Treasury is not adequately protecting data collected and shared under the Bank Secrecy Act, according to a recent GAO study.
The Treasury Department bureau responsible for administering the Bank Secrecy Act is not doing enough to protect the sensitive financial data that it gathers and shares with other agencies and governments, according to an audit of its IT systems and practices.
The Financial Crimes Enforcement Network (FinCEN) has not ignored security, but inadequate documentation and implementation of security controls have left holes, the Government Accountability Office said in the report, “Further Actions Needed to Address Risks to Bank Secrecy Act Data.”
FinCEN maintains its own IT systems and also uses those of the Treasury Communications System and the IRS. GAO found significant weaknesses in the ability to ensure the confidentiality, integrity and availability of the data in all three of the systems.
“A key reason for many of the weaknesses was that FinCEN and IRS had not fully implemented key information security program activities,” the report said. “For example, FinCEN did not always include detailed implementation guidance in its policies and procedures and adequately test and evaluate information security controls.”
“As a result, BSA data — containing highly sensitive personal and financial information about private individuals that is used by the law enforcement community to identify and prosecute illegal activity — are at an increased risk of unauthorized use, modification or disclosure.”
Responding to the findings, Treasury has said it has begun steps to correct the weaknesses and will provide a detailed action plan based on GAO’s recommendations.
The Bank Secrecy Act since 1970 has required banks to retain records and report on financial activities to prevent money laundering. Its provisions were expanded by the USA Patriot Act to include terrorist funding and requirements for sharing data between agencies and governments. FinCEN administers the act and is responsible for analyzing data and sharing it with law enforcement agencies and its counterparts in other countries. The bureau maintains a Web portal for access to BSA data and analysis tools. The Treasury Communications Systems provides a mechanism for electronic filing of reports by banks and other businesses covered by the act, and IRS systems provide the database and applications such as the Web-based Currency Banking and Retrieval System.
“The organizations did not always consistently apply or fully implement controls to prevent, limit or detect unauthorized access to devices or systems,” GAO reported. Inadequate access controls, system segmentation and handling of data at rest and during transmission were found. The audit found that FinCEN and its partners had not consistently or fully:
- Implemented user and password management controls for identifying and authenticating users;
- Restricted user access to data to permit only the access needed to perform job functions;
- Encrypted data;
- Protected external and internal boundaries; and
- Logged user activity on key systems.
“Shortcomings also existed in managing system configurations, patching systems and planning for service continuity,” GAO found. “As a result, increased risk exists that unauthorized individuals could read, copy, delete, add and modify data and disrupt service on systems supporting FinCEN’s mission.”
GAO recommended in its publicly released report that FinCEN:
- Update information security policies and procedures to address key missing information, such as patch prioritization and inspection of outbound network traffic, as well as to include detailed implementation guidance for issues such as securely configuring the virtual private network;
- Ensure that system security plans document all required controls and describe how all required controls are implemented;
- Conduct vulnerability scans on databases, applications and network infrastructure on a quarterly schedule;
- Implement vulnerability scanning of custom source code or manual source code reviews; and
- Update remedial action procedures to require that supporting documentation be provided to verify that corrective actions are fully implemented and effective.
“In a separate report designated ‘Limited Official Use Only’, we are making 88 detailed recommendations to the Secretary of the Treasury to strengthen information security controls at FinCEN, TCS, and IRS over the systems supporting FinCEN’s mission,” GAO said.
Treasury CIO Michael Duffy told GAO that, “Many of the actions required to address the recommendations are already completed or underway. Specifically, of the 41 recommendations addressed to FinCEN, 18 have already been completed; of the 21 recommendations addressed to the Department’s OCIO, 12 have already been completed; and of the 11 addressed to IRS, 4 have already been completed.”