From October 1990 to June 1994 CID initiated 21,507 investigations nationwide. About 4 percent of the cases were initiated as a result of a suspicious transaction report. Among the district offices, however, the

<http://www.mensnewsdaily.com/archive/k/kouri/2004/kouri120704.htm> MND COMMENTARY - Jim Kouri - MensNewsDaily.com
Money Laundering in America December 7, 2004 by Jim Kouri Federal law enforcement officials estimate that between $100 billion and $300 billion is laundered in this country each year. While illegal drug trafficking accounts for much of the funds being laundered, other criminal activities, including terrorism and tax evasion, also account for an extensive amount. In the past two decades, federal law enforcement efforts to combat money laundering have focused on requiring financial institutions to report currency transactions that exceed $10,000. Beginning in 1988, these reports have been supplemented by reports of suspicious transactions. Many of the transactions reported as suspicious involve individuals who appear to be attempting to avoid the $10,000 reporting requirement. However, any activity that deviates from the norm for a particular account can be considered suspicious. The Right to Financial Privacy Act, enacted in 1978, raised questions as to whether financial institutions were authorized to report suspicious transactions. To address these concerns, legislation has been enacted to provide protection against civil liability for institutions reporting suspicious transactions. Banks and other financial institutions report tens of thousands of suspicious transactions each year. The reports have led to the initiation of major investigations into various types of criminal activity. However, because there is no overall control or coordination of the reports, there is no way of ensuring that the information is being used to its full potential. Financial institutions report suspicious transactions on a variety of different forms that provide different types of information and that are filed with different law enforcement and regulatory agencies. The form that is filed most frequently is filed with the Internal Revenue Service (IRS) and kept on a centralized database. However, the form does not contain any information describing the suspicious activity that would allow law enforcement agencies to evaluate the usefulness of the information on the basis of the form alone. Moreover, some institutions have been filing these forms erroneously. IRS and other federal and state law enforcement agencies use the database on a reactive basis; that is, to provide additional information on an investigation that has already been initiated. Other forms used to report suspicious transactions do describe the activity so that the information can be evaluated. However, these forms are filed with six different federal financial regulatory agencies. Because the forms are not maintained on a centralized database, they are not used on a reactive basis. Financial institutions filing this form are required to send a copy of it to the nearest district office of IRS' Criminal Investigation Division. However, IRS has not developed any guidance or directives as to how the information is to be managed as an intelligence resource. Use of the reports to initiate investigations varies among the 35 district offices. The Government Accounting Office identified 15 states that receive copies of suspicious transaction reports filed on one or both of these two-forms. Nine of these states told GAO that they use the information to initiate criminal investigations. The Department of the Treasury, the financial regulatory agencies, and IRS have recently agreed to substantial changes regarding how suspicious transactions are to be reported and how the information is to be used. These proposals, which were made with input from the financial community, have the potential for significantly improving the contribution that suspicious transaction reports make to law enforcement at both the federal and state levels. The IRS does not have agencywide policies or procedures for managing suspicious transaction reports. Consequently, the extent to which special agents in the 35 CID district offices solicit, process, and evaluate the reports is up to the discretion of the district CID chief and varies significantly among districts. The percentage of investigations initiated on the basis of suspicious transaction reports also varies significantly among districts. percentage varied from 0 to over 18 percent. GAO believes that the varying rates are an indication that use of the reports may not be emphasized to the same extent among the districts. Sources: US Department of Justice, US Department of the Treasury and National Security Institute Jim Kouri DISCUSS THIS ARTICLE IN THE FORUM! Jim Kouri, CPP is currently fifth vice-president of the National Association of Chiefs of Police. He's former chief at a New York City housing project in Washington Heights nicknamed "Crack City" by reporters covering the drug war in the 1980s. He's also served on the National Drug Task Force and trained police and security officers throughout the country. He writes for many police and crime magazines including Chief of Police, Police Times, The Narc Officer, Campus Law Enforcement Journal, and others. He's appeared as on-air commentator for over 100 TV and radio news and talk shows including Oprah, McLaughlin Report, CNN Headline News, MTV, Fox News, etc. His book Assume The Position is available at Amazon.Com, Booksamillion.com, and can be ordered at local bookstores. -- ----------------- R. A. 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