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In addition, recent regulatory amendments added additional reporting requirements:

о Casinos with gross annual gaming revenue

over $1,000,000 are added to the list of

financial institutions that must file CTR's for currency transactions over $10,000.

or drafts, loans, commercial paper, stocks, bonds,

and certificates of deposit.

There are both civil and criminal penalties associated with violations of the Bank Secrecy Act. Civil violations can result in penalties of up to $10,000 per violation.

Criminal penalties

can result in a maximum prison term of up to five years and a fine of up to $250,000.

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When the violation is committed in furtherance of the

commission of any other violation of Federal law, or is committed as part of a pattern of illegal activity involving transactions exceeding $100,000 in any 12-month period, then the maximum fine is increased to $500,000.

The IRS has the responsibility to conduct Bank Secrecy Act criminal investigations of all banks and other financial institutions defined in Title 31. The IRS also conducts civil compliance examinations of secondary financial institutions. Secondary financial institutions include, but are not limited to, non-regulated banks, casinos, and currency exchange houses.

Bank Secrecy Act Report Processing

IRS also has responsibility for processing the CTR's, FBAR's, and casino reports which are required under the Bank Secrecy Act.

In October 1984, the Service centralized the processing of these forms at the Detroit Data Center. We moved the processing of the forms after a study indicated Detroit had the hardware necessary to establish a central data base, and was better able to accomplish our administrative and evidentiary needs. A special unit on Banking and Currency was established and is responsible for receiving and processing all CTRS, Casino CTRs, and FBARS.

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The forms are reviewed and assigned a code number. The information on the forms is then entered into the central data base. Once the information is in the computer system it has several uses. Representatives of Criminal Investigation, with the assistance of computer generated data, analyze the information and provide field offices with leads to suspicious transactions. The Detroit Data Center also receives inquiries from the field to search electronically, for any CTR's or similar documents which individuals or financial institutions may have filed, or certify that none have been filed. In addition, correspondence is generated to filers of the documents if a critical element on a report is missing. Tapes containing the information are furnished to the Treasury Enforcement Communications System - TECS and to the IRS National Computer Center for our Information Returns

Program.

Once the information is included in TECS it is available to the various regulatory agencies responsible for conoducting the Bank Secrecy Act compliance examinations at financial institutions.

The IRS National Computer Center uses these reports

as supplemental information in identifying tax returns that should be examined.

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During recent months there has been a tremendous increase in the number of Currency Transaction Reports filed. The Bank of Boston pleaded guilty to Bank Secrecy Act violations and was sentenced in February 1985. After this sentencing, the national rate of CTR filings rose steadily from less than 70,000 a month to a high of 254,530 for December 1985, a fourfold increase. For 1985, the number of CTR's filed totalled 1,832,000, up from 700,000 CTR's in 1984.

In January 1986, the number of CTR's filed totalled 271,630. Based on this filing rate we anticipate that approximately three million CTR's will be filed during calendar year 1986.

Due to the increased volume, and in an effort to reduce time and costs, we are considering accepting electronic filing of CTRS. Many banks enter their CTR information into their own computer system and could provide reports directly to the IRS by magnetic tape instead of sending paper documents. Such a system would substantially cut our processing costs and processing time. I'm sure it would also result in lower processing costs for the banks. Some of the details that need to be worked out are

computer compatibility, security of data transmitted, and

adjustments to time periods for filing requirements. We will be working with Treasury and interested financial institutions on this matter.

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Enforcement Efforts

The IRS has made substantial progress in its enforcement efforts. Since October 1981, we have initiated criminal

investigations of more than 873 money laundering specialists, corrupt financial institutions, and their employees.

Over

Dur ing

As of January 31, 1986, Criminal Investigation has over 300 Bank Secrecy Act investigations currently in open inventory. 60 of these are investigations of financial institutions. 1985, we recommended prosecution of 317 cases involving money laundering.

We have presented evidence leading to the conviction of a total of 31 banks and financial institutions since 1981, with 8 convictions in the past year alone. These banks have been criminally fined nearly $4,000,000. In addition, we have presented evidence leading to the conviction of 34 officers or employees of financial institutions since 1984.

Examples of Bank Involvement

Money laundering specialists use a number of techniques to provide services for their clients. These range from cash

transported offshore in suitcases, to elaborate unofficial banking operations, to the use of fictitious offshore entities.