IRS lends a hand to FinCEN's tracking efforts

Bureau expects tax agency data system to provide 90 percent of what it needs

The IRS is rescuing a fellow Treasury Department bureau after a major data-sharing project fell prey to management problems.

The tax agency has opened its modernized Currency and Banking Retrieval System'where it stores Bank Secrecy Act data'to the Financial Crimes Enforcement Network. FinCEN will use the system's data query and analysis functions, rather than continue work on its floundering BSA Direct Retrieval and Sharing system.

FinCEN anticipates that WeBCBRS will provide users with about 90 percent of the capability that it envisioned with BSA Direct R&S, a FinCEN spokesman said.

FinCEN requires banks, money transmitters and other institutions to report suspicious and large cash transactions. Following trends in these transactions could reveal money laundering or terrorist financing.

Problems with the project

'Efficient and secure electronic dissemination of data to law enforcement and IRS compliance officers provides critical support to investigations of illicit finance,' said Eileen Mayer, director of IRS' Fraud/Bank Secrecy Act division.

FinCen officials hoped the new system would sharpen sharing and analysis of data from suspicious and large banking transactions.

But continuing management problems, including missed program milestones, caused FinCEN officials to cancel its contract with EDS Corp.

The project also was fraught with missed performance objectives, as well as skyrocketing costs, FinCEN officials said.

The original $8.9 million estimate swelled to $15.1 million; of that amount, FinCEN has spent $14.4 million. The scheduled delivery also slipped from October 2005. A funding infusion could not assure a reliable schedule or a usable product, said FinCEN director Robert Werner.

'I could not devote further resources to the project when I can find no guarantee that any amount of added spending would ever produce the desired result,' he said in a statement.

EDS officials were disappointed that FinCEN terminated the contract, but at no time was the company unresponsive to the user requirements, said company spokesman Brad Bass.

'The requirements changed over the time we worked on it. That affected cost and schedule, and as a result, it became a high-risk project,' Bass said.

The Government Accountability Office found that FinCEN's lack of consistent and effective management also contributed to the system's mounting problems.

'Issues that occurred at the project management level continued and compounded, yet were not addressed at the executive level,' said James White, GAO director of strategic issues, in a report last week on the BSA Direct R&S project.

FinCEN users will move to the online WeBCBRS in September, Mayer said. The system, a relational database, integrates all BSA data, including suspicious and large currency transaction reports. IRS will begin training FinCEN users next week.

'The redesign reduces complexity and maintenance costs and increases the responsiveness to business-driven changes,' Mayer said.

The IRS collects transaction data, converts paper and magnetic-tape submissions into electronic media and stores all the BSA data in the system located at its Detroit Computing Center.

The Web front end also is more user- friendly, Mayer said.

The FBI and other federal law enforcement agencies require their own copies of the BSA data so they can integrate it with other data sources for cases under investigation, said a report by FinCEN in collaboration with Mitre Corp. of McLean, Va., which evaluated the project for the bureau.

'The value of BSA data is disproportionate to its volume,' the report said.

For example, the FBI maintains a copy of the BSA data in its Investigative Data Warehouse and integrates it with 50 different data sources. Although BSA data comprises only 15 percent of the documents, it represents 40 percent of the queries'and usage is increasing, the report said.

GAO recommended that FinCEN's CIO develop a plan for improving the agency's management capabilities in which executives regularly review projects' progress against commitments, and take corrective actions when the agency does not meet them.

'FinCEN runs the risk of having similar problems and similar results in the future unless better investment management processes and procedures are put in place,' White said.

Among the problems the BSA Direct project suffered from were an overly aggressive schedule, unclear project scope and requirements, inadequate project governance and a lack of project management expertise by both EDS and FinCEN, the FinCEN/Mitre report said.

'FinCEN is a young organization with immature project management and information technology discipline,' the report said.

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