[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
REVIEWING FinCEN OVERSIGHT REPORTS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
OVERSIGHT AND INVESTIGATIONS
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
APRIL 28, 2010
__________
Printed for the use of the Committee on Financial Services
Serial No. 111-129
U.S. GOVERNMENT PRINTING OFFICE
57-747 WASHINGTON : 2010
-----------------------------------------------------------------------
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800
Fax: (202) 512�092104 Mail: Stop IDCC, Washington, DC 20402�090001
HOUSE COMMITTEE ON FINANCIAL SERVICES
BARNEY FRANK, Massachusetts, Chairman
PAUL E. KANJORSKI, Pennsylvania SPENCER BACHUS, Alabama
MAXINE WATERS, California MICHAEL N. CASTLE, Delaware
CAROLYN B. MALONEY, New York PETER T. KING, New York
LUIS V. GUTIERREZ, Illinois EDWARD R. ROYCE, California
NYDIA M. VELAZQUEZ, New York FRANK D. LUCAS, Oklahoma
MELVIN L. WATT, North Carolina RON PAUL, Texas
GARY L. ACKERMAN, New York DONALD A. MANZULLO, Illinois
BRAD SHERMAN, California WALTER B. JONES, Jr., North
GREGORY W. MEEKS, New York Carolina
DENNIS MOORE, Kansas JUDY BIGGERT, Illinois
MICHAEL E. CAPUANO, Massachusetts GARY G. MILLER, California
RUBEN HINOJOSA, Texas SHELLEY MOORE CAPITO, West
WM. LACY CLAY, Missouri Virginia
CAROLYN McCARTHY, New York JEB HENSARLING, Texas
JOE BACA, California SCOTT GARRETT, New Jersey
STEPHEN F. LYNCH, Massachusetts J. GRESHAM BARRETT, South Carolina
BRAD MILLER, North Carolina JIM GERLACH, Pennsylvania
DAVID SCOTT, Georgia RANDY NEUGEBAUER, Texas
AL GREEN, Texas TOM PRICE, Georgia
EMANUEL CLEAVER, Missouri PATRICK T. McHENRY, North Carolina
MELISSA L. BEAN, Illinois JOHN CAMPBELL, California
GWEN MOORE, Wisconsin ADAM PUTNAM, Florida
PAUL W. HODES, New Hampshire MICHELE BACHMANN, Minnesota
KEITH ELLISON, Minnesota KENNY MARCHANT, Texas
RON KLEIN, Florida THADDEUS G. McCOTTER, Michigan
CHARLES WILSON, Ohio KEVIN McCARTHY, California
ED PERLMUTTER, Colorado BILL POSEY, Florida
JOE DONNELLY, Indiana LYNN JENKINS, Kansas
BILL FOSTER, Illinois CHRISTOPHER LEE, New York
ANDRE CARSON, Indiana ERIK PAULSEN, Minnesota
JACKIE SPEIER, California LEONARD LANCE, New Jersey
TRAVIS CHILDERS, Mississippi
WALT MINNICK, Idaho
JOHN ADLER, New Jersey
MARY JO KILROY, Ohio
STEVE DRIEHAUS, Ohio
SUZANNE KOSMAS, Florida
ALAN GRAYSON, Florida
JIM HIMES, Connecticut
GARY PETERS, Michigan
DAN MAFFEI, New York
Jeanne M. Roslanowick, Staff Director and Chief Counsel
Subcommittee on Oversight and Investigations
DENNIS MOORE, Kansas, Chairman
STEPHEN F. LYNCH, Massachusetts JUDY BIGGERT, Illinois
RON KLEIN, Florida PATRICK T. McHENRY, North Carolina
JACKIE SPEIER, California RON PAUL, Texas
GWEN MOORE, Wisconsin MICHELE BACHMANN, Minnesota
JOHN ADLER, New Jersey CHRISTOPHER LEE, New York
MARY JO KILROY, Ohio ERIK PAULSEN, Minnesota
STEVE DRIEHAUS, Ohio
ALAN GRAYSON, Florida
C O N T E N T S
----------
Page
Hearing held on:
April 28, 2010............................................... 1
Appendix:
April 28, 2010............................................... 27
WITNESSES
Wednesday, April 28, 2010
Freis, James H., Jr., Director, Financial Crimes Enforcement
Network (FinCEN)............................................... 5
Hillman, Richard J., Managing Director, Financial Markets and
Community Investment, U.S. Government Accountability Office.... 15
Larence, Eileen R., Director, Homeland Security and Justice, U.S.
Government Accountability Office............................... 16
Thorson, Hon. Eric M., Inspector General, U.S. Department of the
Treasury....................................................... 7
APPENDIX
Prepared statements:
Moore, Hon. Dennis........................................... 28
Lynch, Hon. Stephen F........................................ 29
Freis, James H., Jr.......................................... 32
Hillman, Richard J........................................... 47
Larence, Eileen R............................................ 62
Thorson, Hon. Eric M......................................... 80
Additional Material Submitted for the Record
Moore, Hon. Dennis:
GAO report entitled, ``Anti-Money Laundering, Improved
Communication Could Enhance the Support FinCEN Provides to
Law Enforcement,'' dated December 2009..................... 96
GAO report entitled, ``Bank Secrecy Act, Suspicious Activity
Report Use is Increasing, but FinCEN Needs to Further
Develop and Document Its Form Revision Process,'' dated
February 2009.............................................. 140
Audit Report from the Office of Inspector General, Department
of the Treasury, entitled, ``SAR Data Quality Requires
FinCEN's Continued Attention,'' dated January 19, 2010..... 193
REVIEWING FinCEN OVERSIGHT REPORTS
----------
Wednesday, April 28, 2010
U.S. House of Representatives,
Subcommittee on Oversight
and Investigations,
Committee on Financial Services,
Washington, D.C.
The subcommittee met, pursuant to notice, at 2:07 p.m., in
room 2128, Rayburn House Office Building, Hon. Dennis Moore
[chairman of the subcommittee] presiding.
Members present: Representatives Moore of Kansas, Lynch,
Adler; Biggert, McHenry, and Paulsen.
Chairman Moore of Kansas. This hearing of the Subcommittee
on Oversight and Investigations of the House Financial Services
Committee will come to order.
Our hearing this afternoon is entitled, ``Reviewing FinCEN
Oversight Reports.'' We will begin this hearing with members'
opening statements up to 10 minutes per side, and then we will
hear testimony from our witnesses. For each witness panel,
members will have up to 5 minutes each to question our
witnesses.
The Chair advises our witnesses to please keep your opening
statements to 5 minutes to keep things moving so we can get to
members' questions. Also, any unanswered question can always be
followed up in writing for the record.
Without objection, all members' opening statements will be
made a part of the record, and I will now recognize myself for
up to 5 minutes for an opening statement.
The Financial Crimes Enforcement Network or FinCEN was
first established by the Treasury Department in 1990 to provide
a government-wide multi-source financial intelligence and
analysis network.
The organization was later formalized as an official bureau
within the Treasury Department by the USA PATRIOT Act of 2001,
when the Bank Secrecy Act's scope was expanded to focus on
stopping terrorist financing as well as money laundering.
FinCEN administers the Bank Secrecy Act (BSA) and is
responsible for the process in which financial institutions
file suspicious activity reports or SARs. FinCEN will then
analyze that information and provide the information analysis
to a wide range of law enforcement, intelligence, and
regulatory agencies.
As we know too well, the tragic attacks on the United
States on September 11, 2001, exposed our broken intelligence
system where one agency knew one thing but another agency did
not know and was not empowered with that vital information to
try to prevent these attacks.
While most of our focus in Congress this past year has been
to provide tough TARP oversight and strengthen our financial
regulatory system following the financial crisis of 2008,
stopping terrorist financing and money laundering remain top
priorities.
Let me be clear. We must remain vigilant and ensure that
our law enforcement and other agencies have all the information
they need to do their job in better protecting our country. Our
constituents expect and deserve nothing less.
Today, we will be reviewing three oversight reports--one by
the Treasury Inspector General, and two by GAO--that examined
FinCEN's efforts to improve SAR data quality and communication
with law enforcement. With limited resources, FinCEN must
leverage resources to do much better in both.
I look forward to hearing how FinCEN has responded to these
oversight reports and learning what concrete steps they have
taken to address the recommendations made by GAO and the
Treasury IG.
While I am glad we have the Treasury IG testifying today on
FinCEN oversight, I am not pleased Congress has effectively
tied his hands and put his office and other Inspectors General
under a tremendous burden with the material loss review
mandates.
While learning lessons from bank failures is important,
tough oversight of fraudulent loan modification schemes,
private bank BSA compliance, and many other priorities are just
as important.
Under the bipartisan leadership of Representatives Steve
Driehaus and Christopher Lee of this subcommittee, the House
acted last year by passing H.R. 3330 to provide the flexibility
that our Inspectors General desperately needed.
I was pleased to see a version of our legislation in the
Senate financial regulatory reform bill, but as is often the
case, when comparing House and Senate legislation, our version,
we believe, is clearly better, and we will continue fighting to
fully empower our Inspectors General with the oversight tools
they need.
I now recognize for 5 minutes the ranking member of the
subcommittee and my colleague from Illinois--it is not Judy
Biggert, she is not here right now--I am going to recognize Mr.
McHenry, Patrick McHenry.
Mr. McHenry. That might be a slight insult to Judy. She is
much more attractive and a nicer lady.
[laughter]
Mr. McHenry. Thank you, Mr. Chairman. Thank you for holding
the hearing today. Obviously, Treasury and FinCEN are certainly
vital in the United States to stop the money laundering and
financing of terror.
Law enforcement needs a quick dependable way to track the
money involved in crimes, and financial institutions often
serve as the first line of defense in preventing financial
crimes and providing critical information to law enforcement.
This is a complex and difficult task, obviously, but it is also
imperative that we make certain it is done correctly.
Since its inception, FinCEN has had to depend on the IRS
for the bulk of its computing and data storage, a situation
that made sense at first, but is now at best inefficient.
Congress last year approved an amendment by Congressman
Paulsen, who is here today on the subcommittee, to start the
process of updating FinCEN's computers, but unfortunately, the
Obama Administration has reduced its Fiscal Year 2011 budget
requests for FinCEN by nearly 10 percent.
FinCEN needs the proper resources to do its job, and that
means it must have its own computer system and the clear
responsibility to make sure it works correctly.
It is unrealistic to imagine that every suspicious activity
report will result in an investigation or a conviction, but
FinCEN and law enforcement should have the hardware and
software and other resources to search data reported by
financial institutions quickly and thoroughly. Faulty data is
unacceptable, whatever the reason.
If online retailers can instantly see that an order being
placed is missing essential data, certainly FinCEN and the IRS
should have the capacity and capability to detect incomplete
suspicious activity reports and see the missing data.
I look forward to hearing from the witnesses, especially
the IG and the GAO, and I look forward to seeing an ongoing
discussion about FinCEN's necessary resources to do its job.
I yield back.
Chairman Moore of Kansas. The Chair now recognizes Mr.
Lynch from Massachusetts for up to 5 minutes.
Mr. Lynch. Thank you, Mr. Chairman. I want to thank you for
holding this very important hearing today. I would like to
welcome our witnesses and thank them for their willingness to
help the committee with its work.
I have met with GAO, as well as Director Freis, regarding
the reports that I, together with Chairman Frank, requested
some time ago, and I am eager to discuss them further during
this hearing.
I wanted to provide some context, however, as to my own
experience with FinCEN, and my knowledge of the good work that
they do.
FinCEN's mission to provide a government-wide, multi-source
financial intelligence and analysis network is global and often
goes unknown or unrecognized. FinCEN's regulatory
responsibilities include administering the Bank Secrecy Act,
the United States' primary anti-money laundering
counterterrorist financing regulatory regime.
They also support law enforcement, intelligence and
regulatory agencies through the sharing and analysis of
financial intelligence, and lastly, and this is the area that I
work with them most often on, I am proud to be the co-chair of
the Anti-Terrorist Financing Task Force, which builds global
cooperation and offers technical expertise among financial
intelligence units throughout the world.
The recent GAO study found that suspicious activity report
filings increased from 163,000 per year in 2000 to 649,000 per
year in 2007. I can only imagine that has increased since then.
This is an immense amount of information to manage and
review. FinCEN works with every major administrative department
to detect fraud and abuse, from the Federal Housing Authority,
trying to help identify bad lenders, to Health and Human
Services, to root out fraud in the reimbursement process.
FinCEN opens up its database and provides essential
information in numerous cases each year. FinCEN's
responsibility was also broadened under the 2001 PATRIOT Act
which expanded the Bank Secrecy Act to include money laundering
and terrorist financing.
FinCEN plays a dual role in supporting domestic law
enforcement and intelligence agencies through sharing their
analysis of financial intelligence while simultaneously
building that global cooperation with our counterparties in
financial intelligence units (FIUs) around the world.
In my travels abroad to the Middle East and other regions,
I have been able to meet with FIUs in a variety of countries to
view FinCEN's international work firsthand.
As the co-chair of the Task Force on Terrorist Financing
and Anti-Proliferation, I visited countries like Morocco,
Tunisia, Jordan, and Afghanistan. We worked together in the
West Bank. We have some problems in Gaza as well.
I am just very thankful for FinCEN's help and guidance in
all of those important places doing important work to combat
the flow of illicit funds to terrorist organizations.
I have seen the relationships developed between foreign
governments and our Treasury officials. The information FinCEN
can provide those FIUs is invaluable. These relationships
formed as international governments establish FIUs and join
FATF, the Financial Action Task Force, are key to FinCEN's
long-term success in combating financial terrorism, both in the
United States and abroad.
However, despite this important dynamic, I am concerned
that due to budget constraints, private contractors are
increasingly doing the work that FinCEN has done in the past.
In its 2006 report, FATF cited FinCEN's important role in
facilitating domestic coordination and cooperation. However, it
also warned that it is essential that FinCEN maintain its key
role within the anti-money laundering and counterterrorism
financing chain, and without proper funding and a presence in
the international community, FinCEN cannot maintain that
leadership role.
The Obama Administration announced in November of 2009 an
initiative to hold accountable those who helped bring about the
last financial crisis. While that is commendable, this program
is comprised of more than 20 Federal agencies including FinCEN,
94 U.S. Attorney Offices, and State and local partners, and
provides FinCEN with no additional resources to do all that
extra work and coordinate and contribute to the Task Force.
This is just one recent but glaring example of how FinCEN
is spread far too thin with too few resources to adequately
accomplish its mission.
I am amazed that they do as much as they fo, as well as
they do it, given the resources they have been given.
I look forward to addressing these issues in the future and
helping FinCEN maintain its prominence within the intelligence
and law enforcement communities.
Mr. Chairman, thank you very, very much for your
willingness to hold this hearing, and thank you for the time,
and I look forward to hearing from our witnesses.
Chairman Moore of Kansas. Thank you, Mr. Lynch. I
appreciate your testimony. Next, Mr. Paulsen has requested 2
minutes. Mr. Paulsen, you are recognized, sir, for 2 minutes.
Mr. Paulsen. Thank you, Mr. Chairman. I also want to thank
you for holding today's hearing. I appreciate it.
Financial institutions often serve as the first line of
defense in detecting financial crimes and providing critical
information to law enforcement, and the information that is
provided to government organizations by FinCEN is essential to
catching criminals and defeating terrorism ultimately.
The ability to follow the money trail provides our
intelligence and law enforcement community with information
that leads to a broader understanding of terrorist
organizations and drug dealers.
As my colleague, Representative McHenry, had mentioned just
a little while ago, I offered an amendment during last year's
appropriations process to help provide funding to FinCen for
additional resources to more effectively combat financial
crimes, and it was my hope that this funding would be used to
help provide needed support and coordination with Federal,
State, and local law enforcement.
I look forward to hearing more about the modernization that
FinCEN is currently undergoing and I look forward to the
testimony today, and thank the witnesses for coming before us
today, Mr. Chairman.
Chairman Moore of Kansas. Thank you, sir. I am pleased to
introduce our first panel of witnesses. First, we will hear
from Mr. James Freis, Jr., Director of the Financial Crimes
Enforcement Network, FinCEN, at the U.S. Department of the
Treasury. Then, we will hear from the Honorable Eric Thorson,
Inspector General for the Treasury Department.
We are glad to have you testify before our subcommittee
again, Inspector General Thorson.
Without objection, your written statements will be made a
part of the record.
Director Freis, you are recognized for 5 minutes to provide
a brief summary of your statement, sir.
STATEMENT OF JAMES H. FREIS, Jr., DIRECTOR, FINANCIAL CRIMES
ENFORCEMENT NETWORK (FinCEN)
Mr. Freis. Thank you. Chairman Moore, members of the
subcommittee, I am Jim Freis, the Director of FinCEN. It is a
pleasure to be here today to discuss the findings from
oversight reports published by the GAO and the Treasury
Inspector General that review FinCEN's support to law
enforcement and the quality and usefulness of suspicious
activity reports, known as SARs.
With the exception of the IG report on SAR quality, which
is no longer representative of today's SAR quality standards,
FinCEN agrees with the findings and recommendations included in
these reports, and I am pleased to say that significant
progress has been made on all fronts to improve upon the areas
identified as in need of improvement.
As the Inspector General notes in his testimony, the
findings included in his report are based on SAR filings from
Fiscal Year 2006, and do not take into account the significant
efforts we have made since then toward the overall objective,
which he and I share, to improve both the quality and the
accuracy of SAR data.
With respect to the GAO's examination into how FinCEN's
mission, services, and resources in support of law enforcement
agencies have evolved, FinCEN concurs with the findings and
recommendations of this report, and we are encouraged to see
that it recognized the value of our efforts and the unique
expertise we provide in addition to correctly illustrating our
important role in supporting law enforcement's prosecution of
financial crimes, all this while balancing the needs and
priorities of over 300 Federal, State, and local law
enforcement agencies, and providing regular and ongoing support
to Federal and State regulatory authorities and foreign law
enforcement around the world.
The report made a series of recommendations for actions
that are designed to maximize the relevance and usefulness of
FinCEN's law enforcement support capabilities, such as
establishing a process for informing law enforcement agencies
and soliciting input about the availability of our various
analytical products and the process for selecting which
products to pursue.
As I note in my affirmative testimony, in October 2009,
FinCEN's Office of Law Enforcement Support initiated an effort
to address communication with law enforcement on three levels:
first, our analytical products; second, the work flow process;
and third, outreach. As part of this effort, FinCEN has
developed plain language descriptions of the types of
analytical products and services we provide and the data
sources and analytical tools available to us. These
descriptions are designed for broad dissemination to all levels
of Federal, State, and local law enforcement to enhance the
communication and understanding of the various analytical
products and services available.
Regarding the GAO's examination into the degree to which
law enforcement agencies actively use SARs for investigative
purposes, FinCEN was pleased with the results, and we believe
it represents a meaningful body of empirical data from which
the Congress can glean in order to satisfy questions regarding
the vital role SARs play in safeguarding our financial system.
The report also notes the efforts taken by FinCEN to
improve the quality of SAR filings, and the increased and
improved use of SAR data by law enforcement and regulatory
authorities at all levels of government.
In its conclusion, the GAO recommended that FinCEN further
develop a strategy that fully incorporates certain practices to
enhance collaboration among Federal agencies into the form
change process.
We agreed with the recommendation, which dovetails with an
initiative FinCEN began well in advance of the report's
publication. Over the past several years, we have been working
toward modernizing our form management process to enable us to
take advantage of the advances in electronic form development.
In doing so, we consult stakeholders to whom we have
delegated BSA examination authority, law enforcement, regulated
financial institutions, and the interested public.
We will continue to prioritize this multi-stakeholder
comprehensive approach to form change collaboration which in
turn will more than satisfy the GAO's recommendation.
Financial crimes and other illicit activities are
unfortunately here to stay, and we will remain vigilant in our
mission to safeguard the financial system from those who wish
to manipulate it for unscrupulous purposes.
FinCEN is more committed than ever to maximizing the
strengths and commonalities that exist between us, our law
enforcement counterparts, and the industries we are responsible
for regulating.
We are very encouraged by the progress we have made thus
far, and we are dedicated to continuing to build on these
accomplishments by leveraging our resources, to not only assist
law enforcement in holding criminal actors accountable, but to
continue our proactive analysis of emerging trends and patterns
in evoking our regulatory authorities to help stop crime before
it is committed.
Thank you for inviting me to testify before you today. I
would be happy to answer any questions you may have.
[The prepared statement of Director Freis can be found on
page 32 of the appendix.]
Chairman Moore of Kansas. Thank you, Mr. Freis. I will
advise the panel members, subcommittee members here, and the
people in the room that votes were called about 3 or 4 minutes
ago. We still have more than 10 minutes left.
The Chair at this time is going to recognize Mr. Thorson
for testimony for up to 5 minutes, and following his testimony,
we will recess for votes. Committee members will go over and
vote and then return as quickly as possible so we can resume
this hearing.
Mr. Thorson, you are recognized for up to 5 minutes, sir.
STATEMENT OF THE HONORABLE ERIC M. THORSON, INSPECTOR GENERAL,
U.S. DEPARTMENT OF THE TREASURY
Mr. Thorson. Chairman Moore and members of the
subcommittee, I appreciate the opportunity to appear before you
this afternoon to discuss my office's most recent oversight
report on FinCEN.
That report, which we issued in January of this year,
addressed data quality with suspicious activity reports or
SARs, filed with FinCEN by banks and other financial
institutions.
As a brief background about my office, we provide
independent audit and investigative oversight of most of
Treasury's programs and operations. Our oversight includes
FinCEN's administration of the Bank Secrecy Act or BSA.
I consider oversight in Treasury's role in preventing money
laundering and combating terrorist financing to be among our
highest priority work. To that end, we first designated this
area as one of Treasury's most significant management and
performance challenges back in 1999 and have continued to do so
since then.
We have also conducted a number of audits of this area in
the last decade or so, including many of FinCEN, as our
resources have allowed.
To be clear, our office identified Treasury's critical role
in preventing money laundering and combating terrorist
financing as high risk well before the horrific events of
September 11, 2001.
Unfortunately, much of the information I am presenting to
you today is based on work that my office conducted some time
ago, although I believe the conditions remain relevant.
The current financial crisis has had a major impact on my
office's ability to do work in this and other critical areas
which I will discuss later.
As the administrator for BSA, FinCEN requires banks,
thrifts, credit unions, money services businesses, and others
to file SARs for transactions that the institution knows,
suspects or has reason to suspect are intended to evade Federal
law or regulation, involve illegally obtained funds, or have no
business or apparent lawful purpose.
FinCEN established the SAR database in 1996 as a single
collection point for SARs to provide law enforcement agencies
with critical information for specific criminal investigations,
as well as to facilitate comprehensive analyses of trends and
patterns in financial activity.
Filers of SAR reports are required to provide accurate
information and face penalties if they do not. This is more
than a matter of what is legally required.
As FinCEN stated in October 2009, ``Accurate and complete
SARs are critical to the utility of BSA data in combating
financial crimes, terrorist financing, and other illicit
activity. The value of any SAR filing is impaired when it is
not accurate and complete.''
We have accomplished four audits on the accuracy and
completeness of SARs in FinCEN's database since 1999, and as
Director Freis pointed out, our latest review was actually
started in 2007, but was significantly delayed due to our
failed bank workload.
That audit found that SARs filed during Fiscal Year 2006
often lacked critical information or included inaccurate data.
Specifically, we found that 59 percent of the 1.1 million SARs
filed in 2006 contained omissions or incorrect, inconsistent or
inappropriate information in one or more of the 17 data fields
that FinCEN deemed critical to law enforcement.
SARs filed by money services businesses had the highest
percentage of data quality problems, 88 percent, followed by
SARs filed by securities and futures firms, 50 percent,
casino's and card clubs, 49 percent, and depository
institutions, 34 percent.
The fields that most often had missing or erroneous data
were related to the subject's taxpayer identification number,
address, and name. We believe that the filer should have used
more due diligence in preparing them.
To improve SAR data quality, we recommended that FinCEN:
number one, continue and enhance its filer education and
outreach programs; and two, identify significant and recurring
SAR quality problems for follow-up.
FinCEN agreed with our recommendations and they identified
a number of steps it has already taken to enhance filer
education. Also, FinCEN told us that it has put a SAR
validation process in place that identifies all SAR filings
with significant errors for its compliance staff to monitor.
We consider these actions an excellent response to our
recommendations.
As requested, I will now briefly address the impact of the
failed bank reviews to Treasury IG's FinCEN oversight.
As you recall, I testified before this subcommittee in May
of last year on this very matter. We are congressionally
mandated to review the causes of failed banks and the OCC or
OTS supervision exercised over those failed institutions
whenever the failure results in a loss of $25 million or more
to the Deposit Insurance Fund.
Since the current economic crisis began, my audit staff has
done little else but conduct material loss reviews. In this
regard, we have completed 17 reviews and have another 35 in
progress. Regrettably, I believe my office will be busy
conducting such reviews for some time to come.
While these reviews are important, we are simply not
learning that much new with each successive review. The
requirement is also precluding us from doing other important
oversight work.
Last July, with the much appreciated support by Chairman
Moore and this subcommittee, the House passed H.R. 3330 to
increase that threshold to $200 million, while prudently
requiring some level of review of all bank failures.
As you pointed out, sir, the current bill, Senate 3217, as
introduced, did include a provision to raise that threshold.
Lastly, FinCEN faces many challenges as administrator of
the BSA, particularly with respect to the fact that it must
rely on other regulators to ensure their regulated industries
comply with BSA requirements.
While a lot of focus is on the current financial crisis, we
must remember the terrorists and criminals still are busy.
Therefore, I applaud the subcommittee for its attention to
FinCEN's important role in administering BSA.
That concludes my statement.
[The prepared statement of Inspector General Thorson can be
found on page 80 of the appendix.]
Chairman Moore of Kansas. Thank you, Mr. Thorson. We will
at this time recess the subcommittee. I would ask all
subcommittee members to come back here immediately upon
completion of votes on the House Floor.
I would ask our witnesses to remain available for
questioning when we get back, and I think we have four votes, I
believe. It will probably take half an hour to 40 minutes, but
we will be back as quickly as we can.
All subcommittee members, please return. We will stand in
recess.
[recess]
Chairman Moore of Kansas. The subcommittee is called back
to order. I ask unanimous consent that we enter into the record
the three oversight reports we are examining today: the GAO
report of February 27, 2009, entitled, ``The Bank Secrecy Act,
Suspicious Activity Report Use is Increasing, but FinCEN Needs
to Further Develop and Document Its Form Revision Process'';
the GAO report of December 14, 2009, entitled, ``Anti-Money
Laundering, Improved Communication Could Enhance the Support
FinCEN Provides to Law Enforcement''; and finally, the Treasury
IG report of January 19, 2010, entitled, ``SAR Data Quality
Requires FinCEN's Continued Attention.''
Without objection, these reports will be made a part of the
record.
I now recognize myself for 5 minutes for questions.
I want to start with Treasury Inspector General Thorson.
Before I focus on FinCEN, Inspector General Thorson, if
Congress were to enact H.R. 3330 to give your office and others
the flexibility you need to better manage your resources and
provide better oversight, what kinds of things with respect to
FinCEN would your office be able to examine and report to
Congress on?
I presume the House legislation would be better for your
office than the Senate language in the financial reg reform
bill; is that correct, sir?
Mr. Thorson. Yes. There are a number of things that raising
that threshold would allow us to do. Specifically, with regard
to FinCEN, I would have to refer to our audit plan, and we can
certainly provide that for you.
The idea and why we requested the increase in the threshold
was to free up some of the audit resources. Certainly, aside
from FinCEN, there are a lot of things within the Treasury
Department that we have had to postpone that really are a major
part of what our office is there for.
I am giving you a little broader answer than you were
probably looking for, but there are a number of things we would
like to be able to do, and this would certainly help.
Chairman Moore of Kansas. Thank you, sir. Director Freis,
thank you for your testimony and for your public service.
In the Treasury IG's January report, they list the top 25
depository institutions, including IndyMac and NetBank, that
had errors in over half of their SAR data in Fiscal Year 2006,
and recommend that FinCEN should notify Federal regulators of
these problems.
Has your Bureau done so, and has FinCEN seen any
improvements or more errors with depository institutions,
especially in the past 2 years, as they have dealt with the
financial crisis?
Any comments, sir?
Mr. Freis. Yes, Mr. Chairman. We have developed a process
within FinCEN that is consistent with those recommendations, to
work very closely with the supervisors of the financial
institutions, so we do examine for problems in the filing of
all our reports, not just SARs, and we follow up directly with
the supervisor, and then the supervisor will monitor to see
improvements.
I am happy to say that we have seen a continual increase in
the quality of the reports from the financial industry.
Chairman Moore of Kansas. Mr. Thorson, do you have any
comments on that?
Mr. Thorson. First of all, we are very happy to see that
and certainly accept FinCEN's explanations of the changes they
have made. We obviously have not had a chance to look at that
since then.
I think all of us here have the same goal, and that is to
do whatever we can do to increase the efficiency and
effectiveness of FinCEN, as it helps all of us.
Chairman Moore of Kansas. Director Freis, on page one of
your testimony, you note ``FinCEN's efforts to maintain the
`proper balance' between reporting requirements imposed upon
the industry and the need to ensure information gets to law
enforcement officials.''
Which do you believe FinCEN does better, improving SAR data
quality and working with industry on reporting requirements or
working with law enforcement to get the information to them?
Mr. Freis. I do not think it is a choice between the two,
Mr. Chairman. I think our mission is to get information to law
enforcement and increasing the quality is making that
information more accessible to law enforcement.
Ultimately, a large part of what I have tried to do in our
dialogue with the financial industry is show them how it is in
their interest, and particularly in these economic times when
we are fighting the people who are trying to rip off the bank
or rip off the customers and customers who lose money are not
good customers for your bank. We have a common interest with
the financial industry.
Chairman Moore of Kansas. Thank you. Inspector General
Thorson, from what you know, would you encourage FinCEN to do a
better job working with industry on SAR data quality or working
with law enforcement?
Mr. Thorson. I think really both of those things but
certainly the quality when you talk, for instance, IndyMac, one
of the banks that we looked at after it failed, had an 86
percent error rate.
Everybody has the desire to certainly improve on those
kinds of things, and I think what Director Freis has been
saying is they are addressing it.
You asked what would that threshold on MLRs improve on,
that is one of the things that we would certainly be able to
do, validate the actions taken on SARs as well as their IT
modernization that he also mentioned.
Chairman Moore of Kansas. Thank you, sir. My time has
expired. Mr. Paulsen, you are recognized for 5 minutes.
Mr. Paulsen. Thank you, Mr. Chairman. I will ask just a
couple of questions. First, I will go to you, Mr. Thorson, if I
could.
Probably the most interesting part of your testimony comes
at the end where you address FinCEN's IT system. I would like
to ask you three questions at once and you can tackle them
altogether, I guess, more or less.
Number one, if FinCEN could stand up its own computer
system, would that system address a lot of the data quality and
form updating issues you and the GAO address?
Number two, Treasury in general, not just FinCEN, has had a
lot of difficulty with newer computer systems. Would you
summarize now and then maybe give us a larger written report
later on how FinCEN can successfully manage a transition to its
own system?
Number three, what in your view is the cause for the
morphing of the FinCEN OFAC tracking system? What are its
prospects for success, and is there anything that Congress can
or should do in that capacity?
Mr. Thorson. With the number of questions, I would like to
provide you a very accurate answer, and I will do that in
writing.
One thing you mentioned was how do we implement this or how
does FinCEN successfully implement that. I just would give you
the answer I would give you on any major program, whether it is
FinCEN or DOD. In this case, an IT program would start with a
good solid plan of what it is you want to do, and what it is
going to cost.
In this case with Treasury, I would involve the Office of
the CIO, and I would have strong independent oversight. That
oversight is not there to second guess everything they do at
all. It is there really to help them to make sure that they are
looking at things that maybe they had not thought of.
I hesitate to use the word ``partner'' because we are
independent of everything. The truth is that is what our goal
is, to help them accomplish their mission.
A strong independent oversight would also be one of the
factors I would put in there.
Mr. Paulsen. Thank you. Mr. Freis, let me just follow up.
As I mentioned earlier in my opening statement, FinCEN's
mission and work to help safeguard the financial system and aid
our law enforcement community is important. I support that
certainly as we all do.
As I mentioned in my opening statement, I am interested in
FinCEN's ongoing modernization efforts. Will the modernization
efforts that FinCEN is currently carrying out help resolve some
of the issues that have been laid out in some of the reports
that we have discussed that now have been brought up
specifically?
I am interested in how the modernization has helped you or
helped you partner essentially with other agencies.
Mr. Freis. Yes, indeed. The modernization is designed to
address some of the issues that you mentioned and some of the
issues that are in the GAO reports.
Very consistent with what Mr. Thorson just said, the most
important aspect in going to a big project, a big investment
like this, is appropriate planning. We have been planning for a
period of 3\1/2\ years for this IT modernization. It has been
an unprecedented level of collaboration with all of the
stakeholders.
By that, I mean bringing together our law enforcement
customers because ultimately, once again, we are trying to get
them the data they need to fight the criminals, and working
with the regulatory authorities on whom we rely for ensuring
compliance and appropriate reporting by the regulated
industries, and also working with the industry.
Any way that we can help simplify their efforts to get us
lower costs more quickly is a benefit to everyone, both the
industry and law enforcement and of course, the general public,
that we are looking to protect.
We also have established significant levels of oversight
with this program. First, making sure that we bring together
the stakeholders that need to be closely involved.
Mr. Thorson mentioned the Treasury CIO. We have a
management executive group that oversees the work in the IT
modernization, and that consists of myself as the Director of
FinCEN, the Treasury CIO personally, and one of the two Deputy
Commissioners at the IRS.
As you know, we are transitioning the system in part from
the IRS to FinCEN. Those are the three primary stakeholders. We
work together in terms of the overall department priorities and
working very closely with the Office of Management and Budget
to make sure that they are helping us as we leverage across the
different parts of the entire Administration.
Mr. Paulsen. Thank you. My time is just wrapping up now.
Mr. Thorson, if you have some follow-up in written form, I
think that would be very helpful as well.
Thank you, Mr. Chairman.
Chairman Moore of Kansas. Thank you. The Chair at this time
recognizes Mr. Lynch for 5 minutes, sir.
Mr. Lynch. Thank you again, Mr. Chairman.
Director Freis, and this actually applies to Mr. Thorson as
well, in this tight budget environment, it is not likely that
we are going to see any increases for staffing. Director Freis,
how many folks do you have handling your whole operation right
now?
Mr. Freis. We have 325 people as of today.
Mr. Lynch. You are handling a global operation, trying to
interface with governments all over the world. I have seen you
do that. You have 300 domestic law enforcement agencies that
you have to deal with. Now, we have just added some more
responsibility with respect to these financial institutions
that we want you to interface with. You are doing work with the
top oversight panel.
Realistically, I do not see this getting better. I do not
see the funding for your people getting better.
GAO, you are sort of in the same boat, where just doing
this oversight in addition to what we are already requiring you
to do on material loss at these banks.
I just see this system stretching further towards the
breaking point. How do you expect to handle all this
responsibility with no additional people, no additional money,
and at the same time ramping up this new technology?
I am just trying to figure out how this works and how this
gets better.
Mr. Freis. We appreciate your support and we certainly
appreciate the direction from the Congress in helping us to
prioritize the funding that we have received for the IT
modernization. It is a critical aspect.
When I look back at our statutory mission, what Congress
laid out for us, more than half of it talks about our IT
management functions and the way the single investment at
FinCEN can leverage across all aspects of the government.
Mr. Lynch. Director, I appreciate that. I have more meter
maids in my city than you have folks to handle your
responsibility around the world. You have far greater
responsibility, with all due respect to my meter maids, they do
a wonderful job as well.
It is just trying to match the resources to the job that
needs to be done. Unless we change our budgetary priorities to
give you the tools you need to do your job, I just see a
failure coming. There will be a failure and then everybody will
throw up their hands and say, why did we not fund FinCEN, why
did we not provide the resources that they needed to do their
job, how did this failure happen? It will all be in retrospect
looking back at some colossal intelligence failure that
continues to go on.
I, for one, support getting you more resources and
increasing your staffing commensurate with the responsibilities
that we have given you.
We are not nearly there in terms of the importance of the
job that you do.
Like I said earlier in my statement, I am amazed that you
do as much as you do with the little resources that you have.
You have to be maxed out here in terms of all the
responsibilities that you have.
I think it is disingenuous sometimes for Congress to come
down on you and say, why are you not doing this, why are you
not doing that? You have to cooperate better. You have to
communicate better. Just covering all the bases you have to
cover is a job in itself.
Is there any hope that at least with the technology
upgrade--are there ways we can do this to multiply the
effectiveness of the employees that you have using new
technology?
Mr. Shaul from Mr. Frank's office, who has been helping me
with some of the SAR stuff, has suggested, for instance, if we
could move to a bar coding type of method to track SARs and to
make them more complete, some of that information will be
embedded so we do not have the problems that we had with
IndyBank.
Is that something that you think might be helpful as a
force multiplier so you are not running around doing the stuff
manually or less efficiently than you might be doing?
Mr. Freis. Certainly, the IT can be a force multiplier, but
most of what we are doing in terms of the IT modernization, one
of the core pillars of it, is moving away from paper and manual
processing to leveraging that electronically.
Right now, the people who are doing that manual processing
are IRS employees. We, as the Treasury Department and the
government will benefit from that, FinCEN will not benefit--
Chairman Moore of Kansas. The gentleman's time has expired.
Mr. Lynch. Thank you, Mr. Chairman.
Chairman Moore of Kansas. I want to thank our witnesses for
testifying here today, Mr. Freis and Mr. Thorson, Inspector
General Thorson. Thank you both for testifying.
If you have any additional comments to make, please make
those in writing and submit them. I will excuse you at this
time and call our second panel, if you would please be seated.
Thank you, gentlemen.
We will convene with the second panel of witnesses. I am
pleased to introduce our second panel. First, we will hear from
Mr. Richard J. Hillman, Managing Director, Financial Markets
and Community Investment, with the Government Accountability
Office.
Then, we will hear from Ms. Eileen Larence, Director,
Homeland Security and Justice Issues, also with GAO.
Without objection, your written statements will be made a
part of the record. Mr. Hillman, sir, you are recognized for 5
minutes.
STATEMENT OF RICHARD J. HILLMAN, MANAGING DIRECTOR, FINANCIAL
MARKETS AND COMMUNITY INVESTMENT, U.S. GOVERNMENT
ACCOUNTABILITY OFFICE
Mr. Hillman. Thank you, Mr. Chairman. I appreciate the
opportunity to be here today to discuss recent work we have
completed at FinCEN.
My statement today is based upon GAO's 2009 report on the
use of suspicious activity reports and challenges FinCEN has
encountered in its form revisions process.
Specifically, I will discuss three issues: factors that
have contributed to an increase in the number of SAR filings
for depository institutions; actions taken by FinCEN and law
enforcement agencies to improve the quality of SAR reporting;
and challenges FinCEN encountered in its attempt to revise the
SAR form in 2006, and steps FinCEN could take to improve
collaboration in its form revision process.
Regarding the first issue, SAR filings have increased
significantly from 2000 through 2008. Total SAR filings by
depository institutions have more than quadrupled from about
163,000 in 2000 to more than 732,000 in 2008.
Two key factors largely explain the increase: first,
automated monitoring systems can flag multiple indicators of
suspicious activity and identify significantly more unusual
activity than manual monitoring; and second, several public
enforcement actions against a few depository institutions
prompted other institutions to more closely look at their
clients and account activities.
Another factor has been institutions' greater awareness of
and training of Bank Secrecy Act requirements after September
11, 2001.
As you know, SARs are a key information source for law
enforcement agencies, as well as the Federal regulators.
Because the information they contain is critical for
investigations of money laundering, terrorist financing, and
other financial crimes, it is important that filers accurately
fill out the reports.
FinCEN and law enforcement agencies have taken some actions
to improve the quality of SAR filings and educate filers about
their usefulness. For example, FinCEN and Federal law
enforcement representatives regularly participate in anti-money
laundering issues, including events focused on SARs.
Moreover, law enforcement representatives said they also
establish relationships with depository institutions to
communicate with staff about crafting useful SAR narratives.
In addition, FinCEN, law enforcement agencies, and
financial regulators have taken steps in recent years to make
better use of SAR filings. For example, FinCEN uses SARs to
provide analytical products to law enforcement agencies and
financial regulators. Some law enforcement agencies use SAR
data with their own datasets to facilitate complex analytical
processes, and Federal, State, and local law enforcement
representatives have collaborated to review and start
investigations based upon SARs in their areas.
Financial regulators are also using SARs. For example, they
use them in their examinations process to assess compliance and
take action against abuses by depository institution insiders.
Finally, our view of FinCEN's form revision process for the
SARs highlights challenges and weaknesses in FinCEN's
management of multi-agency efforts. I will note that not only
does FinCEN need to coordinate and collaborate with numerous
law enforcement agencies and financial regulators, it also
relies on the IRS for information technology support of BSA
data including SARs, specifically.
FinCEN developed a revised form in 2006, but then learned
that it could not be used because of information technology
limitations that the IRS could not address.
Furthermore, some law enforcement groups expressed concerns
that certain of the 2006 revisions could be detrimental to
their investigations.
Bank regulators, on the other hand, were satisfied with the
revisions. In short, FinCEN's stakeholders had not all been
involved early enough in the process.
In 2008, FinCEN developed a new process for revising forms,
including SARs, which may increase collaboration with some
stakeholders. However, available documentation on the process
did not detail the degree to which the new process would
incorporate GAO identified best practices for enhancing and
sustaining Federal agency collaboration efforts.
For example, it did not specify roles and responsibilities
for stakeholders or depict monitoring, evaluation or reporting
mechanisms. Therefore, we recommended that FinCEN further
develop and document its strategy to fully incorporate certain
of these practices into their revision process and distribute
that documentation to all stakeholders.
In recent discussions with FinCEN officials, we have
learned that it is taking some additional steps toward greater
collaboration with law enforcement agency representatives,
prosecutors, and multi-agency law enforcement teams and others
to determine the contents of the form, but it is still too soon
to determine the effectiveness of this process.
In closing, I would like to note that the story of the SARs
revision process highlights some of the key long-standing
concerns that we identified over the years concerning FinCEN's
ability to carry out its mission effectively given that it must
depend on other agencies.
We recognize that the mission of FinCEN creates some of its
own challenges but we also believe that management has
opportunities to strengthen its coordination and collaboration
across agencies.
Mr. Chairman, thank you, and I will be happy to answer any
questions at the appropriate time.
[The prepared statement of Mr. Hillman can be found on page
47 of the appendix.]
Chairman Moore of Kansas. Thank you, Mr. Hillman.
Ms. Larence, you are recognized for 5 minutes, ma'am.
STATEMENT OF EILEEN R. LARENCE, DIRECTOR, HOMELAND SECURITY AND
JUSTICE, U.S. GOVERNMENT ACCOUNTABILITY OFFICE
Ms. Larence. Mr. Chairman and members of the subcommittee,
I appreciate the opportunity to summarize our review of
FinCEN's support to Federal, State, and local law enforcement
as they investigate and prosecute terrorist financing, money
laundering, and other financial crimes.
In some ways, parts of FinCEN are in transition as they
examine how to continue to be a relevant and meaningful
resource to its more than 300 law enforcement customers.
As more of these customers obtain direct access to the
financial data FinCEN collects under the Bank Secrecy Act, they
could do their own data queries and analyses and decrease the
request to FinCEN for this kind of tactical case support by
about 80 percent so FinCEN could examine other ways it could
support law enforcement and effectively use its resources.
The agency decided that it could use its expert knowledge
about the financial data to conduct more complex and strategic
analyses. For example, the agency could identify new patterns
and emerging trends that could forewarn of new financial
concerns.
Given the evolving role of FinCEN, we surveyed Federal and
State law enforcement agencies, including FinCEN's primary
customers, to determine how useful they found FinCEN's current
services and products.
In general, the 25 law enforcement agencies responding to
our survey in late 2008 found these services and products
useful, and cited three in particular as most useful: first,
having this direct access to the financial data; second, having
liaisons at FinCEN; and third, being able to use FinCEN's
secure communications to query U.S. financial institutions for
data on persons or organizations under investigation, a
capability that the PATRIOT Act provided.
Law enforcement also reported that some of FinCEN's complex
analytical products are particularly helpful in their
investigations. This is especially true of technical reference
manuals that cover issues such as Internet payment mechanisms.
We identified four relatively easy commonsense ways that
FinCEN could improve its working relationship and
communications with law enforcement and help the agency be more
relevant and responsive to these customers, increase the value
and impact of its analyses, and ensure it uses its limited
resources effectively.
First, FinCEN could better inform law enforcement about the
types of complex analytic products it can provide and let law
enforcement know when it issues a new product. At the time of
our review, 14 of the 25 law enforcement agencies had not
received any or only one of FinCEN's strategic analytic
products since 2004.
Second, FinCEN could better define the types of requests
for analytic support it will accept and the criteria it will
use to set priorities for its analytic resources. FinCEN could
also let law enforcement know whether and why it accepted or
rejected a request.
These basic practices would help build FinCEN's customer
relations with law enforcement.
Third, FinCEN could more actively solicit law enforcement's
input on ongoing as well as planned analyses, significantly
increasing their usefulness and relevance.
Fourth and finally, FinCEN could establish a mechanism for
agencies to provide law enforcement sensitive comments on
proposed regulatory changes so as not to compromise key
investigative techniques or strategies.
The good news is that the Director acknowledges that FinCEN
agreed with our recommendations. In fact, because we were doing
work at the committee's request in the agency, FinCEN itself
conducted its own internal study and acknowledged similar
concerns as those we had identified.
Last week, we asked FinCEN for an update, and learned it is
initiating or plans to initiate corrective actions in a number
of these areas. As Director Freis acknowledged, it is drafting
both a menu of products and services, as well as a menu of
resources that it plans to distribute electronically to law
enforcement.
It is also drafting a survey to determine what information
law enforcement needs to support their investigations and a new
form to capture and track requests for analytic support.
In addition, FinCEN has developed a process to let law
enforcement know the agency will fulfill a request, and
furthermore, FinCEN organized some of its staff and workload so
as to better engage law enforcement. And finally, FinCEN did
solicit law enforcement input on a recent proposed regulatory
change up-front before the change was a done deal, although in
part, Congress provided them direction to do this.
The agency is establishing a way for law enforcement to
submit sensitive comments on proposed changes.
Mr. Chairman, these are all good steps. FinCEN just needs
to implement them and then track their success to ensure that
the agency is using its resources most effectively in meeting
law enforcement's needs.
This will help to ensure that parts of FinCEN will survive.
The subcommittee's support for FinCEN and oversight of its
contributions will help to ensure that it is following through
on these reforms.
This concludes my statement. I would be happy to answer any
questions.
[The prepared statement of Ms. Larence can be found on page
62 of the appendix.]
Chairman Moore of Kansas. My thanks to both witnesses for
their testimony. I appreciate that very much. I will recognize
myself for 5 minutes for questions.
Ms. Larence, with respect to law enforcement and how FinCEN
prioritizes which reports they do, how should they improve that
priority system? Should they permit law enforcement to help
decide, for example, perhaps a request from the FBI Director
has a higher priority than an FBI agent in Seattle?
Would involving law enforcement in that prioritization
system help?
Ms. Larence. Yes. We think that involving law enforcement
in setting the criteria would help, but then also making sure
FinCEN is transparent about that criteria. We do not argue that
law enforcement should call all the shots because law
enforcement itself recognizes that FinCEN brings particular
expertise to the table because they have access to all of the
data and because they have a broad perspective across the
industry, regulators, and law enforcement itself. Law
enforcement would just like to be more of a partner in that
process.
Chairman Moore of Kansas. Thank you. Since you each focused
on separate issues, it may be difficult for you both to give us
a sense of which problem is more urgent, better communication
with law enforcement or improving SAR data quality.
How would each of you rank your respective issue on a scale
of one to five, five meaning FinCEN is doing a great job, and
one meaning they need to improve?
Mr. Hillman, do you have any thoughts, sir?
Mr. Hillman. Similar to the last panel, I believe that both
of the actions that you are calling for are essential for
FinCEN in achieving its mission. It must work with other
regulators and other depository institutions in accomplishing
its mission. It must serve law enforcement in meeting its
terrorist financing and other financial crimes' work.
I would put a high priority on both of those activities
because if they were unsuccessful, then our country would be
unsuccessful.
Chairman Moore of Kansas. Thank you, sir. Ms. Larence, do
you have any comments?
Ms. Larence. Clearly, the law enforcement community found
direct access to the data itself the most important service
that FinCEN can provide, so I would argue that is where FinCEN
would need to put its priorities.
Chairman Moore of Kansas. Thank you. Starting with you, Mr.
Hillman, has FinCEN been responsive to GAO's recommendations?
What additional steps should they take or focus on to improve
their performance?
Mr. Hillman. One of the major areas we found in our report
on the SAR activities was that their forms revision process was
not a collaborative process. They had made changes to that form
and many individuals within the law enforcement community,
specifically SAR review teams in other High Intensity Financial
Crime Areas (HIFCA) had limited ability to influence the
changes that they wanted to make to those forms.
Since that recommendation was made, FinCEN has really taken
to heart the need to ratchet up their coordination and
communication in the forms revision process. We have seen
substantial efforts on the part of the organization in
obtaining views from outside parties early in the process, much
of what we had recommended in the past.
What we have not seen, however, are some other important
facets of collaboration, including identifying and reporting
and evaluating progress associated with their initiatives.
We are also concerned that we have not really seen a plan
for the effective implementation of this modernization effort,
and given past progress in the information technology area, a
plan is very important.
Chairman Moore of Kansas. Thank you, sir. The Chair next
recognizes Mr. Paulsen for 5 minutes, sir.
Mr. Paulsen. Thank you, Mr. Chairman. Maybe I will start
with Mr. Hillman. Mr. Hillman, what are your views as to the
current level of budgetary funding provided to FinCEN? Do they
have adequate resources to effectively carry out their mission?
Mr. Hillman. We really have not looked at the resources
that have been provided to the organization. However, we do
acknowledge the unenviable task that it has in achieving its
multiple mission responsibilities, relying on the limited
resources it does have and the other regulators at its
disposal.
Given that environment, that just puts a premium on
ensuring effective collaboration and coordination across all of
the financial regulators, law enforcement agencies, depository
institutions, and others that are producing BSA data for that
organization.
That is what we have emphasized with FinCEN, improving its
opportunities to collaborate and coordinate to get the biggest
investment it can from the resources that it has.
Mr. Paulsen. How important is it from your perspective for
FinCEN to complete its SAR form revision process and how often
do you think such a review or changes should take place in the
future, given the changing nature of the financial system and
of financial crimes?
Mr. Hillman. They are required by law--from the Paperwork
Reduction Act--to review their forms process every 3 years.
They generally look at those forms a little bit ahead of that
schedule to ensure they can complete that review in a timely
fashion.
I believe they are doing a diligent job in looking at their
forms revisions. What we have found, however, is that the
revisions that they have made had not been fully coordinated
with others to determine that those form changes were going to
improve the efficiency of the process, and then once they had
decided on the revisions that they wanted to make, they had not
coordinated effectively with the IRS and they were even in fact
unable to implement the revisions they were proposing.
Today, FinCEN is still using forms that they developed in
2003 in their forms revision process, and are unable to use
technology to enhance their efforts going forward.
Mr. Paulsen. Ms. Larence, as you probably know, FinCEN
issued a report on fraud in the mortgage market well before the
bubble collapsed. It was virtually ignored by the law
enforcement community.
Should FinCEN be held responsible for reports and
information that are simply not used by law enforcement? Do you
have any suggestions on that front at all?
Ms. Larence. In talking with some of the FBI agents and
liaisons, I think they felt like FinCEN brought a different
perspective to that issue than the FBI could. The FBI has
access to different information and takes a case perspective.
They thought FinCEN could bring value but they would have
liked to have maybe collaborated with FinCEN more.
FinCEN itself in its internal review admitted that what
they hear from law enforcement is the quality of their reports
is very high, but sometimes the relevance is not as high. We
argue if they would collaborate more with law enforcement to
determine what kinds of information they need, what they are
focusing on, they would stand a better chance to be more
relevant.
Mr. Paulsen. Regarding GAO's recommendation that FinCEN
establish a process to inform law enforcement about the
availability of completed analytical products, the December
2009 report indicated that FinCEN was not inclined to share
certain products completed for one customer with other law
enforcement agencies due to confidentiality rules.
How should FinCEN handle this situation so that vital data
and reports can be made available to all law enforcement
agencies?
Ms. Larence. A couple of things. They do follow what they
call the third party rule. That is, they would ask the
originating agency if they could have permission to share, and
how extensively could they share, those products.
What we heard from law enforcement was they would just like
to even know that the product existed, and that way they may be
able to pursue channels to get that information.
It looks from what FinCEN is telling us, we have not had a
chance to audit that yet, but they have put a process in place,
both to better inform and market their products as well as to
communicate better with law enforcement on their responses to
law enforcement's requests.
Mr. Paulsen. Thank you, Mr. Chairman.
Chairman Moore of Kansas. Thank you, sir. The Chair
recognizes Mr. Lynch for 5 minutes.
Mr. Lynch. Thank you again, Mr. Chairman. Let me ask both
of you. We are talking a lot about FinCEN's responsibility to
interact and collaborate with law enforcement. That is just
one-third of what their mission is.
They also have a mission with 325 employees, they have 300
law enforcement agencies, then they have every single reporting
financial services firm in the country, thousands, and then on
top of that, they have 160 countries that currently have
financial intelligence units--116, excuse me, and we are
working on maybe another 40 right now to try to get financial
intelligence units stood up, and FinCEN is working on those.
They have 325 employees. I think it is mind boggling to
expect anybody to be able to do that with that small a number
of employees. I just do not see it happening. These folks are
stretched thin.
I know you did not look specifically at that, but do you
have any--
Mr. Hillman. That actually was not the scope of our review
in looking at SARs and SAR revisions, but it is clear FinCEN
has a daunting responsibility with the resources that it has.
It continues to put a premium on proper guidance and forms to
the other regulators and depository institutions that supports
its activities.
In the recent past, we have seen a ratcheting up on the
part of FinCEN in putting a good guidance out on their Web site
for others on attending conferences. We learned that between
2006 and 2008, FinCEN representatives had attended over 300
different conferences and multi-agency groups to spread the
word as to what types of activities they were hoping to see
achieved.
Law enforcement is doing the same thing and working with
depository institutions and helping to ensure they get adequate
and high-quality narratives in these SAR forms.
We just need to continue to leverage the available
resources to accomplish the goals and mission of FinCEN.
Mr. Lynch. Right now, it seems like FinCEN is going out to
these different agencies. They went out to California and they
have been working closely with the FBI.
Ironically, the FBI has put as many resources into
analyzing the information provided by FinCEN than we have
provided FinCEN to actually develop the data and provide the
intelligence. It is sort of backwards.
I just do not know how long we can continue to do that. I
know FinCEN has a connection with all these different
departments. We are providing extra resources to these other
agencies, and yet we are level funding FinCEN that is providing
all these agencies.
I just see organizationally, it is a real problem. I do not
know how to get past that without providing additional
resources to FinCEN.
Ms. Larence?
Ms. Larence. We tried very hard to be able to help answer
that question, at least in terms of the work they are providing
to law enforcement, through the Analysis and Liaison Division.
FinCEN needs to be able to demonstrate this is what we are
doing with the resources that we have right now in terms of
supporting the law enforcement community. Here are the critical
gaps or here are the missed opportunities that we have to be
able to provide significant support. FinCEN needs to be able to
demonstrate these gaps.
We just had a hard time getting that kind of management
information to be able to make that story.
Mr. Lynch. Let me ask, in your reports and in your analysis
in looking at this, is FinCEN bringing in--you would think that
one way we might be able to close that gap is to sort of bring
in the law enforcement people, do a number of seminars on the
financial analysis products that they have.
I know there is outreach. I am not so sure that is the best
use of their time. Maybe bring all those folks into Washington
and do a bunch of these conferences and do a training on the
products and on the data and how to use FinCEN better.
Of course, that is going to be a double-edged sword because
they are going to get more and more SARs. They are going to get
more and more business. It is sort of like the problem I had
with some of my local hospitals. They are losing money on every
patient. Then they do outreach and they get more patients
coming into the hospital and they are losing even more money.
It is sort of a downward spiral of a self-fulfilling prophecy.
That is the problem that FinCEN has. I do not think they
are doing it purposely. By not doing outreach, they are
probably reserving some of their resources that they have.
Any thoughts on that?
Ms. Larence. I think they have some existing channels that
they can use more effectively. They have a bi-monthly
roundtable with law enforcement. They have changed the agenda
already where they are better publicizing the products and they
are using the roundtable to solicit ideas from law enforcement
about the kinds of issues and analyses that would be helpful.
They have already taken some steps there.
They have been increasing their attendance at conferences
and doing outreach. They have been partnering with some of the
IGs to get the word out. They are looking at using the
available channels that they have.
I think also with issuing these menus of products and
services and resources and using their existing gateway and
secure outreach portals that they have to law enforcement just
to publicize them will help a lot.
Mr. Lynch. Thank you. Thank you both. I yield back.
Chairman Moore of Kansas. Thank you. I understand that
Ranking Member Judy Biggert is on her way. If Mr. Paulsen has
any additional questions, he can go ahead at this time until
she arrives.
Mr. Paulsen. Thank you, Mr. Chairman. Just a couple of
follow-up questions for Mr. Hillman, if I could.
As you know, the suspicious activity report, the SAR report
filings continue to increase. However, the quality of SAR
filings continues to be an issue in depository institutions.
Officials have commented they would like clear guidance on
what law enforcement looks for, what they really want, what
they find useful in these reports.
Based on your work, what actions have FinCEN and law
enforcement agencies taken to assist financial institutions in
improving the quality of the SAR filings, and what should be
done in the future on this front?
Mr. Hillman. This is one area that has been a continual
concern on the part of depository institutions, concern that
they do not know exactly how law enforcement is using this
data, not knowing how exactly how to satisfy those needs.
We have found, however, that FinCEN has done a number of
things to improve communication and coordination with the
depository institutions and to educate them about the
importance of SAR filings.
For example, they have a variety of written products
reporting trends in SAR data, providing tips on SAR filings.
They have also posted a variety of guidance on their Web site.
One important piece of guidance outlined the 10 most
important common filing errors in SARs and steps to avoid them.
In 2008, they also produced a guideline from SAR filings on
proceeds and foreign corruption.
FinCEN representatives, as I previously mentioned, also are
participating in a number of conferences for depository
institutions to share information with them and law enforcement
is doing the same, to best assist depository institutions in
providing the right information on SAR narratives and to help
depository institutions better understand the types of
information that they need for their investigative activities.
Going forward, FinCEN really needs to continue to educate
filers on the important uses of SARs and the benefits to law
enforcement.
Mr. Paulsen. One more question. In the past, financial
industry officials have expressed concerns about the extent to
which law enforcement agencies use suspicious activity reports
and whether the effort put into filing them is actually helping
law enforcement investigations.
Just again a quick follow-up, because I think you had a
little bit of this in your answer, but what steps have FinCEN,
law enforcement, and others taken to make better use of SARs in
general? This is a common theme I think we hear.
Mr. Hillman. Absolutely. FinCEN, law enforcement, and
financial institution regulators are each taking steps to
ensure they are using quality information that is available
from SARs.
FinCEN, as we previously discussed, has produced various
non-public analytical products and they have also pushed out
bulk downloads of their SAR data to law enforcement
organizations and others for them to combine that SAR
information and other BSA information with other investigative
information they have at their disposal to enrich their
investigative activities.
We have also seen some concerns being expressed by law
enforcement agencies and others who use SAR forms, basically
going to concerns with the formatting and the efficiency of the
downloading process.
A couple of important concerns have to do with the fact
that SAR narratives produced on their systems come forth in all
capital letters. There is no additional formatting for an
individual, a SARs review team, for example, who may be looking
at hundred of these SARs in an individual instance, from better
understanding what was in that data.
We also have had concerns expressed by financial regulators
in that the downloads that are available in producing SARs
analyses do not allow regulators to provide all the SARs that
they need in that analysis at one point in time. There are
concerns their analyses may not be fully complete.
In addition, financial regulators have expressed concerns
that the data input that is being provided by FinCEN, and to
some extent by the IRS as well, is not producing accurate
results.
There are opportunities for FinCEN and the IRS to improve
the uploading of information in their systems.
Mr. Paulsen. Thank you, Mr. Chairman.
Chairman Moore of Kansas. Thank you, Mr. Paulsen, for your
questions. Now I recognize for 5 minutes for questions the
ranking member of the subcommittee, my colleague and friend
from Illinois, Ranking Member Judy Biggert.
Ms. Biggert?
Mrs. Biggert. Thank you very much, Mr. Chairman. Thank you
for giving me the opportunity to ask questions. I,
unfortunately, have been in a markup all day. We still have
eight amendments to go. I had quite a few amendments. It
usually does not last this long.
Chairman Moore of Kansas. We are glad you are here.
Mrs. Biggert. My first question would be, what are the
answers to addressing FinCEN's shortcomings and what does
FinCEN need to do their job and to do it well? Is it new
authority? Resources? Is it a set timeframe to update
information systems? Briefly.
Mr. Hillman. I will take the issue on the information
systems. I believe that is one of the significant challenges
facing this organization at the time.
They have had a dismal record in the past in establishing
robust and successful information technology modernization
initiatives, and they are undergoing one now as we speak.
The advice that I would provide to FinCEN is that they take
the time to thoroughly develop a plan for moving forward in
their information technology initiative before implementing
individual steps, and that they solicit the input of Treasury's
Chief Information Officer in their deliberations on their
modernization efforts.
The Director, when he was here earlier this afternoon,
discussed the fact that the CIO himself is on a panel with the
Director and the Deputy Commissioner to oversee the
modernization effort.
FinCEN itself as an organization with so few resources, it
really could leverage the technology expertise available in the
Information Office to achieve its purposes more effectively.
Ms. Larence. In terms of the issues that we looked at,
these are not new findings. FinCEN had several internal studies
starting in 2005, 2006, and 2008. FinCEN knows what it needs to
do. It just needs to do it. It needs to track it to make sure
the changes are effective. It needs to hold itself accountable
with law enforcement for these changes.
I think setting timeframes and establishing an
accountability system where it publicly reports out to law
enforcement and to the Congress on what its commitments are and
whether it is making those commitments.
Mrs. Biggert. Do you think Congress should set a timeline
or a certain time when they should complete--outline the
specific goals?
I know the same situation is really in HUD, every year we
ask them if they have their information system up and running
and the technology, and it just keeps delaying and delaying.
How can Congress get them moving and should there be a
deadline set?
Mr. Hillman. I believe that it would be important for
Congress to request a plan from FinCEN as to how it intends to
successfully modernize its information technology, and then to
request periodic progress reports on their activities.
In that way, there would be some very important oversight
from the Congress in ensuring that FinCEN is making true
progress in achieving its ultimate goals.
Ms. Larence. We noticed in the most recent work on proposed
regulatory changes that FinCEN collaborated very well with the
law enforcement agencies within DHS, in part because Congress
directed them to do that through statute.
It is pretty clear that if Congress gave support and
incentives such as setting recurring timeframes and holding
FinCEN accountable to them, that does help.
Mrs. Biggert. I think in the first panel, Director Freis
said we have been planning for 3\1/2\ years and now they
restarted the planning process. How much time do you think it
would take them to complete the process of updating their
technology?
Mr. Hillman. With their current technology efforts, the
staff within FinCEN, when we were updating the status of our
recommendations for this hearing, were reluctant to share with
us any timeframes for completing any individual efforts, but
suggested that the total modernization effort was likely not to
be completed until 2014.
Mrs. Biggert. Does law enforcement find FinCEN more or less
relevant now that agencies can access and analyze the Bank
Secrecy Act data on their own?
Ms. Larence. What we found in our review is that kind of
case-specific tactical support the agencies are now doing
themselves, so they did not really need FinCEN to do that for
them.
They did recognize that FinCEN had valuable expertise,
again, because FinCEN understood industry, regulators, and law
enforcement. They do think FinCEN could have a more strategic
and forward-looking approach to trying to anticipate issues,
looking for patterns and trends in the data.
Law enforcement does think FinCEN brings value to the
table. They just want to collaborate better so they have an
opportunity to help to define with FinCEN the kinds of analyses
that will be most relevant and useful to support their
investigations and their cases.
Mrs. Biggert. Do you think law enforcement really needs
these complex analyses?
Ms. Larence. I think they find them very helpful, if they
are timely and useful. What we heard is if FinCEN involved law
enforcement in helping to again define what to pursue in those
analyses and also get them involved on ongoing reviews, that
would help the information to meet law enforcement's needs and
be more relevant than it is today.
Mrs. Biggert. Do you see some of the agencies, law
enforcement agencies, need FinCEN more to help them conduct
their investigations and prosecutions than others?
Ms. Larence. We did note that they have now more than 300
potential law enforcement customers. These range from some of
the five biggest players, such as the DEA, the FBI, and ICE,
down to smaller State law enforcement agencies, and to some
extent, even local law enforcement agencies.
These agencies are going to need a variety of skills and
support from FinCEN. I think FinCEN has a lot of potential
customers out there.
Mrs. Biggert. Thank you. Thank you both for being here.
Thank you, Mr. Chairman. I yield back.
Chairman Moore of Kansas. My thanks to the distinguished
lady from Illinois. Again, I want to thank our witnesses for
their testimony this afternoon.
Today's hearing was helpful in improving our understanding
of the challenges facing FinCEN and ways those challenges can
be addressed. This is something we will continue to monitor
closely.
The Chair notes that some members may have additional
questions for our witnesses which they may wish to submit in
writing. Without objection, the hearing record will remain open
for 30 days for members to submit written questions to these
witnesses and to place their responses in the record.
Again, I want to thank the witnesses for appearing today
and for your testimony. The hearing is adjourned. Thank you
all.
[Whereupon, at 4:47 p.m., the hearing was adjourned.]
A P P E N D I X
April 28, 2010
[GRAPHIC] [TIFF OMITTED] T7747.001
[GRAPHIC] [TIFF OMITTED] T7747.002
[GRAPHIC] [TIFF OMITTED] T7747.003
[GRAPHIC] [TIFF OMITTED] T7747.004
[GRAPHIC] [TIFF OMITTED] T7747.005
[GRAPHIC] [TIFF OMITTED] T7747.006
[GRAPHIC] [TIFF OMITTED] T7747.007
[GRAPHIC] [TIFF OMITTED] T7747.008
[GRAPHIC] [TIFF OMITTED] T7747.009
[GRAPHIC] [TIFF OMITTED] T7747.010
[GRAPHIC] [TIFF OMITTED] T7747.011
[GRAPHIC] [TIFF OMITTED] T7747.012
[GRAPHIC] [TIFF OMITTED] T7747.013
[GRAPHIC] [TIFF OMITTED] T7747.014
[GRAPHIC] [TIFF OMITTED] T7747.015
[GRAPHIC] [TIFF OMITTED] T7747.016
[GRAPHIC] [TIFF OMITTED] T7747.017
[GRAPHIC] [TIFF OMITTED] T7747.018
[GRAPHIC] [TIFF OMITTED] T7747.019
[GRAPHIC] [TIFF OMITTED] T7747.020
[GRAPHIC] [TIFF OMITTED] T7747.021
[GRAPHIC] [TIFF OMITTED] T7747.022
[GRAPHIC] [TIFF OMITTED] T7747.023
[GRAPHIC] [TIFF OMITTED] T7747.024
[GRAPHIC] [TIFF OMITTED] T7747.025
[GRAPHIC] [TIFF OMITTED] T7747.026
[GRAPHIC] [TIFF OMITTED] T7747.027
[GRAPHIC] [TIFF OMITTED] T7747.028
[GRAPHIC] [TIFF OMITTED] T7747.029
[GRAPHIC] [TIFF OMITTED] T7747.030
[GRAPHIC] [TIFF OMITTED] T7747.031
[GRAPHIC] [TIFF OMITTED] T7747.032
[GRAPHIC] [TIFF OMITTED] T7747.033
[GRAPHIC] [TIFF OMITTED] T7747.034
[GRAPHIC] [TIFF OMITTED] T7747.035
[GRAPHIC] [TIFF OMITTED] T7747.036
[GRAPHIC] [TIFF OMITTED] T7747.037
[GRAPHIC] [TIFF OMITTED] T7747.038
[GRAPHIC] [TIFF OMITTED] T7747.039
[GRAPHIC] [TIFF OMITTED] T7747.040
[GRAPHIC] [TIFF OMITTED] T7747.041
[GRAPHIC] [TIFF OMITTED] T7747.042
[GRAPHIC] [TIFF OMITTED] T7747.043
[GRAPHIC] [TIFF OMITTED] T7747.044
[GRAPHIC] [TIFF OMITTED] T7747.045
[GRAPHIC] [TIFF OMITTED] T7747.046
[GRAPHIC] [TIFF OMITTED] T7747.047
[GRAPHIC] [TIFF OMITTED] T7747.048
[GRAPHIC] [TIFF OMITTED] T7747.049
[GRAPHIC] [TIFF OMITTED] T7747.050
[GRAPHIC] [TIFF OMITTED] T7747.051
[GRAPHIC] [TIFF OMITTED] T7747.052
[GRAPHIC] [TIFF OMITTED] T7747.053
[GRAPHIC] [TIFF OMITTED] T7747.054
[GRAPHIC] [TIFF OMITTED] T7747.055
[GRAPHIC] [TIFF OMITTED] T7747.056
[GRAPHIC] [TIFF OMITTED] T7747.057
[GRAPHIC] [TIFF OMITTED] T7747.058
[GRAPHIC] [TIFF OMITTED] T7747.059
[GRAPHIC] [TIFF OMITTED] T7747.060
[GRAPHIC] [TIFF OMITTED] T7747.061
[GRAPHIC] [TIFF OMITTED] T7747.062
[GRAPHIC] [TIFF OMITTED] T7747.063
[GRAPHIC] [TIFF OMITTED] T7747.064
[GRAPHIC] [TIFF OMITTED] T7747.065
[GRAPHIC] [TIFF OMITTED] T7747.066
[GRAPHIC] [TIFF OMITTED] T7747.067
[GRAPHIC] [TIFF OMITTED] T7747.068
[GRAPHIC] [TIFF OMITTED] T7747.069
[GRAPHIC] [TIFF OMITTED] T7747.070
[GRAPHIC] [TIFF OMITTED] T7747.071
[GRAPHIC] [TIFF OMITTED] T7747.072
[GRAPHIC] [TIFF OMITTED] T7747.073
[GRAPHIC] [TIFF OMITTED] T7747.074
[GRAPHIC] [TIFF OMITTED] T7747.075
[GRAPHIC] [TIFF OMITTED] T7747.076
[GRAPHIC] [TIFF OMITTED] T7747.077
[GRAPHIC] [TIFF OMITTED] T7747.078
[GRAPHIC] [TIFF OMITTED] T7747.079
[GRAPHIC] [TIFF OMITTED] T7747.080
[GRAPHIC] [TIFF OMITTED] T7747.081
[GRAPHIC] [TIFF OMITTED] T7747.082
[GRAPHIC] [TIFF OMITTED] T7747.083
[GRAPHIC] [TIFF OMITTED] T7747.084
[GRAPHIC] [TIFF OMITTED] T7747.085
[GRAPHIC] [TIFF OMITTED] T7747.086
[GRAPHIC] [TIFF OMITTED] T7747.087
[GRAPHIC] [TIFF OMITTED] T7747.088
[GRAPHIC] [TIFF OMITTED] T7747.089
[GRAPHIC] [TIFF OMITTED] T7747.090
[GRAPHIC] [TIFF OMITTED] T7747.091
[GRAPHIC] [TIFF OMITTED] T7747.092
[GRAPHIC] [TIFF OMITTED] T7747.093
[GRAPHIC] [TIFF OMITTED] T7747.094
[GRAPHIC] [TIFF OMITTED] T7747.095
[GRAPHIC] [TIFF OMITTED] T7747.096
[GRAPHIC] [TIFF OMITTED] T7747.097
[GRAPHIC] [TIFF OMITTED] T7747.098
[GRAPHIC] [TIFF OMITTED] T7747.099
[GRAPHIC] [TIFF OMITTED] T7747.100
[GRAPHIC] [TIFF OMITTED] T7747.101
[GRAPHIC] [TIFF OMITTED] T7747.102
[GRAPHIC] [TIFF OMITTED] T7747.103
[GRAPHIC] [TIFF OMITTED] T7747.104
[GRAPHIC] [TIFF OMITTED] T7747.105
[GRAPHIC] [TIFF OMITTED] T7747.106
[GRAPHIC] [TIFF OMITTED] T7747.107
[GRAPHIC] [TIFF OMITTED] T7747.108
[GRAPHIC] [TIFF OMITTED] T7747.109
[GRAPHIC] [TIFF OMITTED] T7747.110
[GRAPHIC] [TIFF OMITTED] T7747.111
[GRAPHIC] [TIFF OMITTED] T7747.112
[GRAPHIC] [TIFF OMITTED] T7747.113
[GRAPHIC] [TIFF OMITTED] T7747.114
[GRAPHIC] [TIFF OMITTED] T7747.115
[GRAPHIC] [TIFF OMITTED] T7747.116
[GRAPHIC] [TIFF OMITTED] T7747.117
[GRAPHIC] [TIFF OMITTED] T7747.118
[GRAPHIC] [TIFF OMITTED] T7747.119
[GRAPHIC] [TIFF OMITTED] T7747.120
[GRAPHIC] [TIFF OMITTED] T7747.121
[GRAPHIC] [TIFF OMITTED] T7747.122
[GRAPHIC] [TIFF OMITTED] T7747.123
[GRAPHIC] [TIFF OMITTED] T7747.124
[GRAPHIC] [TIFF OMITTED] T7747.125
[GRAPHIC] [TIFF OMITTED] T7747.126
[GRAPHIC] [TIFF OMITTED] T7747.127
[GRAPHIC] [TIFF OMITTED] T7747.128
[GRAPHIC] [TIFF OMITTED] T7747.129
[GRAPHIC] [TIFF OMITTED] T7747.130
[GRAPHIC] [TIFF OMITTED] T7747.131
[GRAPHIC] [TIFF OMITTED] T7747.132
[GRAPHIC] [TIFF OMITTED] T7747.133
[GRAPHIC] [TIFF OMITTED] T7747.134
[GRAPHIC] [TIFF OMITTED] T7747.135
[GRAPHIC] [TIFF OMITTED] T7747.136
[GRAPHIC] [TIFF OMITTED] T7747.137
[GRAPHIC] [TIFF OMITTED] T7747.138
[GRAPHIC] [TIFF OMITTED] T7747.139
[GRAPHIC] [TIFF OMITTED] T7747.140
[GRAPHIC] [TIFF OMITTED] T7747.141
[GRAPHIC] [TIFF OMITTED] T7747.142
[GRAPHIC] [TIFF OMITTED] T7747.143
[GRAPHIC] [TIFF OMITTED] T7747.144
[GRAPHIC] [TIFF OMITTED] T7747.145
[GRAPHIC] [TIFF OMITTED] T7747.146
[GRAPHIC] [TIFF OMITTED] T7747.147
[GRAPHIC] [TIFF OMITTED] T7747.148
[GRAPHIC] [TIFF OMITTED] T7747.149
[GRAPHIC] [TIFF OMITTED] T7747.150
[GRAPHIC] [TIFF OMITTED] T7747.151
[GRAPHIC] [TIFF OMITTED] T7747.152
[GRAPHIC] [TIFF OMITTED] T7747.153
[GRAPHIC] [TIFF OMITTED] T7747.154
[GRAPHIC] [TIFF OMITTED] T7747.155
[GRAPHIC] [TIFF OMITTED] T7747.156
[GRAPHIC] [TIFF OMITTED] T7747.157
[GRAPHIC] [TIFF OMITTED] T7747.158
[GRAPHIC] [TIFF OMITTED] T7747.159
[GRAPHIC] [TIFF OMITTED] T7747.160
[GRAPHIC] [TIFF OMITTED] T7747.161
[GRAPHIC] [TIFF OMITTED] T7747.162
[GRAPHIC] [TIFF OMITTED] T7747.163
[GRAPHIC] [TIFF OMITTED] T7747.164
[GRAPHIC] [TIFF OMITTED] T7747.165
[GRAPHIC] [TIFF OMITTED] T7747.166
[GRAPHIC] [TIFF OMITTED] T7747.167
[GRAPHIC] [TIFF OMITTED] T7747.168
[GRAPHIC] [TIFF OMITTED] T7747.169
[GRAPHIC] [TIFF OMITTED] T7747.170
[GRAPHIC] [TIFF OMITTED] T7747.171
[GRAPHIC] [TIFF OMITTED] T7747.172
[GRAPHIC] [TIFF OMITTED] T7747.173
[GRAPHIC] [TIFF OMITTED] T7747.174
[GRAPHIC] [TIFF OMITTED] T7747.175
[GRAPHIC] [TIFF OMITTED] T7747.176
[GRAPHIC] [TIFF OMITTED] T7747.177
[GRAPHIC] [TIFF OMITTED] T7747.178
[GRAPHIC] [TIFF OMITTED] T7747.179
[GRAPHIC] [TIFF OMITTED] T7747.180
[GRAPHIC] [TIFF OMITTED] T7747.181
[GRAPHIC] [TIFF OMITTED] T7747.182
[GRAPHIC] [TIFF OMITTED] T7747.183
[GRAPHIC] [TIFF OMITTED] T7747.184
[GRAPHIC] [TIFF OMITTED] T7747.185
[GRAPHIC] [TIFF OMITTED] T7747.186
[GRAPHIC] [TIFF OMITTED] T7747.187
[GRAPHIC] [TIFF OMITTED] T7747.188
[GRAPHIC] [TIFF OMITTED] T7747.189
[GRAPHIC] [TIFF OMITTED] T7747.190
[GRAPHIC] [TIFF OMITTED] T7747.191
[GRAPHIC] [TIFF OMITTED] T7747.192
[GRAPHIC] [TIFF OMITTED] T7747.193
[GRAPHIC] [TIFF OMITTED] T7747.194
[GRAPHIC] [TIFF OMITTED] T7747.195
[GRAPHIC] [TIFF OMITTED] T7747.196
[GRAPHIC] [TIFF OMITTED] T7747.197
[GRAPHIC] [TIFF OMITTED] T7747.198
[GRAPHIC] [TIFF OMITTED] T7747.199
[GRAPHIC] [TIFF OMITTED] T7747.200
[GRAPHIC] [TIFF OMITTED] T7747.201
[GRAPHIC] [TIFF OMITTED] T7747.202
[GRAPHIC] [TIFF OMITTED] T7747.203
[GRAPHIC] [TIFF OMITTED] T7747.204
[GRAPHIC] [TIFF OMITTED] T7747.205
[GRAPHIC] [TIFF OMITTED] T7747.206
[GRAPHIC] [TIFF OMITTED] T7747.207
[GRAPHIC] [TIFF OMITTED] T7747.208
[GRAPHIC] [TIFF OMITTED] T7747.209
[GRAPHIC] [TIFF OMITTED] T7747.210
[GRAPHIC] [TIFF OMITTED] T7747.211
[GRAPHIC] [TIFF OMITTED] T7747.212
[GRAPHIC] [TIFF OMITTED] T7747.213