The purpose of this section of the Fraud Handbook is to notify field compliance employees of a policy and procedural change affecting the Bank Secrecy Act (BSA) and the National Fraud Program (NFP). This guidance is required to improve the quality of civil and criminal referrals of BSA violations. The procedures apply to BSA Title 31 cases, Form 8300 (Report of Cash Payments Over $10,000 Received in a Trade or Business) cases worked under Title 31 and Foreign Bank and Financial Accounts Report (FBAR) violations.

BSA civil enforcement cases are referred to the Financial Crimes Enforcement Network (FinCEN) via Form 5104, Report of Apparent Violation of Financial Recordkeeping and Reporting Regulations, for consideration of appropriate enforcement action. Form 8300 and FBAR civil penalties are assessed by IRS, so they are not referred to FinCEN.

Civil penalty referrals are no longer forwarded to Criminal Investigation (CI) for review.

Form 2797, Referral Report of Potential Fraud Cases , is used to refer BSA Title 31 case, Form 8300 and FBAR criminal violations to CI for criminal investigation consideration.

Revenue Agent Fraud Technical Advisors (FTAs) will assist in the development of indicators of willfulness or intent, the determination of affirmative acts of willfulness or intent, and the preparation of Form 2797 (if needed). Also, the FTAs may assist BSA in the preparation of Form 5104, Report of Apparent Violation of Financial Recordkeeping and Reporting Regulations , a civil enforcement referral to FinCEN.

If indications and/or affirmative acts of intentional or willful BSA Title 31 case, Form 8300, or FBAR violations are discovered, the examiner will discuss the potential violations with the group manager. The examiner, with the approval of the group manager, will contact the local FTA for guidance. If the examiner is considering only a civil referral to FinCEN, the involvement of the FTA is at the discretion of the examiner and group manager.

If the decision to involve the FTA is made, the examiner will initiate completion of Form 13639, Fraudulent Intent Referral Memorandum (FIRM). Form 13639 documents the involvement of the FTA, the plan for developing the case with respect to the willfulness issue, and the referral recommendations of the FTA.

The examiner documents indications and/or affirmative acts of willfulness in Part 3 of Form 13639. The FTA documents the referral recommendations by checking one of the boxes in Part 6 of Form 13639 and lists the reason(s) for certain recommendations in the Explanation section of Form 13639.

Civil enforcement on Form 5104 referrals will be forwarded through Microsoft Outlook/Secured Messaging to the SB/SE FinCEN. See Exhibit 25.1.12-1, IRS Standards for Title 31 Referrals to FinCEN liaison, for guidance regarding when a referral is appropriate. The SB/SE FinCEN liaison will arrange for the CI FinCEN liaison to review the referral prior to forwarding it to FinCEN for civil enforcement consideration.

If further examination is warranted to determine if a violation was willful:

Upon completing the plan of action for further examination to determine whether a violation was willful; the examiner, group manager, and FTA will discuss the results and reach a conclusion regarding a criminal referral. The FTA will memorialize this conclusion on the initial Form 13639 or a second (follow-up) Form 13639 will be completed and stapled to the initial Form 13639. The FTA will indicate in Part 6 of Form 13639 (original or follow-up) the final referral recommendation; either firm indications of willfulness and criminal criteria are present and preparation of Form 2797 is recommended, or criminal investigation is not appropriate. The FTA will provide, in the Explanationsection, the reason(s) why a criminal referral is not appropriate or, if a criminal referral is recommended, a detail of the firm indications of willfulness.

If further examination is not warranted in determining if a violation was willful, the FTA will indicate so in Part 6 of Form 13639 and provide a written explanation of the reason(s) why further examination to determine if a violation was willful is not warranted and include any recommendations with respect to civil penalties in the Explanation section of the form. The examiner may proceed with the routine case procedures.

BSA Title 31 Case Procedures:

FBAR Procedures:

Form 8300 Procedures:

If firm indications of willful BSA, FBAR, or Form 8300 violations exist and criminal criteria (criteria used by CI for case acceptance) are met:

See IRM 4.26.17.5.4 for additional procedures dealing with FBAR cases.

The following procedures apply to cases worked under Title 31 only. Most Form 8300 examinations are conducted under Title 26. The preparation and processing of Form 2797 for Title 26 examinations is prescribed in IRM 25.1.3.

The examiner is required to use the current version of Form 2797 located on the Forms Repository. The web address of the Forms Repository is http://publish.no.irs.gov/catlg.html .

When preparing Form 2797 for a BSA violation, the examiner will follow the instructions attached to the form (Page 4) and:

See IRM 25.1.3 for detailed instructions concerning the processing of Form 2797.

The procedures prescribed below do not apply to Form 8300 examinations conducted under Title 26.

A memorandum of understanding (MOU) between SB/SE BSA and FinCEN provides for the following:

In order to meet this requirement, the NFP BSA Liaison will forward a copy of the Forms 2797, via Microsoft Outlook/Secured Messaging to the BSA senior program analyst that has the IRS/FinCEN MOU responsibility for reviewing the Forms 2797 for potential disclosure violations. The BSA program analyst will ensure that the Forms 2797 do not contain any "tax return information " prior to forwarding them to FinCEN.

If return information is included in the referral, access to and use of IRC § 6103 protected information, such as IDRS data, for non-tax purposes is not permitted. Its use may constitute a violation of IRC § 7213 and/or § 7213A (unauthorized disclosure and/or unauthorized access). See IRM 4.26.14 for further information on disclosure and BSA, unless a related statute determination has been made. Information obtained from Title 26 examinations cannot be included in Title 31 criminal referrals (Forms 2797), if a related statute determination has not been made. A disclosure violation may also occur even when a related statute determination has been made, if the person to whom the disclosure is made does not have a "need to know," with respect to the tax information included in the referral. Thus, Title 31 criminal referrals will not include Title 26 return information, except as mentioned in the instructions under IRM 25.1.12.6(2), and if a related statute determination is made, a copy of the related statute determination memorandum must be attached to Form 2797.

Prior to the disposition conference, it may be helpful for the group manager to contact the SB/SE and/or the CI FinCEN liaison for assistance in determining whether parallel civil and criminal action may be appropriate.

During the disposition conference, if the case is being accepted for criminal investigation, the participants should discuss the possibility of parallel civil and criminal actions. A civil money penalty may be imposed, notwithstanding the fact that a criminal penalty is imposed with respect to the same violation. Parallel referrals may be desirable in order to protect the statute of limitations or for other reasons.

If a case is determined to warrant parallel civil and criminal actions, it should be noted in the Form 5104 referral.

Before the civil referral is considered by FinCEN, the CI FinCEN liaison will review the referral for compatibility with CI needs. FinCEN will not receive the referral for civil enforcement action until this review is completed.

Evidence of violations that do not meet the criminal/local criteria requirements may be referred by the examiner as an information item. Information items are documented by the examiner on Form 13639 and forwarded to the BSA coordinator at:

The BSA coordinator will determine if the information referral should be routed to the local CI Suspicious Activity Report-Review Team (SAR-RT) coordinator for consideration as a referral of information to another agency, which may have jurisdiction over related crimes, or to the appropriate CI field office for further development. Any developed leads will be assigned a source code reflecting SB/SE BSA as the source of the information.

Evidence of customers engaging in substantial check cashing, money order purchase/redemption, wire transmission, etc. should be captured on Form 5346, Examination Information Report. It is crucial that copies of all supporting evidence (cashed checks [front and back], money orders, wire transmission receipts, etc.) are included. The examiner will prepare the Forms 5346, retain a copy of each form for the case file, and forward the completed Forms 5346 to the group manager for approval. Upon approval, the group manager will forward the forms for Title 31 and/or Title 26 violation consideration to the BSA coordinator at the address identified above.