The USA PATRIOT Act extends the applicability of the Bank Secrecy Act (BSA) to new types of institutions including mutual funds, broker/dealers and money services businesses. That translates into an increased burden on the IRS, the agency managing the BSA database. Last year, the IRS processed over 13.7 million BSA reports at its Detroit computing center, of which 95 percent were currency transaction reports.
Recognizing the potential strain on the IRS and its systems, the PATRIOT Act required the Treasury to recommend whether or not the IRS should retain management of the BSA database, and whether it should continue to have both audit and examination responsibility for BSA compliance.
The Treasury's response: Leave the IRS in charge.
The IRS began processing currency transaction reports in the mid-1980s at a facility in Detroit, Mich., formerly an administrative processing center. "The FinCEN/Detroit Computing Center partnership for information processing has been highly effective and is well on its way to meeting the new challenges and additional tasks imposed by the PATRIOT Act," said the April 26 report.
Still, it's not quite "T+1"straight-through processing just yet. Suspicious activity reports, or SARs, "are entered into the system and available to users within ten business days of receipt, even when received in paper form," said the report. Last year 29 percent of SARs were received on paper, a figure expected to decline as electronic filing options become available later this year.
On the audit and examination question, the Treasury cited the unique expertise of the IRS' 113,000-member workforce. "IRS field personnel have special expertise in standard accounting, audit and financial practices, which renders them uniquely qualified to undertake the examination of a wide range of business entities for compliance with the BSA's financial reporting, recordkeeping and other requirements," said the report.
It's also hard to imagine another agency taking control of such an immense store of financial information. According to the report, there's not a "viable alternative to transfer one or both of these functions to another organization that has similar expertise or sufficient resources."