On May 12, 2015, the Financial Crimes Enforcement Network (FinCEN) held its first Annual Law Enforcement Awards Ceremony to recognize law enforcement agencies who made effective use of Bank Secrecy Act (BSA) data and obtained successful prosecutions in several different categories. FinCEN Director Jennifer Shasky Calvery, also recognized the importance of this occasion, which was to provide “concrete evidence of the value of BSA data to the financial industry,”¹ and to recognize “how critical a strong public/private partnership” is to FinCEN’s objectives to combat money laundering and terrorist financing.²

Those presenting the following awards to law enforcement were the Securities Industry and Financial Markets Association, the American Gaming Association, the Independent Community Bankers of America, the American Bankers Association, and the Clearing House Association, among others. The award recipients were:

The overall theme of the award ceremony was to show the financial industry that their data is being used and reviewed by regulators and law enforcement; that the reports which banks spend enormous resources completing is worthwhile, significant, and useful; and that continued compliance with BSA record keeping requirements will further help FinCEN combat money laundering, cyber threats, fraud and terrorist financing, among other international crimes.

Director Shasky Calvery explained that from a law enforcement and regulatory perspective, it may be difficult to provide meaningful feedback about the value of reports such as currency transaction reports (CTRs) and suspicious activity reports (SARs), because:

1. “Law enforcement investigations can take years to complete. And until a case is seen through completion, investigative resources and methods must be safeguarded or the case could be jeopardized.”³
2. “There are laws prohibiting the inappropriate disclosure of BSA reports,” and it is necessary to “safeguard this confidential information” to “ensure the safety of financial institution employees and protect the financial institution from civil liability.”⁴

Because balancing these interests while also providing meaningful feedback to financial institutions can be difficult, Director Shasky Calvery stated: “[I]n thinking through these issues, the idea of an awards program to highlight the value of the Bank Secrecy Act was born,” and “the goal of the program is to recognize criminal cases where BSA reporting played a significant role in the successful investigation and prosecution of a case.”⁵

FinCEN provided great detail in explaining the use of BSA data by those honored. Such use included:

• Providing leads that helped identify a multimillion dollar Ponzi scheme, which began with a BSA report with a relatively low dollar amount. Further review of BSA filings revealed additional instances of possible structuring, money laundering and other suspicious activities. At least 42 victims lost more than $10 million through this scheme.
• BSA reporting on suspects identified a series of suspicious transactions involving multiple businesses writing checks to each other, noting the signers all had recently issued social security numbers and that the businesses were issued at the same address, which was a residence. This case involved approximately 30 shell companies and a large network of healthcare clinics and durable medical equipment suppliers. The scheme involved the use of fraudulent billing companies to file no-fault accident claims with insurance companies on behalf of medical clinics and equipment providers. Upon receipt of payment from the insurance companies in settlement of the claims, the conspirators drew checks payable to a complex web of shell companies, which had no legitimate business and were incorporated in the names of long-departed foreign students. This investigation resulted in 13 indictments, nine convictions and the forfeiture of approximately $3.4 million.
• BSA data indicated that a company’s bank account received structured deposits in locations where the business did not have any customers. This case resulted in the first Black Market Peso Exchange (BMPE) scheme money laundering conviction in the Central District of California and was found to have touched illegal activity by the Sinaloa Cartel and money launderers in Colombia. It involved nine convictions of those involved in the BMPE scheme, including those who operated unlicensed money transmitting businesses and evaded financial reporting requirements. This prosecution was the impetus for the Los Angeles garment district raid in September 2014, wherein over $100 million in cash was seized.
• Dozens of BSA records filed by more than 20 financial institutions described staggering amounts of fund transfers, helping complete the puzzle for investigators in a case involving Liberty Reserve, a Costa Rican company that offered digital currency. Liberty Reserve facilitated international crime by providing anonymity to individuals involved in illicit financial transactions by allowing criminals to use its currency in order to make and receive payments for illicit material or activity including child pornography, Ponzi schemes, stolen identity, narcotics and other contraband. Approximately $40 million was frozen pursuant to seizure warrants and restraining orders.
• A single BSA document that was identified by investigators tied suspicious activity to one of the subjects of an investigation involving fraudulent government contracts. Defendants were convicted on bribery-related charges and joint restitution to the government amounted to nearly $20 million.
• In a case where an individual was convicted of conspiring to provide material support to the Pakistani Taliban, BSA data was critical in uncovering the diverse and complex methods the individual used to send money from the U.S. to Pakistan. These methods, which were designed to conceal and support terrorist activity, included: (1) wire transfers from the U.S. to Pakistan, where an associate picked up and administered the funds; (2) transfers of funds from cashier’s checks drawn on U.S. banks to a bank in Pakistan where co-conspirators could draw checks; and (3) bulk cash carried by family members and other travelers from the U.S. to Pakistan.

As the financial industry can see, complying with the BSA through the filing of CTRs and SARs has provided very significant leads and completed the puzzles to many transnational criminal investigations. Far from boring or mundane, these investigations are complex and involved a myriad of illicit crimes involving multimillion dollar Ponzi schemes, narcotics trafficking, child pornography, and terrorist financing.

Although the FinCEN awards are provided to law enforcement, it is also the financial institutions who are getting well-deserved recognition for providing law enforcement with the tools and data needed to conduct sophisticated financial investigations. It will be interesting to see which investigations will be awarded next year in the categories described above. Stay tuned.

Christine S. Bautista, Partner, Litigation Practice Group/White Collar and Internal Investigations, Akerman LLP, Chicago, IL, USA, christine.bautista@akerman.com

1. “FinCEN Recognizes High-Impact Law Enforcement Cases Furthered through Financial Institution Reporting: First-Ever Awards Ceremony Promotes Feedback to Industry,” FinCEN Press Release, May 12, 2015), http://www.fincen.gov/whatsnew/pdf/20150512.pdf.
2. FinCEN Director Jennifer Shasky Calvery, Opening Remarks at the FinCEN 2015 Law Enforcement Awards Ceremony, May 12, 2015, http://www.fincen.gov/news_room/speech/pdf/20150512.pdf.
3. Id.
4. Id.
5. Id.