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Part 4. Examining Process

Chapter 26. Bank Secrecy Act

Section 2. Program Structure

4.26.2  Program Structure

4.26.2.1  (11-17-2006)
Overview

  1. This section describes the regulatory and organizational structure of the IRS SB/SE Bank Secrecy Act (BSA) compliance examination program.

4.26.2.2  (11-17-2006)
Regulatory Structure

  1. Civil anti-money laundering statutes are found in two separate titles of the United States Code:

    • 31 U.S.C. 5311 and following (Title 31), commonly referred to as the Bank Secrecy Act (BSA) and

    • 26 U.S.C. 6050I (Title 26), Internal Revenue Code.

4.26.2.2.1  (11-17-2006)
Title 31

  1. The Department of the Treasury has primary responsibility for implementing and enforcing the BSA. The Secretary of the Treasury delegated the authority to administer the BSA to the Director, Financial Crimes Enforcement (FinCEN). FinCEN re-delegated responsibility for assuring civil compliance with the law to various Federal agencies including the Internal Revenue Service. Treasury Directive 15–41 (See IRM Exhibit 4.26.1–2 .) and 31 C.F.R. 103.56(b)(8) delegate the responsibility to examine and assure compliance with the requirements of 31 C.F.R. part 103 for certain entities to the IRS.

  2. Most entities under IRS jurisdiction are commonly referred to as non-bank financial institutions (NBFIs). IRS also has the delegated authority to examine banks and other financial institutions that are not examined by federal bank supervisory agencies for safety and soundness. Thresholds determine if some financial institutions are subject to the BSA. (See IRM 4.26.5.) NBFIs currently include:

    1. Money Service Businesses (MSBs), subject to certain transaction thresholds, including, Currency Dealer or Exchanger; Check Casher; Issuer of Traveler's Checks, Money Orders or Stored Value; Seller or Redeemer of Traveler's Checks, Money Orders or Stored Value; and Money Transmitter.

    2. Casinos and Card Clubs (including Indian tribal casinos).

    3. Insurance companies subject to the Anti-Money Laundering (AML) compliance program requirements of the BSA.

    4. Dealers in precious metals, jewels and gems subject to the AML compliance program requirements of the BSA.

  3. FinCEN is delegated the primary regulatory authority for Title 31. This includes writing of regulations and imposing civil penalties.

  4. FinCEN Counsel is the legal authority for interpretation of Title 31 law and regulations. All requests for technical advice relating to BSA matters must be routed through the BSA Policy Program Manager for transmission to FinCEN. IRS Office of Chief Counsel should not be asked to render advice on Title 31 except for Report of Foreign Bank and Financial Accounts (FBAR) issues. IRS Criminal Tax may provide legal advice concerning the criminal aspects of Title 31, including forfeiture.

  5. Communications with FinCEN must be routed through the BSA Policy FinCEN Liaison. Contact information is available on the BSA website at http:\/\/sbse.web.irs.gov\/FR\/BSA. BSA field personnel are not to contact FinCEN directly.

4.26.2.2.2  (11-17-2006)
Title 26

  1. IRC 6050I is part of Title 26, the Internal Revenue Code, under the regulatory authority of IRS Office of Chief Counsel.

  2. Requests for technical advice should be routed through normal channels to the BSA Policy Program Manager for transmission to the Office of Chief Counsel.

4.26.2.3  (11-17-2006)
Organizational Responsibilities

  1. Within the IRS SB/SE Operating Division, the Director, Fraud/BSA, is responsible for oversight and policy direction for the BSA Program.

4.26.2.3.1  (11-17-2006)
Responsibilities of the Director of Fraud/BSA

  1. The Director of Fraud/BSA has the following responsibilities:

    1. Working in conjunction with FinCEN to set national goals and policies for the IRS BSA compliance program;

    2. Establishing procedures to ensure the effectiveness of the national program;

    3. Coordinating with Learning and Education to deliver training classes to ensure uniform application of law and regulation;

    4. Acting as liaison with FinCEN for Title 31 matters;

    5. Reviewing Title 31 summonses and penalty referrals prior to referral to FinCEN;

    6. Analyzing program statistics and disseminating them to appropriate parties (e.g., Treasury, Congress);

    7. Preparing briefings for Congress and upper management;

    8. Working with SB/SE Stakeholder Liaison formerly, Taxpayer Education and Communication (TEC), to coordinate outreach for industry and trade association groups.

    9. Conducting field program reviews;

    10. Maintaining the BSA web site;

    11. Coordinating with the other operating divisions within IRS; and,

    12. Preforming other actions necessary to coordinate the program.

4.26.2.3.2  (11-17-2006)
Responsibilities of Chief, Policy and Operations

  1. The Chief, Policy and Operations has the following responsibilities:

    1. Setting program goals and priorities in coordination with FinCEN;

    2. Implementing policy;

    3. Implementing the BSA work plan;

    4. Accomplishing program goals;

    5. Training examiners; and,

    6. Performing other duties as needed to ensure compliance with Title 31 and Title 26.

4.26.2.3.3  (11-17-2006)
Responsibilities of BSA Policy Program Manager

  1. The BSA Policy Program Manager has the following responsibilities:

    1. Developing Policy;

    2. Developing the BSA work plan;

    3. Maintaining the Title 31 database and other applicable databases;

    4. Monitoring BSA program accomplishments and preparing reports;

    5. Liaison with FinCEN; and,

    6. Performing other duties as needed to ensure compliance with Title 31 and Title 26;

  2. The BSA Policy Program Manager also has the responsibility of identifying and selecting workload using a risk-based approach that includes such factors as:

    • Utilizing law enforcement or other regulatory agency tips

    • Concentrating on High Intensity Drug Trafficking Areas (HIDTAs) and High Intensity Money Laundering and Related Financial Crimes Areas (HIFCAs)

    • Detecting unusual Currency Transaction Reports (CTRs) and/or Suspicious Activity Reports (SARs) filing patterns

    • Focusing on the Money Services Business (MSB) principal (as opposed to the agents)

    • Examining entities with previous problems

    • Identifying entities that do not have functioning anti-money laundering compliance programs.

4.26.2.4  (11-17-2006)
BSA Program Goals

  1. The BSA Compliance program supports the Department of Treasury's national money laundering strategy goals by:

    1. Focusing on those most non-compliant;

    2. Balancing between BSA and IRC 6050I programs;

    3. Ensuring geographic and industry coverage;

    4. Coordinating with other business operating divisions (e.g. TE/GE);

    5. Making best use of available resources;

    6. Providing adequate training;

    7. Assigning responsibility;

    8. Measuring results; and,

    9. Setting milestones.


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