The GAO Criticizes FinCEN For Not Communicating CTR and SAR Metrics. But Is Communication Enough?
In August, the GAO issued a report titled, “Agencies and Financial Institutions Share Information but Metrics and Feedback Not Regularly Provided.” The GAO criticized FinCEN and recommended more feedback from FinCEN about reports that had been filed. Unfortunately, the report ignores the cost/benefit analysis of filings in the first place. FinCEN’s website reports that depository institutions filed over 16,000,000 SARS since 2012. How many criminal convictions occurred on these matters? Apparently less than one out of 1,000. How many of the crimes would have been discovered if there were no SAR filing? Unknown, but some of them. What was the cost to banks and other reporting entities to find such a small number of crimes, many of which would have been discovered anyway? A 2016 report estimated the cost was $8 billion. Disclosure of metrics is not enough. When the metrics show that there were 977,703 SARs filed by depository institutions in 2018, federal agencies need to look at those filings to determine whether the societal value exceeds the cost.
Today’s Takeaway? Congress is considering reducing the BSA filing burden on banks. The next time you are engaged in any lobbying, or the next time you just see your Congressperson on the street, put in a good word for burden reduction. A few months ago, I commented here that a bank should always file a SAR if it is even questionable because no one was ever criticized for over-filing. That is still true, which means that we should all talk to regulators and legislators about clear and irrefutable exemptions that can reduce the filing burden without materially increasing the risk that criminals will get away with their crimes.