Treasury testing tools to help connect the dots

Money laundering and terrorist financing present unique data challenges. 'They are two different problems and need different tools,' FinCEN's William Fox says.

J. Adam Spencer

Feds want to make it easier to spot criminals and terrorists who camouflage funding in legitimate money transactions

Federal investigators trying to disrupt terrorist financing expect to get more analytical muscle from a new system run by the Treasury Department's Financial Crimes Enforcement Network.

The system, dubbed BSA Direct for the Bank Secrecy Act work it's supposed to help investigators do, will spot anomalies, trends and patterns that officials might otherwise miss in financial data scoured to uncover money moved for illegal uses.

'BSA Direct will completely change the way we do business,' FinCEN director William Fox told lawmakers at a recent hearing of the Senate Banking, Housing and Urban Affairs Committee.

Contractor EDS Corp. plans to have a prototype ready for testing by March. The system will help the Treasury agency connect the dots and combat money laundering and terrorist financing, Fox said. BSA Direct relies on data-mining and analytical applications coupled with improved access for law enforcement and state and federal regulators.

FinCEN gets its data from filings from banks and other financial institutions that are required under the Bank Secrecy Act. The USA Patriot Act expanded the required filings to include businesses that have heavy cash flow, such as casinos, check-cashing services and money transmission vendors.

The new system will let investigators at all levels of government 'make use of that data through sophisticated analytics and bounce that data off data in their possession,' Fox said.

BSA Direct will also better detect underreporting by tracking reporting histories and noting when anyone falls below their usual reporting rate.

'Money laundering is looking at the problem through a telescope, trying to watch people clean big wads of dirty money to use it, whereas terrorist money is almost trying to look at the problem through a microscope, where you're trying to watch small amounts of possibly even clean money or from a clean source being put to evil purposes. They are two different problems and need different tools,' Fox said.

BSA Direct will incorporate several phases of data management, including acquisition, cleansing, processing and presentation, said a BSA Direct project manager who FinCEN asked not be identified.

EDS Corp., which won a six-year, $18.5 million contract for the project in June, is using the Teradata suite of applications from NCR Corp. for the database management system.

The database apps will structure the data; an acquisition component will pull in source data and ready it for use. Users will tap into BSA Direct via a Web portal to do data mining and analysis.

FinCEN also plans to add new analytical tools from Business Objects of San Jose, Calif., to the arsenal of apps it already uses, such as VisualLinks from Visual Analytics Inc. of Poolesville, Md. The new apps will help with setting up data for analysis and give users the ability to more easily drill down into the data, the project manager said.

Following the prototype tests, FinCEN will run a pilot release of BSA Direct this summer. For the pilot, a few state and federal law enforcement officials will use the systems before the agency rolls out the final release in October, Fox said.

Currently, law enforcement and regulators can access data gathered under the Bank Secrecy Act. But the process is convoluted and requires multiple Web links to obtain files stored in the IRS' Currency Banking Retrieval System, a set of databases at the Detroit IRS Computing Center.

The creation of the data still requires a lot of paper handling. Although the number of businesses that transmit their BSA reports electronically'especially large financial institutions'is increasing, most still file on paper, Fox said.

The IRS scans more than 13 million paper reports submitted each year by more than 200,000 filers. FinCEN downloads the BSA files to its databases two or three times a week. Once BSA Direct is running, FinCEN will accept all electronically filed reports rather than getting them from the IRS.

EDS will host BSA Direct in the Washington metropolitan area, but will maintain a second site far from the nation's capital to handle load balancing and act as a secure backup site.

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