IRS Data Assesses State Of U.S. Anti-Money Laundering

By Pete Rizzo (@pete_rizzo_)

A total of 5,125 criminal investigations were initiated in FY 2012 and the conviction rate for the year stands at 93 percent, reveals the Internal Revenue Service (IRS) in its latest Annual Business Report released on September 5.

The IRS prides itself in being the last line of defense in bringing down America’s criminal elite since 1936, when the unit was called IRS Intelligence Unit. The report recently released by IRS further reveals that there was a 5 percent increase in the number of investigations completed and an 8.5 percent increase in prosecution recommendations over FY 2011.

IRS-CI, in partnership with other law enforcement agencies and the Department of Justice (DOJ) investigates and prosecutes individuals and organizations that are attempting to launder their criminally derived proceeds.

Criminal investigation (CI) also seeks to deprive individuals and organizations of their illegally obtained cash and assets through effective use of federal forfeiture statutes. A term that best describes this is money laundering, the process by which criminals evade paying taxes on illegal income by concealing the source and the amount of profit it provides.

As this infographic illustrates, the number of money laundering investigations have followed an uneven trend. In the 12 months between 2010 and 2011, the number of investigations rose by 129 to 1,726 and in the year between 2011 and 2012, this figure fell back to 1,663.

The Bank Secrecy Act (BSA) investigations, that look into reporting of certain currency transactions with financial institutions, the disclosure of foreign bank accounts and the reporting of transportation of currency across the United States borders, have instead shown a steady rise from 738 in 2010 to about 923 in 2012.

Both types of crimes are inexorably linked, as the BSA requires financial institutions to assist the government in detecting and preventing money laundering, as well as other tasks.

In an article for Main Justice, former Assistant Chief in the Fraud Section of the Justice Department’s Criminal Division, Robertson Park, indicated that despite the increase in the IRS’ enforcement of the BSA, regulators have faced criticism from Congress and the public for their failure to punish money laundering at U.S. and international institutions in recent years.

However, recent reports, suggest the source of the problem may go deeper than federal enforcement. For example, high-profile incidents that have found the Federal Reserve calling for increased money-laundering scrutiny at major FIs further support this claim.

For more insights and statistics into the IRS’ national operations for FY2012, download the agency’s full report here.