uring the past year, the Financial Crimes Enforcement Network
marked its 15th birthday. In those 15 years, we have been
charged with growing responsibility for protecting the nation's
financial system from the threats of terrorism and financial crime. Our
accomplishments during the past year convince me that we are increasingly realizing our
tremendous potential for contributing to the financial and national security of our country and
of financial systems around the globe.
In our role as Administrator of the Bank Secrecy Act, we took decisive
steps toward ensuring more effective and uniform application of this important statute. We developed information-
sharing agreements with Federal and state banking agencies that give us more comprehensive
data than ever before on Bank Secrecy Act compliance. We also cooperated with regulatory
agencies in ways that were not even conceived of a few years ago to promote more uniform
examination procedures for compliance with the Bank Secrecy Act, faster and more consistent
compliance activities, and joint action in cases of egregious violations of the law.
To improve the management of data filed under the Bank Secrecy Act, we developed BSA
Direct, a major initiative that will eventually collect, process, store, and disseminate all Bank
Secrecy Act data. As the fiscal year ended, we were close to completing the initial phase of
the system, which will provide authorized law enforcement and regulatory agencies with easier
access to the Bank Secrecy Act data and enhanced ability to query and analyze that data.
We also saw that our strategy of increasing the number of authorized law enforcement
agencies with controlled access to the Bank Secrecy Act data is paying off in greater and more
creative use of the data. Increasing customer access to the data has allowed us to begin
moving away from serving as a "library" for Bank Secrecy Act data and to focus more of our
analytical resources on producing complex, actionable intelligence related to financial crimes.
In addition, we produced an outstanding manual on funds transfers that demonstrates our
expertise in the complex mechanisms that can be misused in financial crime.
We also strengthened partnerships with key allies in the fight against money laundering,
terrorist financing and other financial crimes. Internationally, we hosted the 13th Plenary of the
Egmont Group of financial intelligence units and continued to support and provide leadership
for this group. At home, we stepped up cooperative efforts with our sister agencies within
the U.S. Department of the Treasury's Office of Terrorism and Financial Intelligence. Through
our joint efforts, the Treasury Department was able to identify several foreign banks of special
money laundering concern and to impose special measures against these institutions.
We are proud of these accomplishments. We are equally proud of the swift and well-
reasoned actions that we took to meet the unexpected challenges of Fiscal Year 2005. For
Realizing that some banks were suspending or refusing to provide services to money
services businesses such as check cashers and money transmitters because of fears
of violating Bank Secrecy Act regulations, we worked with the banking regulators to
provide uniform guidance for taking a risk-based approach to providing bank services
for this important sector.
Faced with a dramatic increase in the number of Suspicious Activity Reports filed
under the Bank Secrecy Act, we analyzed patterns of filings to determine whether
unnecessary reports were being filed to avoid possible penalties. We found some
indications of unnecessary filings and have been working closely with the financial
industry and banking regulators to guard against such filing through education and by
ensuring the consistent application of Suspicious Activity Report regulations.
Following discovery of a vulnerability on our QuikNews e-mail list server, we
immediately assessed the damage, reported the incident to appropriate Federal law
enforcement authorities, notified those whose information was compromised, and
took steps to prevent a reoccurrence.
In the aftermath of Hurricane Katrina, we issued a joint statement with the bank
regulators encouraging depository institutions to be "reasonable" in their approach to
verifying the identity of individuals temporarily displaced by the storm and unable to
provide standard identification documents.
I feel very privileged to have recently completed my second year at the helm of an
organization that is having a profound impact on financial systems and practices around
the world. I am also very proud of, and grateful to, the dedicated men and women of the
Financial Crimes Enforcement Network who have so diligently served the nation and the world
during the past year.
We recognize that there is much more to do in our quest to safeguard the financial system
from the abuses of financial crime. In February 2005, we launched a new strategic plan that
sets our course for the near future.
We need to continue to strengthen the Bank Secrecy Act regulatory regime, deploy and
expand BSA Direct, step up the production of policy-level analysis of financial crimes patterns
and threats, and better leverage our knowledge of global financial activity to promote greater
international collaboration against financial crime. We must also continue to build the internal
infrastructure, employee and management skills, and processes required of a world-class
financial intelligence unit. We look forward to continuing to work with our law enforcement,
regulatory, and government partners as we pursue these priorities in the coming year.
William J. Fox, Director
Financial Crimes Enforcement Network