Attention FAE Customers:
Please be aware that NASBA credits are awarded based on whether the events are webcast or in-person, as well as on the number of CPE credits.
Please check the event registration page to see if NASBA credits are being awarded for the programs you select.

IRS's Use of Bank Secrecy Act Data Yields Large Number of Criminal Referrals

S.J. Steinhardt
Published Date:
Jan 19, 2023

In releasing investigative statistics, the IRS's criminal investigation arm (IRS-CI) showed how the agency was able to recommend a large number of cases for prosecution using Bank Secrecy Act (BSA) data in its financial crime investigations. 

Over the past three fiscal years, more than 83 percent of IRS-CI criminal investigations recommended for prosecution had a primary subject with a related BSA filing. In such cases, convictions resulted in average prison sentences of 38 months, $7.7 billion in asset seizures, $256 million in restitution, and $225 million in asset forfeitures.

Under the BSA, financial institutions must notify the federal government when they encounter instances of potential money laundering or tax evasion. These data are used by federal agencies to investigate money laundering and related financial crimes.

Almost 16 percent of all investigations opened by IRS-CI division in fiscal year 2022 originated from a BSA form, Accounting Today reported. Those forms are typically filed by banks and other financial institutions, but can also be filed by other types of businesses and individuals. In comparison, 5-7 percent of investigations each year come from fraud referrals, 27-30 percent came from U.S. attorney's offices, and a similar share come from other U.S. agencies.

Accounting Today also reported. that 84.2 percent of all investigations opened by IRS-CI during fiscal year 2022 have BSA filings related to the primary subject of the investigation, and 90.4 percent of IRS-CI cases were searched against BSA data in that year.

"The Bank Secrecy Act exists to prevent financial institutions from being used as a vehicle by criminals to conceal or launder their ill-gotten gains. It also serves as a safety net for crime victims," said IRS-CI Chief Jim Lee. "Hundreds of millions of dollars in restitution have been awarded to crime victims because our agents were able to use BSA data to prove a crime was committed.

In its statement, IRS-CI highlighted two cases that resulted from using BSA data. One identified unusual financial patterns tied to Rubbin Sarpong, of Millville, N.J.. He was sentenced in May 2022 to 14 years in prison for conspiring to commit wire fraud, money laundering and tax evasion resulting from a romance fraud scheme. He was also ordered to pay restitution of $3.08 million to 36 victims and nearly $400,000 to government agencies.

The other concerned the prosecution of “serial tax fraudster” Michael Dexter Little, who was sentenced in January 2022 to 19 years, six months in prison for conspiracy to commit wire fraud, conspiracy to commit money laundering, and aggravated identity theft for filing a series of false tax returns claiming massive, bogus fuel tax credits. He was ordered to forfeit at least $12.3 million traced to his crimes.

Click here to see more of the latest news from the NYSSCPA.