The Cornerstone Report: Volume 2, Issue 3
The Currency Transaction Report
The Bank Secrecy Act (BSA) of 1970 introduced a number of monetary transaction reporting requirements designed to prevent criminal organizations from exploiting the U.S. financial system by moving and stockpiling their illicit funds. These reporting requirements are invaluable tools for law enforcement and are the backbone of the United States’ anti-money laundering program. Each reporting requirement provides a layer of defense, and the Currency Transaction Report (CTR) is the first line of that defense.
The August 2005 Cornerstone Report focused specifically on Suspicious Activity Reports (SARs). In this article, we will explore from a law enforcement perspective the value of CTRs and their role in preventing and detecting illicit financial transactions. While this article will only provide a snap shot of how CTRs are used by ICE and benefit the United States, we feel it is important.
Financial institutions are required to file a CTR for cash transactions of more than $10,000. The placement of funds into the financial system is recognized by law enforcement as the criminal’s most vulnerable stage of the money laundering process, and CTR reporting requirements
play a major role in combating the infusion of illicit proceeds into our legitimate financial system. Drug dealers, arms traffickers, alien smugglers and countless other criminal organizations know about CTR reporting requirements—forcing them to operate outside of legitimate business practices which raise “red flags” in the financial and law enforcement communities, making them vulnerable to detection.
To avoid these red flags, criminal organizations sometimes establish cash-intensive businesses in an attempt to legitimize the filing of CTRs by financial institutions on their illegitimate cash transactions. However, once law enforcement becomes aware of these criminal organizations through sources of information or other investigative leads, these CTRs become invaluable and establish a trail that documents the movement of their illicit funds. Being able to follow the trail of illegal money helps law enforcement discover criminals they might not have otherwise known about. Required financial reporting also unveils the wider range of illegal activities in which known criminals may be engaged, as well as others who may also be criminally associated.
CTR queries have long been a routine investigative tool utilized by ICE. They help investigators detect illegal activity, develop leads and expand existing investigations. CTR databases are readily accessible to law enforcement and provide a wealth of identifying information related to a subject, including full name, address, date-of-birth, social security number, passport number, driver’s license information, alien registration number, primary and secondary bank account information, and related businesses and business addresses—information investigators can use to help identify subjects.
ICE special agents utilize CTRs to establish links between individuals and businesses, and to identify co-conspirators and potential witnesses. This information is often utilized to meet the “probable cause” requirement necessary to obtain search, arrest and seizure warrants. CTRs also provide critical information relating to asset identification. The identification and seizure of a criminal organization’s assets can be devastating to the organization and is an important tool for law enforcement.
ICE conducts approximately 1 million record checks of BSA data each year; CTRs are routinely queried at the initiation and throughout an investigation. With current data mining technology and techniques, law enforcement agencies can now utilize CTRs in powerful ways to identify trends and patterns, and to identify individuals operating outside of these legitimate business practices. For example, ICE utilizes CTRs to identify trade-based money laundering schemes that can be used to launder millions in illicit proceeds, which can adversely impact the United States economic security, and devastate the economy of our international trading partners.
The CTR requirement is part of a process which limits the criminal’s options to move and store their illicit funds. Individuals and businesses conducting legitimate transactions have no reason to avoid the filing of CTRs. However, criminals are forced to make a choice between appearing to be a legitimate customer, thereby exposing their assets and money movements through BSA reporting requirements, or engaging in risky, illegal actions to conceal the movement of their funds. Suspicious attempts to avoid the filing of a CTR by structuring cash deposits (making a series of deposits just under the $10,000 reporting threshold over a number of days) is a significant red-flag indicator of criminal activity and one of the most frequent triggers for the filing of a SAR. With the development of a world economy and the move to a cashless society, the importance of the CTR will continue and grow, not just for the banking community but for ICE and their law enforcement partners.