The Problem of Lengthy Processing Times for Civil Penalty Cases Is Growing Worse

In the past, civil penalty cases have not been processed in a timely manner. 1). 2). 3). Processing Times Slower in Recent Years

For 1985 through 1991, Treasury’s data show that the average processing time to close a case was 1.77 years. 4). Specifically, the average processing time to close a case was 3.02 years. “Perhaps the most serious result of civil penalty cases remaining inactive for lengthy periods of time can be the expiration of the statute of limitations....”
According to FinCEN’s data for the period January 1, 1992, through March 27, 1998, a total of 16 cases had one or more BSA violations that could not be pursued because the statute of limitations had expired. In addition, we believe that insufficient management attention has been a significant cause of the lengthy processing times for civil penalty cases. FinCEN officials told us that the agency has never set timeliness goals for civil penalty processing. For example, FinCEN’s data for the 16 cases show the following. FinCEN Has Not Issued a Regulation to Delegate Civil Penalty Authority

Section 406 of the MLSA directed the Secretary of the Treasury to delegate to appropriate federal banking regulatory agencies the authority to assess civil penalties for BSA violations. FinCEN’s current strategic plan indicates that delegation of civil penalty authority to the banking regulatory agencies may not occur before 2002. Conclusions

Except for the delegation of civil penalty authority to FinCEN in 1994, Treasury’s policies and procedures for processing civil penalty referrals for BSA violations generally have not changed since our 1992 report. Also, the number of staff processing civil penalty referrals has remained fairly constant, at about six, before and after the May 1994 delegation to FinCEN. Pending such delegation, FinCEN is still responsible for processing civil penalties. The second was to determine the status of FinCEN’s efforts regarding a provision of the Money Laundering Suppression Act of 1994 (MLSA). More specifically, as agreed with the Chairman’s office, we focused our work on the following questions:
How, if at all, has Treasury changed its policies and procedures for processing civil penalty cases since 1992? Based upon workload and related statistics, what was Treasury’s performance in processing civil penalty cases during calendar years 1992 through 1997? What is the status of FinCEN’s efforts to develop and issue a final regulation delegating the authority to assess civil penalties for BSA violations to the federal banking regulatory agencies, as required by the MLSA? Cases closed as a percentage of annual workload 648 Average time to close case (in years)
Table III.3: Processing Times (by Time Period) for the 648 Civil Penalty Cases That Were Closed During Calendar Years 1985 Through 1997 Table III.4: Average and Range of Processing Times by Type of Action Taken for the 648 Civil Penalty Cases That Were Closed During Calendar Years 1985 Through 1997 Average (in years)
Average (in years)
Average (in years)

Comments From the Financial Crimes Enforcement Network

Major Contributors to This Report

	General Government Division, Washington, D.C.

	Office of the General Counsel, Washington, D.C.

Geoffrey R. Hamilton, Senior Attorney The first copy of each GAO report and testimony is free.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Department of the Treasury's Financial Crimes Enforcement Network's (FinCEN) efforts to process civil penalty referrals for violations of the Bank Secrecy Act (BSA), focusing on: (1) whether Treasury has changed its policies and procedures for processing civil penalty cases since 1992; (2) Treasury's performance in processing civil penalty cases during calender years 1992 through 1997; and (3) the status of FinCEN's efforts to develop and issue a final regulation delegating the authority to assess civil penalties for BSA violations to the federal banking regulatory agencies, as required by the Money Laundering Suppression Act.

What GAO Found

GAO noted that: (1) except for the May 1994 delegation to FinCEN, Treasury's policies and procedures for processing civil penalty cases generally have not changed since 1992; (2) also, the number of staff processing civil penalty cases has remained fairly constant, at about six, before and after the May 1994 delegation to FinCEN; (3) the problem of lengthy processing times for civil penalty cases is growing worse; (4) for example, according to FinCEN's data for cases closed in calendar years 1985 through 1991, the average processing time to close a case was 1.77 years, and the most lengthy time was 6.44 years; (5) in comparison, FinCEN's data for calendar years 1992 through 1997 indicate an average processing time was 3.02 years, and the most lengthy time was 10.14 years; (6) for cases closed in the 2 most recent years, 1996 and 1997, the average processing times were 3.57 years and 4.23 years, respectively; (7) lengthy processing can negatively affect the public's perception of the government's efforts to enforce the BSA, thereby lessening the credibility and deterrent effects of the act's provisions; (8) another result is that the 6-year statute of limitations for BSA civil penalties could expire; (9) according to FinCEN's data, for the period January 1, 1992, through March 27, 1998, a total of 16 cases had one or more BSA violations that could not be pursued because the statute of limitations had expired; (10) insufficient management attention is a significant cause of the lengthy processing times for civil penalty cases; (11) FinCEN officials told GAO, for example, that the agency has never set timeliness goals for processing civil penalty cases; (12) FinCEN has issued neither a notice of proposed rulemaking nor a final regulation to delegate civil penalty assessment authority to the banking regulatory agencies; (13) FinCEN officials told GAO they have been working with the federal banking regulatory agencies for some time to devise an appropriate plan for delegating civil penalty assessment authority, but some issues still required resolution; (14) FinCEN's current strategic plan indicates that such delegation may not occur before 2002; and (15) for several more years, FinCEN could still be responsible for processing civil penalty referrals.