USPS tracks suspicious deals

USPS tracks suspicious deals

Database to follow money orders replaces paperwork at 39,000 post offices

By William Jackson

GCN Staff

The Postal Service has developed an online system to track suspicious financial transactions at post offices and to monitor clerks' compliance with laws requiring them to report such transactions.


The Postal Service can track a money order from point of sale to point of cashing, Henry Gibson says.


The system, which became operational in June 1999, was in the works for about five years. It consists of an IBM DB2 Universal Database application running on an IBM Corp. mainframe at the Postal Service data center in San Mateo, Calif., and a reporting application in which compliance officers at Washington headquarters can query and cross-reference reports.

'It lets us track a money order from the point of sale to the point of cashing,' said Henry Gibson, the Postal Service's compliance officer for the Bank Secrecy Act.

The centralized system replaces paper reports that had been kept on file locally in more than 39,000 post offices. Trying to find information in the old system was worse than looking for a needle in a haystack, said Al Gillum, acting program manager.

'First, you had to find the haystack,' he said.

The Postal Service, which sells money orders and stored-value cards, and provides money transfer services, is the only federal agency subject to the reporting requirements of the Bank Secrecy Act. To thwart money launderers, the law for years has required financial institutions to report to the Treasury Department all transactions of $10,000 or more, and to keep on file information about transactions of $3,000 or more.

USPS simplified its reporting chores by setting a policy of not accepting any $10,000 transaction without special permission. For $3,000 transactions, clerks collect the required information on Postal Form 8105-A, kept on file at local post offices.

Lost in the shuffle

But post offices altogether issue about 1 million money orders a day, and headquarters had no way to know how good a reporting job they were doing. Nor could law enforcement officers get hold of the reports unless they already knew what they were looking for.

In March, new Treasury regulations set a 2002 date for reporting all suspicious transactions, regardless of amount. They also require the Postal Service to monitor compliance of its 100,000 clerks and 30,000 managers across the country.

The regulations did not specify the kind of monitoring system, 'but with nearly 40,000 post offices, we didn't even want to think about a manual process,' Gillum said.

Fortunately, USPS already had begun developing its Bank Secrecy Application to centralize the information collected about suspicious transactions. Postal officials had been expecting such a requirement to monitor suspicious activity, Gillum said, and they had already designed a second form, 8105-B.

The information began flowing into the database in September 1997. The front-end application for accessing data went into pilot testing in 1999 and became operational in June.

Although information is still gathered on paper, the forms go each day to a secure Postal Service data entry facility in St. Louis. Data resides in DB2 on an eight-way IBM S/390 Model 9672 Y86 parallel processor system under the OS/390 operating system.

There are three sets of tables: one for Form 8105-A, one for Form 8105-B, and a third for transactions that have been examined and verified as suspicious.

The information is analyzed with an application developed in Focus for S/390, a reporting and development tool from Information Builders Inc. of New York.

Although the law imposes fines or other sanctions if suspicious transactions are not reported, the Bank Secrecy Act does not define what a suspicious transaction is. That determination is left up to the clerk.

Compliance officers at Postal Service headquarters analyze the data to make sure clerks are doing the job, and the service's law enforcement branch searches for patterns that might indicate money laundering or illegal operations.

Gibson personally grants access rights to the database on a need-to-know basis. The accounts, protected by user names and passwords, expire automatically if inactive for 30 days.

A Web future

Access usually is via the Postal Service's intranet, the Postal Routed Network, although there are some dial-up connections. Plans call for eventually moving the system from the mainframe to a Web server and making it available via browser, Gillum said, for the convenience of law enforcement agents in the field.

Database transactions are searchable by sender, payee, endorser, dates, ZIP code, bank or any combination of the fields.

Combining information already has helped postal officials identify and track allegedly illegal activity that might otherwise have remained hidden in hundreds of thousands of individual files, Gibson said.

Now that the system is in place to automate report filing, there is no reason for the Postal Service to continue its policy against transactions of $10,000 or more. The limit has not yet been removed, however.

The greatest benefit for the Postal Service is that it now can keep track of how well clerks carry out their reporting responsibilities.

'As much as anything, that's what this system is going to do,' Gillum said. 'We built it from scratch with compliance in mind.'

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