows quicker access to investigators. E-Filing also positively impacts the public by reducing government and industry costs and the environmental waste of paper forms. This will save the U.S. Government millions of dollars per year through the reduction of expenditures associated with paper processing, in particular the physical intake and sorting of incoming reports, and the manual keying of reported information into FinCEN’s database.
Almost all FinCEN reports fall within the electronic filing mandate. For practical reasons, the Currency and Monetary Instrument Report (CMIR), which is most often completed by individuals upon physically crossing the border into the United States, and paper versions of FinCEN Form 8300 (Report of Cash Payments Over $10,000 Received in a Trade or Business) are not included in the mandate. In addition, while FinCEN strongly encourages individuals to electronically file Reports of Foreign Bank and Financial Accounts (FBARs), FinCEN has granted an exemption for mandatory FBAR E-Filing until June 30, 2013.
By: Steve Hudak
7/2/2012
A new requirement to electronically file Financial Crimes Enforcement Network (FinCEN) forms became effective on July 1, 2012. This will result in significant savings for the U.S. Government, financial institutions, and ultimately for the U.S. taxpayers. Mandatory E-Filing will also enhance the quality of FinCEN’s electronic data, improve its analytical capabilities, and ultimately it will make it quicker and easier for law enforcement to track criminal money.
Over the past 20 years, banks, casinos, brokerages, and many other financial businesses have filed millions of paper forms with FinCEN. Many large and sophisticated firms eventually started using magnetic tape, but even with these advances millions of paper forms still had to be reviewed and manually keyed into the FinCEN Database. Last year alone, financial institutions and individuals filed more than 17 million separate reports with FinCEN and more than 2 million of those were on paper. Although a variety of reports are required under FinCEN’s regulations, the majority of these fall into two categories. The first category covers Currency Transaction Reports (CTRs), which are filed in connection with cash transactions involving currency exceeding $10,000. The second category focuses on Suspicious Activity Reports (SARs) which are filed in connection with transactions that financial institutions know, or have reason to suspect, may be related to illicit activity. FinCEN reports create a financial trail that law enforcement and intelligence agencies use to track criminal and terrorist networks, and their activities and assets. These reports help detect and deter illicit activity, including money laundering, the financing of terrorist activity, and many other types of fraud.
Several years ago, FinCEN started encouraging financial institutions to use its free, Web-based system known as the Bank Secrecy Act Electronic Filing System (BSA E-Filing) in an attempt to cut down on paper reports. In September 2011, FinCEN proposed that nearly all FinCEN reports be electronically filed. After an extensive review of comments and suggestions from the industry and the public, FinCEN reaffirmed this requirement in February 2012. As of July 1, 2012, FinCEN is no longer accepting most paper filings, and has considered extensions and exemptions only in certain circumstances.
Mandatory E-Filing supports Treasury’s flagship initiative of moving toward a paperless Treasury. It also allows for greater data security and privacy compared with paper forms, ensures compatibility with future versions of FinCEN reports, and allows quicker access to investigators. E-Filing also positively impacts the public by reducing government and industry costs and the environmental waste of paper forms. This will save the U.S. Government millions of dollars per year through the reduction of expenditures associated with paper processing, in particular the physical intake and sorting of incoming reports, and the manual keying of reported information into FinCEN’s database.
Almost all FinCEN reports fall within the electronic filing mandate. For practical reasons, the Currency and Monetary Instrument Report (CMIR), which is most often completed by individuals upon physically crossing the border into the United States, and paper versions of FinCEN Form 8300 (Report of Cash Payments Over $10,000 Received in a Trade or Business) are not included in the mandate. In addition, while FinCEN strongly encourages individuals to electronically file Reports of Foreign Bank and Financial Accounts (FBARs), FinCEN has granted an exemption for mandatory FBAR E-Filing until June 30, 2013.
