Summary

The implementation of the Bank Secrecy Act's reporting requirements and their usefulness to law enforcement efforts were reviewed. Congress envisioned that the reporting requirements of the act would be useful for tracking the financial resources associated with criminal activities and the profits gained from these illegal activities. However, GAO found that the reports required under the act are not widely used and their potential utility as an investigative tool is unknown. The Department of the Treasury, responsible for implementing the act, has initiated actions along with other agencies to correct many of the problems hindering the use of the reports. However, GAO believes that further improvements are needed if the act is to be effectively implemented. GAO also believes that it is time for an overall assessment of the costs and benefits of the act's reporting requirements to determine their usefulness.

GAO found that, after 10 years, the act has not been used sufficiently to demonstrate whether the demands it places on the private sector, especially financial institutions, are commensurate with the benefits obtained by the federal government. GAO believes that the next 2 to 3 years will be crucial to demonstrating the cost-effectiveness of the act's reporting requirements. Recent actions taken by Treasury and the regulatory agencies to improve implementation and compliance, coupled with a greater emphasis on financial investigations by law enforcement agencies, suggest that the act's requirements may now be receiving the attention that Congress envisioned. However, as law enforcement agencies focus more on detecting the financial resources of organized criminals, and as more attention is given to the effects of federal regulatory activities on the national economy, Treasury will have to demonstrate better that the usefulness of the act reports justifies the costs. If this cannot be demonstrated, then GAO believes that the act's reporting requirements should be repealed.