Detailed Information on the
Bank Secrecy Act Analysis Assessment

Evaluating the feasibility of better assessing law enforcement impact of FinCEN's products. During FY 2007, FinCEN is taking numerous steps, including meeting with internal and external stakeholders, to evaluate the options for better assessing the law enforcement impact related to the utility of BSA data. In FY 2008, based on the information collected, FinCEN will draft a recommendation on the next steps to implement a process to collect information that would quantify the impact of utilization of BSA data to law enforcement.

Developing measures of the impact of FinCEN's efforts to strengthen anti-terrorist financing and anti-money laundering programs worldwide. In FY 2007, FinCEN determined that an annual customer survey would be the most appropriate mechanism for measuring the impact of FinCEN's efforts to strengthen anti-terrorist financing and anti-money laundering programs worldwide. In the remainder of FY 2007, FinCEN will: identify international liaison activities that could be utilized to measure impact, draft a survey to solicit customer input, and create a new or refine an existing database to capture requisite contact information for potential respondents. In FY 2008, FinCEN will administer the survey and review and analyze the response rate.

FinCEN will work to provide better understanding of its analytical products and services to law enforcement customers, better meet its customer's needs, and create process for assessing and prioritizing requested products and services.

Developing a plan to improve the survey response rate from domestic law enforcement. FinCEN has devised a plan to improve its survey response rate and will continue to monitor the response rates and make adjustments as necessary.

Measure: Percent of complex analytical work completed by FinCEN analysts.

Explanation:This measure tracks FinCEN's progress toward increasing the number of complex analysis reports produced.

Measure: The percentage of private industry or financial institution customers finding FinCEN's SAR Activity Review products valuable.

Explanation:This measure evaluates the impact and usefulness of FinCEN's Suspicious Activity Report (SAR) Reviews to financial institution customers. The measure is based on information collected through a customer survey.

Measure: Median time taken from date of receipt of Financial Institution Hotline Tip SAR to transmittal of a written analytical report to law enforcement or the intelligence community.

Explanation:This measure tracks our efficiency of processing Hotline tips and providing analysis to law enforcement and the intelligence community.

Measure: The percentage of domestic law enforcement and foreign financial intelligence units finding FinCEN's analytical reports highly valuable.

Explanation:This measure evaluates the impact and usefulness of the analytic reports based on responses to a customer survey. The survey looks at whether customers use the reports to open new investigations; whether the data generates new leads; whether the data provides information previously unknown or expands new information; and the usefulness of the information to investigations.

Measure: The percent of countries/jurisdictions connected to the Egmont Secure Web within one year of Egmont membership.

Explanation:The measure monitors FinCEN's success in ensuring that foreign intelligence units have a secure method for transmitting anti-money laundering and terrorist financing information.

Is the program purpose clear?

Explanation: This program's purpose is to combat terrorism, money laundering and other financial crime through analysis of Bank Secrecy Act (BSA) data and other relevant information and to reduce global vulnerability of both the formal and informal financial sectors to abuse by terrorists and other criminals. FinCEN's activities support policy, law enforcement, regulatory and intelligence efforts and foster global cooperation against domestic and international financial crimes.

Evidence: Treasury Order 180-01; USA PATRIOT Act, HR 3162, Title III, Sec 361, Subsection 310 (C) and (E) through (H); Treasury Strategic Plan FY 2004-2009 (Strategic Goal F3); FinCEN Strategic Plan FY 2006-2008, pg 6

Does the program address a specific and existing problem, interest, or need?

Explanation: FinCEN was created by order of the Secretary of the Treasury on April 25, 1990. Section 361 of the US PATRIOT Act established the organization as a bureau within Treasury and clarified the duties and powers of the Director. FinCEN's duties, as clarified, include analyzing BSA data and coordinating with financial intelligence units in other countries on anti-terrorism and anti-money laundering initiatives. FinCEN's analysis is used by both domestic and foreign law enforcement.

Evidence: USA PATRIOT Act, HR 3162, Title III, Sec 311 and Sec 361, Subsection 310, (C) and (E) through (H).

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: Although other federal, international, and state and local entities conduct their own analysis of BSA data, FinCEN's analysts complement and add to their efforts by responding to specific requests from federal and international institutions and law enforcement entities for complex data analysis. FinCEN also acts as an intermediary for domestic law enforcement with foreign FIUs, and identifies and connects agencies working on similar cases. In addition, the USA PATRIOT Act of 2001 requires FinCEN to furnish research, analytical, and informational services to financial institutions and appropriate law enforcement entities, including foreign Financial Intelligence Units (FIUs).

Evidence: USA PATRIOT Act, HR 3162, Title III, Sec 311 and Sec 361, Subsection 310, (C) and (E) through (H); FY 2004 FinCEN Annual Report, pgs 4, 19 and 20; FinCEN Strategic Plan FY 2006-2008, pgs 6-18; Financial Action Task Force (FATF) mandate; Egmont Statement of Purpose and Principles for Information Exchange Between Financial Intelligence Units; Press Release and Fact Sheet, Egmont Plenary (Jun 2005); Memorandum of Understanding Between FinCEN and Federal Regulators

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: FinCEN's analytics division underwent a reorganization in 2004 to better align resources with the program's strategic goal of combating terrorism, money laundering, and other financial crime through analysis of BSA data. Under the new analytics division, all analysts are expected to handle all types of cases (both routine and complex), resulting in more analysts handling complex analytic work. In addition, FinCEN employs contractor staff to do research, primarily for routine requests. By dedicating more analysts to complex analytic work, the design allows FinCEN to more readily produce complex analytic work in support of law enforcement investigations, a key goal of the program.

Evidence: Office of Inspector General Study, Terrorist Financing/Money Laundering: FinCEN Has Taken Steps to Better Analyze Bank Secrecy Act Data But Challenges Remain and Skills Assessment; US Government Accountability Office, International Financial Crime: Treasury's Roles and Responsibilities Relating to Selected Provisions of the USA PATRIOT Act (May 2006).

Is the program design effectively targeted so that resources will address the program's purpose directly and will reach intended beneficiaries?

Explanation: FinCEN's BSA Analysis program was reviewed by the Treasury Office of the Inspector General between September 2004 and July 2005. This evaluation identified the need to develop capabilities and target more resources toward more complex analysis of BSA data and proactive casework. As a result, FinCEN has undertaken various efforts to improve program management and to address the additional analytical training and tools required for more complex analysis of BSA data and proactive casework.

Evidence: Office of Inspector General Study, Terrorist Financing/Money Laundering: FinCEN Has Taken Steps to Better Analyze Bank Secrecy Act Data But Challenges Remain and Skills Assessment; USA PATRIOT Act; FY 2007 Congressional Budget Submission; Egmont Statement of Purpose and Principles for Information Exchange Between Financial Intelligence Units

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: FinCEN has two long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program. The first measure is the percentage of customers (domestic law enforcement and foreign financial intelligence units (FIUs)) finding FinCEN's analytical reports highly valuable. The measure is a composite measure compiled from survey results. The surveys look at the impact of FinCEN's analysis products, such as whether the product was used to open a new investigation, whether it generated new leads, or whether it provided information previously unknown. The second long-term measure is the percentage of financial institution customers that find FinCEN's Suspicious Activity Review products useful. The measure is also a composite measure compiled from survey results. The surveys look at whether regulated industries find the products useful to improving their BSA/anti-money laundering programs and whether the products provide useful guidance on filing requirements.

Evidence: FY 2007 Congressional Budget Submission, FinCEN FY 2006 Director's Quarterly Report.

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: In 2006, FinCEN received baseline data for both of its long-term measures, and has set incremental targets that work toward an ambitious goal of 80% of customers rating FinCEN's products as highly valuable.

Evidence: FY 2007 Congressional Budget Justification.

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: In addition to monitoring the two long-term measures on an annual basis, FinCEN also tracks the percentage of complex analytic products completed by FinCEN analysts. This measure looks at FinCEN's progress toward increasing the number of complex analysis reports produced.

Evidence: FY 2007 Congressional Budget Submission, FinCEN FY 2006 Director's Quarterly Report (first quarter).

Does the program have baselines and ambitious targets for its annual measures?

Explanation: The baseline for the percent of complex analytic work completed by FinCEN analysts was set in 2004 at 1.6 and annual targets anticipate progress toward an ambitious long-term goal of 75 percent by 2008.

Evidence: FY 2007 Congressional Budget Submission, FinCEN FY 2006 Director's Quarterly Report (first quarter).

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: Contractors for case processing and information technology that provide support for the program's analytical tools have contracts that include performance requirements, such as delivering software that is capable of performing the requisite functions and is delivered in accordance with the stated schedule. However, a recent audit by Treasury's Office of the Inspector General identified significant issues with FinCEN's case management system which impacts the reliability of the case management data FinCEN reports. FinCEN partners internationally through the Financial Action Task Force (FATF), the premier international body dedicated to safeguarding the global financial system against money laundering and terrorist financing, and the Egmont Group, a group of 100 plus Financial Intelligence Units, dedicated to the exchange of information for the same purposes. These organizations share the goals of the program, which are outlined in the FATF Mandate and the Egmont Statement of Purpose.

Evidence: Base Technologies Inc., contract, (PART 2, Statement of Work); Visual Analytics, Inc., (Performance Work Statement); Financial Action Task Force (FATF) mandate; Egmont Statement of Purpose and Principles for Information Exchange Between Financial Intelligence Units, Press Release and Fact Sheet, Egmont Plenary (Jun 2005)

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: Although the Treasury Office of Inspector General (OIG) has recently conducted an evaluation of FinCEN's internal processes in conducting analysis of BSA data, no evaluations to date have been conducted on the effectiveness of FinCEN's analysis of BSA data in combating terrorism, money laundering and financial crime.

Evidence: Office of Inspector General Study, Terrorist Financing/Money Laundering: FinCEN Has Taken Steps to Better Analyze Bank Secrecy Act Data But Challenges Remain.

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: FinCEN's budget is performance-based and specifically ties to the accomplishment of its annual and long-term performance goals. Using the guidance and format of the Department of Treasury, FinCEN's budget is presented programmatically to align resources with performance and to define the relationship between the performance targets and budget resources. FinCEN has two major budget activities: 1) BSA Administration and Analysis, and 2) Regulatory Support Programs. For each activity, in the Summary of Program Resources and Performance, budget and performance information are provided to explain historical trends, performance challenges, and expectations. Further performance planning information is included in the Performance Plan Section.

Evidence: FY 2007 Congressional Budget Submission; OIG Audit of FinCEN's FY 2005 Balance Sheet, pg 17.

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: Consistent with the new terrorism and financial intelligence focus of the Department of Treasury, FinCEN released an updated strategic plan for FY 2006 - FY 2008. The Department of the Treasury is currently revising its Department-wide strategic plan, and FinCEN is subsequently revising its strategic plan to align with the Department's. In addition to the above, the program has a Strategic Plan Implementation team and has adopted policies to align casework and weekly reporting with strategic goals in an effort to reduce strategic planning deficiencies, such as clarifying and strengthening quantifiable performance measures.

Evidence: FinCEN Strategic Plan FY 2006 - FY 2008.

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: In May 2006 the Treasury Office of the Inspector General issued a report on FinCEN's ability to analyze BSA data as well as issues associated with FinCEN's case management information system, the database that FinCEN uses to track and report on their analytical work. The report identified significant concerns with FinCEN's ability to accurately report complete performance data due to weaknesses identified with its database system.

Evidence: OIG Report: Terrorist Financing/Money Laundering: FinCEN Has Taken Steps to Better Analyze Bank Secrecy Act Data But Challenges Remain (May 2006).

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: In 2005, FinCEN senior managers had program performance elements that tie to goal achievement written into their performance plans. Success with these elements is ranking criteria for the managers' yearly performance ratings. However, program partners, including both international partners and contract support, are not held accountable for performance results.

Evidence: FY 2005 Senior Management Performance Plan; Base Technologies Inc., contract, Section 1L, Past Performance Review; Visual Analytics, Inc., contract, Section 16 (Past Performance Review).

Are funds (Federal and partners') obligated in a timely manner, spent for the intended purpose and accurately reported?

Explanation: FinCEN's resource and acquisition review processes ensure that resources are used for the programs for which they are intended. All proposed acquisitions are subject to a multi-level review process. All acquisitions are reviewed by the program/project officer, Division Director or Assistant Director, and by the Deputy CFO. All acquisitions over the $25,000 threshold are approved by the Deputy Director of FinCEN. FinCEN's Investment Review Board reviews all major information technology projects. All funds are reviewed on a quarterly basis by the CFO's office to ensure funds are obligated timely and in accordance with the funding plan, which is approved by the Deputy Director. FinCEN plans for an unobligated lapse of approximately 0.5 percent of estimated obligations for potential adjustments needed in future years.

Evidence: Standard Object Class Table; Quarterly Financial Management Reports-sample attached; SF-132 (Apportionment); SF-133 (Report on Budget Execution).

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: The program has two efficiency measures. The first was established in 2005 and tracks the timeliness of analysis products. The measure looks at the median time taken from date of receipt of financial institution hotline tip SAR to transmittal of a written analytical report to law enforcement or the intelligence community. The second measure monitors FinCEN's progress in connecting new foreign intelligence units to the Egmont Secure Web within one year of Egmont membership. This measure tracks FinCEN's success in ensuring that FIUs have a secure method for transmitting anti-money laundering and terrorist financing information.

Evidence: FY 2007 Congressional Budget Submission, FinCEN FY 2006 Director's Quarterly Report (first quarter).

Does the program collaborate and coordinate effectively with related programs?

Explanation: FinCEN collaborates effectively with its partners and related programs. For example, FinCEN has engaged its customers to identify opportunities for complex case support, and began providing bulk data downloads of the BSA data directly to its primary law enforcement customers, allowing them to integrate the data with their own data warehouses. FinCEN is also a part of the interagency Money Laundering Threat Assessment Working Group, a group composed of experts from the spectrum of U.S. Government agencies, bureaus and offices. FinCEN works collaboratively with offices within the Treasury Office of Terrorism and Financial Intelligence to provide BSA research and analysis in furtherance of the shared goal of safeguarding the U.S. and international financial systems from abuse of terrorist financing and financial crimes. FinCEN is engaged internationally as a member of both the Financial Action Task Force (FATF) and the Egmont group, both dedicated to the global efforts to combating money laundering and terrorist financing. FinCEN leads the Bank Secrecy Act Advisory Group (BSAAG) a unique venue in which industry, law enforcement, and the regulators can discuss critical BSA issues. The program has signed Memorandums of Understanding (MOU) with the five federal regulators that establish procedures for information exchange to enhance filing and record keeping compliance.

Evidence: Financial Action Task Force (FATF) mandate and FATF Money Laundering & Terrorist Financing Typologies 2004-2005; Egmont Principles for Information Exchange Between Financial Intelligence Units; Press Release and Fact Sheet, Egmont Plenary (Jun 2005); 2005 U.S. National Money Laundering Threat Assessment; Input for National Money Laundering Strategy; FinCEN Annual Report 2004, SAR Activity Review - Trends, Tips & Issues; Bank Secrecy Act Advisory Group Meeting Summary; Memorandum of Understanding Between FinCEN and Federal Regulators

Does the program use strong financial management practices?

Explanation: In an audit of FinCEN's balance sheet for fiscal year 2005, one material weakness was reported related to internal controls over financial reporting. FinCEN has taken steps to correct this weakness.

Evidence: OIG-06-027 Audit of FinCEN's FY 2005 Balance Sheet

Has the program taken meaningful steps to address its management deficiencies?

Explanation: The two main tools for management in monitoring and improving performance for FinCEN consist of an effective management information system and obtaining feedback from customers through surveys. Two recent reports, one by the Government Accountability Office and one by Treasury's Office of the Inspector General, highlight key issues related to FinCEN's management information system and FinCEN's customer satisfaction surveys.

Evidence: OIG Report: Terrorist Financing/Money Laundering: FinCEN Has Taken Steps to Better Analyze Bank Secrecy Act Data But Challenges Remain (May 2006); GAO Report: International Financial Crime: Treasury's Roles and Responsibilities Relating to Selected Provisions of the USA PATRIOT Act (May 2006).

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: FinCEN's two long-term performance measures were implemented in 2006, so only basline data is available.

Evidence:

Does the program (including program partners) achieve its annual performance goals?

Explanation: For the annual goal associated with the percent complex analytic work, FinCEN met the 2005 target of 10% and exceeded the 2006 target of 25%.

Evidence: FY 2007 Congressional Budget Submission, FinCEN FY 2006 Director's Quarterly Report (first quarter).

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: In 2005, FinCEN established an efficiency measure looking at the median time taken from date of receipt of financial institution hotline tip and terrorism related SAR to transmittal of a written analytical report to law enforcement or the intelligence community. In 2006, FinCEN exceeded its target time of 30 days with a median response time of 19 days. FinCEN also monitors the percentage of countries/jurisdictions connected to the Egmont Secure Web within one year of becoming a member of the Egmont group.

Evidence: FY 2007 Congressional Budget Submission, FinCEN FY 2006 Director's Quarterly Report (first quarter).

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: The FinCEN customer satisfaction survey calculated the American Customer Satisfaction Index (ASCI) for the analytic products that make up the program. It is the only uniform, cross-industry/government measure of customer satisfaction. The ASCI allows for benchmarking between the public and private sectors. The ASCI scores, indicated in parenthesis, were calculated for three analytic products - Investigative Case Reports (62), Investigative Target Reports (78), and SAR Activity Review publications (67). Satisfaction scores of other regulatory agencies are in the low 60's. Therefore, satisfaction with FinCEN's Investigative Case Reports is on par with other regulatory agencies, and satisfaction with FinCEN's Investigative Target Reports and SAR Activity Review publications is higher in comparison with other regulatory agencies.

Evidence: FinCEN Customer Satisfaction Survey, Final Report, 2005.

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: The Treasury Office of the Inspector General study found that while FinCEN has taken steps to increase its use of analytic tools and methods for identifying trends and patterns in BSA data, FinCEN has made only limited progress in increasing its complex data mining and analysis. Since the study, FinCEN has undertaken various efforts to address the additional analytical training and tools required for more complex analysis of BSA data and proactive casework.

Evidence: Office of Inspector General Study, Terrorist Financing/Money Laundering: FinCEN Has Taken Steps to Better Analyze Bank Secrecy Act Data But Challenges Remain.