Not a Secret Any Longer: Report Says BSA Isn’t Having Much Effect

WASHINGTON—A new report from the U.S. Treasury indicates that the IRS’ Bank Secrecy Act program has had minimal impact on compliance.


The Treasury Inspector General for Tax Administration has issued a report titled “The Internal Revenue Service’s Bank Secrecy Act Program Has Minimal Impact on Compliance,” which sets forth a decidedly dim view of the utility and effectiveness of the current Bank Secrecy Act (BSA) compliance efforts by the Internal Revenue Service,” according to Ballard Spahr.

The primary conclusions of the report are:

  • Referrals by the IRS to the Financial Crimes Enforcement Network for potential Title 31 penalty cases suffer lengthy delays and have little impact on BSA compliance
  • The IRS BSA program spent approximately $97 million to assess approximately $39 million in penalties for fiscal years 2014 to 2016
  • Although referrals regarding BSA violations were made to IRS criminal investigation, most investigations were declined and very few ultimately were accepted by the Department of Justice for prosecution

“Arguably, the most striking claim by the report is that ‘Title 31 compliance reviews (by the IRS) have minimal impact on Bank Secrecy Act compliance because negligent violation penalties are not assessed,” Ballard Spahr said, adding that a primary takeaway from the report is that an examination program lacking actual enforcement power is not very effective. 

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Word Count: 282
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Copyright Year: 2019
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