fraud

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Treasury crosses the finish line on fraud network overhaul

The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) is responsible for enforcing the Bank Secrecy Act, a job that involves collecting, searching and analyzing financial transaction data for evidence of wrongdoing. As the urgency of this mission grew, especially over the last decade, FinCEN faced a host of big data challenges with a legacy of small data technology.

Some of these hurdles were common to the government IT enterprise: Data (provided by external financial institutions) was inconsistent in quality and format, it was broken into small datasets, search and analysis was limited and online access for federal, state and local agencies using the data was not adequately secured.

The BSA IT Modernization program set about updating the systems in 2008, transferring 11 years of data totaling 400 gigabytes from the IRS to a new FinCEN System of Records. The system adhered to the National Information Exchange Model (NIEM) format, enabling electronic filing of new records by financial institutions, creating an online portal for access, and developing a Web-based query and analytical application.

Now, just before its entire architecture is expected to begin its full operation and maintenance, records are electronically filed, centrally managed and stored in a standardized format, and a new online portal and Web-based query engine allows secure access and analysis by more than 10,000 authorized users across more than 400 federal, state and local agencies.

“This was a complex and challenging implementation,” said Tim Young, a principal at Deloitte Consulting, the prime integrator for the modernization program. “To pull it off required developing business requirements as well as addressing technical issues. We needed expertise across a number of technical and nontechnical domains.”

FinCEN launched the modernization program because its legacy, siloed systems were not up to the task of monitoring global financial activity as the volume of data and the strategic importance of financial intelligence increased in the years after the Sept. 11, 2001, attacks in the United States. 

BSA IT Mod was brought in on schedule and within budget, however, despite the fact that the deadline was moved up 18 months by the Office of Management and Budget.  The finished system, unpacked in phases over the last three years, is a combination of newly developed tools and custom integration of a number of off-the-shelf products. Major components of the project were delivered in incremental releases, which included:

  • Electronic filing. Paper-based reports on transactions from financial institutions were replaced with filing through the BSA Electronic Filing System. Ninety-three percent of reports now are captured electronically.
  • System of record. Eleven years of FinCEN data, about 850 million records held by the IRS, were transitioned to FinCEN’s new system in the NIEM format by January 2012.
  • Advanced analytics. Three releases of a new analytics tool suite based on the SAS Fraud Framework were implemented through April 2011.
  • Data collection. Four new data collection reports on suspicious activity, current transactions, money services, business registration and designations of exempted persons, were implemented by March 2012.
  • New query system. FinCEN Query was introduced in September 2012, replacing the Web-based Currency and Banking Retrieval System and allowing advanced searches across more than a decade of data.

As of November 2012, the average time to make data available on the new system was 40 hours, well under the 90-hour target. Since FinCEN Query went live, 1.1 million queries have been made on through the system  by more than 1,600 users, said Deloitte’s Young. “If it wasn’t useful and relevant, there wouldn’t have been that much usage.”

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