25.5.11  Title 31 Bank Secrecy Act Investigations

Manual Transmittal

December 20, 2011

Purpose

(1) This transmits a revision to IRM 25.5.11 Title 31 Bank Secrecy Act Investigations

Material Changes

(1) IRM 25.5.11 is revised to update Title 31 CFR references throughout this section.

(2) IRM 25.5.11.1(2) is added to describe a "related statute" and define when disclosure of Title 26 information to employees is permitted.

(3) IRM 25.5.11.1(3) adds reference to Delegation Order 4-35 for approval of a Title 31 summons.

(4) IRM 25.5.11.2.1 is added to explain steps for issuance of Report of Foreign Bank and Financial Accounts (FBAR) Title 31 summons.

(5) IRM 25.5.11.2.2 is added to explain steps for issuance of a Bank Secrecy Act (BSA) Title 31 summons.

(6) IRM 25.5.11.3 is updated to add "return receipt " of mail in the service of Title 31 summons.

(7) IRM 25.5.11.4(2) is updated to remove the requirement to send notice to the customer by registered mail.

(8) IRM 25.5.11.4.2 adds a statement that Part D of Title 31 summons should be completed at the same time the original summons is completed.

(9) IRM 25.5.11.4.5 is updated to remove the registered mail requirement that a notice of transfer must be given to the customer if records are transferred.

(10) IRM 25.5.11.5.1(2) added statement regarding the time frame for customer to file motion to challenge the summons.

(11) IRM 25.5.11.6(1) expands the list of items where the government is not liable for expenses.

(12) IRM 25.5.11.7(2) updates the approval path when enforcement of a Title 31 summons is needed.

(13) IRM 25.5.11.8(2) updates procedures for obtaining permission for disclosure by FinCEN.

(14) Exhibit 25.5.11-1 added Attachment I to TD F 90-22.31, Summons. Details items requested with the summons.

(15) Exhibit 25.5.11-2 added Attachment II to TD F 90-22.31, Summons. Details definitions and identifying and grouping documents.

(16) Exhibit 25.5.11-3 added Attachment III to TD F 90-22.31, Summons. Details information for reimbursement of summons expenses.

Effect on Other Documents

This IRM supersedes IRM 25.5.11 dated October 4, 2006.

Audience

All operating Divisions and Functions

Effective Date

(12-20-2011)

Signed by Scott D. Reisher
Director, Collection Policy

25.5.11.1  (12-20-2011)
General

  1. Examination has many Bank Secrecy Act (BSA) civil compliance responsibilities. Criminal Investigation (CI) has some responsibility for use of Title 31 summonses in relation to processing civil forfeitures predicated on Title 31 violations. The use and enforcement of the Title 31 summons is provided for by the following:

    1. Title 31 USC §§ 5311–5332,

    2. Title 31 CFR Chapter X Subpart, and

    3. Title 12 USC § 3401–3422 (Right to Financial Privacy Act)

      Note:

      A Title 26 summons, Form 2039, Summons, cannot be used for a Title 31 criminal investigation. 31 USC § 5318(b)(1) restricts the use of Title 31 summonses to civil enforcement of the Bank Secrecy Act and certain other statutes.

  2. IRC §§ 6103(b)(4) and (h)(1) together permit disclosure of Title 26 information to IRS employees for examination purposes when there is a good faith determination that a Title 31 violation was committed in furtherance of a Title 26 violation or was part of a pattern to violate the provisions of Title 26. Once a related statute call is made, IRC §§ 6103(b)(4) and (h)(1) allow IRS employees whose official duties require access to tax returns and tax return information, to use the information in an examination under Title 31. The information gathered in the Title 31 investigation from this point forward is subject to the disclosure rules under IRC § 6103. A "related statute" determination is based on a "good faith" judgment that the BSA violation was in furtherance of the Title 26 violation. A "good faith" determination should be demonstrated by tangible objective factors and supported by adequate documentation. The determination is noted on a related statute memorandum. Refer to IRM 4.26.14.2, Use of Title 26 Information in Title 31 Examinations, for necessary actions to obtain a related statute determination.

  3. Title 31 CFR 1010.912 provides that a Title 31 summons can only be issued by the Chief, CI, or a delegate thereof, for the purpose of perfecting civil seizures and forfeitures related to violations of the Currency and Foreign Transactions Reporting Act, as amended (USC §§ 5311–5332) as well as Section 21 of the Federal Deposit Insurance Act (12 USC §1829b), Section 411 of the National Housing Act (12 USC §1730d), and Chapter 2 of Pub. L. 91–508 (12 USC §1951 et seq.), and related regulations, except with respect to the Currency and Monetary Instrument Reports (CMIRs). Other IRS officials who can issue a Title 31 Summons for civil enforcement of Title 31 are the Commissioner, the Deputy Commissioner, or a delegate of either office. See IRM 1.2.43.36 , Delegation Order 4-35, for a list of delegates.

  4. A Title 31 Summons, TDF 90-22.31, Department of the Treasury - Summons, may be issued for the examination of books and records and or witnesses to:

    1. A financial institution (as defined in 31 CFR 1010.100);

    2. An officer or employee of a financial institution, including a former officer or employee; or

    3. Any person having possession, custody, or care of any other records and reports required under the Bank Secrecy Act or Title 31 CFR Chapter X.

  5. A Title 31 summons may not be issued after a Service related criminal referral has been made to the U.S. Attorney’s office or to the DOJ Tax Division. A criminal referral in this context means a Service initiated request, attorney for the government grand jury request, or Service prosecution recommendation. A Title 31 summons may be issued however, after declination by DOJ or final adjudication of a related Title 31 criminal investigation.

  6. A Title 31 summons cannot be used as a tool in a criminal investigation. The Service employee assigned to perfect a Title 31 forfeiture:

    1. Must not work on any criminal investigation related to the forfeiture, and

    2. Must be able to articulate that no leads or investigative steps to establish criminal conduct were obtained or taken with the use of a Title 31 summons.

  7. Evidence of a crime discovered during civil forfeiture perfection via the Title 31 summons can be used for criminal purposes. The grand jury cannot be used to perfect civil forfeitures, but information developed in the normal course of a grand jury investigation can be used for forfeiture purposes pursuant to 28 USC. (However, grand jury information cannot be used for administrative matters.)

  8. The Title 31 summons is subject to the Right to Financial Privacy Act, Title 12 USC §§ 3401–3422. Title 12 USC § 3405 requires that notice be given to the customer whose financial records are sought to allow opportunity for filing of a motion to challenge the summons. Title 12 USC § 3409 provides that the customer notice can be delayed up to 90 days upon application to a judge or magistrate under certain conditions, e.g., notice would seriously jeopardize an investigation.

25.5.11.1.1  (04-30-1999)
Contents

  1. The portions to be completed on a Title 31 summons, including the certificate of service, are self explanatory. A summons for books and records requires that the place for appearance shall not exceed 500 miles from where the financial institution operates or conducts business in the United States.

25.5.11.2  (12-20-2011)
Review of Title 31 Summons Prior to Issuance

  1. Prior to issuance of a Title 31 summons, a review process must be completed.

25.5.11.2.1  (12-20-2011)
FBAR Title 31 Issuance

  1. The examiner should prepare a cover memo for the summons package. The memo is addressed from the examiner through the Group Manager and SB/SE Associate Area Counsel to the Territory Manager. The memo should:

    1. Provide a brief history of the case;

    2. Describe the potential BSA violations; and

    3. State if the party being summoned indicated whether he or she will or will not comply with the summons.

  2. The summons package forwarded for review should include:

    1. The transmittal memorandum and any attachments to the memorandum;

    2. The summons memorandum narrative;

    3. Copy of the first page of the summons (TDF 90-22.31, Summons);

    4. Attachment I, a list of the documents and records being summoned (see Exhibit 25.5.11-1, Attachment I);

    5. Attachment II, mandatory language regarding definitions and identifying and grouping documents (see Exhibit 25.5.11-2, Attachment II);

    6. Attachment III, information on reimbursement of expenses (see Exhibit 25.5.11-3, Attachment III).

  3. SB/SE Associate Area Counsel will review the summons and

    • If disapproved, Counsel and the examiner will work together to resolve.

    • If approved, Counsel will prepare a memorandum to the Territory Manager approving issuance of the Title 31 summons.

  4. The Territory Manager will sign (issue) the FBAR summons after receiving the memo from Counsel. The Territory Manager will return the summons package to the BSA examiner for service of the summons.

25.5.11.2.2  (12-20-2011)
BSA Title 31 Issuance

  1. A summons memorandum narrative is prepared for the summons package by the examiner. The narrative describes:

    1. The types of BSA regulated services or activities provided;

    2. The business location;

    3. The type of customers served;

    4. The entity's registration status if the entity is a money services business;

    5. The entity's compliance efforts regarding suspicious activities;

    6. Whether Suspicious Activity Reports (SARs) have been filed;

    7. Whether the entity has an individualized anti-money laundering (AML) policy; and

    8. Any potential BSA violations.

  2. The examiner will prepare a transmittal memorandum for the summons package. The memorandum is addressed from the BSA examiner through the BSA Group Manager and BSA Territory Manager to the SB/SE Liaison to the Financial Crimes Enforcement Network (FinCEN). This transmittal memorandum:

    1. Provides a brief history of the case,

    2. Describes the potential BSA violations,

    3. States why the summons is being sought, and

    4. Whether the party being summoned indicated whether he or she will or will not comply with the summons.

  3. The summons package forwarded for review should include:

    1. The transmittal memorandum and any attachments to the memorandum;

    2. The summons memorandum narrative;

    3. Attachment I, a list of the documents and records being summoned (see Exhibit 25.5.11-1, Attachment I);

    4. Attachment II, mandatory language regarding definitions and identifying and grouping documents (see Exhibit 25.5.11-2, Attachment II);

    5. Attachment III, information on reimbursement of expenses (see Exhibit 25.5.11-3, Attachment III).

  4. The BSA examiner will forward the summons package for review through his/her BSA Group Manager to the BSA Territory Manager.

  5. The BSA Territory Manager signs the transmittal memorandum and then faxes the summons package to the designated program analyst, currently the SB/SE Liaison to FinCEN. The fax number is available on the BSA web site at http://mysbse.web.irs.gov/AboutSBSE/FRDBSA/contacts/9342.aspx.

  6. The SBSE Liaison to FinCEN will prepare a memorandum approving the issuance of the summons and send it to the Territory Manager and Group Manager.

  7. The BSA Territory Manager will sign (issue) the summons after receiving the approval memorandum from the SBSE Liaison to FinCEN.

  8. The summons package is returned through the BSA Group Manager to the BSA examiner for service of the summons.

25.5.11.3  (12-20-2011)
Service

  1. Any delegate of the Secretary authorized to issue a Title 31 summons, or any other person authorized by law to serve a summons or other process, may serve a Title 31 summons. The person summoned is given Part A of a Title 31 summons.

  2. Service of a Title 31 summons may be made on any person by personal delivery or by registered, return receipt mail; or upon any other person by delivery to an officer, managing or general agent, or any other agent authorized to receive process of service.

25.5.11.4  (12-20-2011)
Customer Notice Requirements

  1. Notice to a customer whose records are being sought via a Title 31 summons applies only to records of customers of any office of the following institutions located in any state or territory of the United States, Puerto Rico, Guam, American Samoa, or the Virgin Islands:

    1. Bank

    2. Credit Card Issuer

    3. Loan or Trust Company

    4. Savings and Loan

    5. Homestead Association (including cooperative banks)

    6. Credit Union

    7. Consumer Finance Institution

  2. If customer notice is required, the customer must be given the summons in person or by mail, on or before the date of service of the summons (except if a delay of notice order was granted). The following parts of the Title 31 summons are provided as notice:

    1. Part B (copy of summons)

    2. Part C (customer notice)

    3. Part C–1 (instructions for completing and filing the attached motion and sworn statement)

    4. Part C–2 (Customer’s Motion to Challenge Government’s Access to Financial Records)

    5. Part C–3 (Customer’s Sworn Statement for Filing a Challenge)

25.5.11.4.1  (12-20-2011)
Delay of Customer Notice

  1. If the customer whose records are being sought is expected to take action to jeopardize the investigation, 12 USC § 3409 provides that the required customer notice can be delayed for up to 90 days upon application to a judge or magistrate judge through a civil Assistant U.S. Attorney. The customer must be notified of the summons upon expiration of the delay granted by a judge. Notification can be completed in person or by regular mail by delivering a completed Part E with Part B of the summons. In this instance, Parts C, C–1, C–2, and C–3 are not given to the customer. The time and place of examination must still be adhered to in obtaining the records.

25.5.11.4.2  (12-20-2011)
Certificate of Compliance with the Right to Financial Privacy Act 1978

  1. If customer notice is required, a completed Part D of the summons must be given to the financial institution prior to receiving the financial records. The examiner should complete Part D at the time the original summons is completed.

25.5.11.4.3  (12-20-2011)
Date When Records Can Be Obtained After Issuance of Summons

  1. The customer has 10 days to file the motion if the customer notice was in person, or 14 days from the date of mailing. The records may be obtained from the financial institution upon expiration of the applicable time frame, if the customer has not filed a motion with the court and served the issuing agency.

25.5.11.4.4  (04-30-1999)
Notice That No Legal Proceedings are Contemplated

  1. If customer notice is required, the completed Part F of the summons must be given promptly to the customer if and when a determination is made that no legal proceeding against the customer is contemplated.

25.5.11.4.5  (12-20-2011)
Notice of Transfer of Financial Records to Another Department or Agency and Certification for Transferring Records

  1. If customer notice is required and the records obtained are transferred pursuant to 31 CFR 1010.520 and this chapter, a notice of transfer must be given to the customer by completing Part H of the summons and personally handing or mailing it to the customer. A certificate of the transfer is made by completing Part G and keeping it with the original summons.

25.5.11.5  (04-30-1999)
Examination of Books and Witnesses

  1. Any person authorized to issue a Title 31 summons, or any officer or employee of the Treasury Department, or their designee, may receive evidence and examine witnesses. Any person authorized by law may administer any required oaths and affirmations. Testimony of any person may be taken under oath, and shall be written down or transcribed if under oath. A transcript copy shall be given to a witness upon request, unless the person issuing the summons determines under 5 USC § 555, that a copy should not be provided, in which case the witness may only inspect the official transcript.

25.5.11.5.1  (12-20-2011)
Time and Place of Examination

  1. Title 31 CFR 1010.911 through 1010.917 does not state how much time a person summoned should be given to produce records or to give testimony. If the information is needed quickly, a short time for production is appropriate when absolutely necessary. Otherwise, give a longer period of time so the request is not burdensome.

  2. If customer notice is required prior to obtaining the records, then the time of examination must not be before the expiration of the time allowed for the customer to file a motion to challenge the summons. The customer has 10 days to file the motion if the notice was in person or 14 days from the date of mailing.

25.5.11.6  (12-20-2011)
Payments of Title 31 Summons Expenses

  1. Title 31 CFR 1010.917 states that persons summoned with a Title 31 summons shall be paid the same fees and mileage for travel in the United States that are paid witnesses in the U.S. courts. The government is not liable for any other expenses incurred for the production of books, papers, records or other data per 31 U.S.C. § 5318(c)(3).

25.5.11.7  (12-20-2011)
Enforcement

  1. In the case of noncompliance with a Title 31 summons, the matter shall be referred by the Special Agent in Charge (SAC), Cl, or by Examination, to the U.S. Attorney. The U.S. Attorney may bring an action to compel compliance in any U.S. court within the jurisdiction:

    1. In which the investigation that gave rise to the summons is or has been carried on;

    2. In which the person summoned is a resident; or

    3. In which the person summoned carries on business or may be found.

  2. When a referral is made for enforcement of a Title 31 summons, prompt notification must be made through the SB/SE Liaison to FinCEN's Associate Director, Office of Regulatory Policy and Programs Division.

  3. Prepare requests for enforcement of a Title 31 summons using the memorandum report format, to include the following information:

    1. The name and full address of the person whose property may be subject to seizure;

    2. A summary of the pertinent facts in the investigation;

    3. Exactly what the Service employee is seeking to obtain;

    4. The relevancy of the records sought, including the relevancy of records pertaining to third parties;

    5. The need or importance of such evidence to the success or completion of the investigation;

    6. If a corporation was summoned, a statement of whether service of the summons has been made on a responsible officer and, if not, why not;

    7. The circumstances surrounding contacts with the person summoned, explaining the defense(s) claimed for refusing to comply with the summons, and the circumstances under which the person summoned claimed the defense(s);

    8. A transcript (if recorded) of the questions asked to the person summoned and the person’s responses;

    9. A description of any problems involving the imminent expiration of the statutes of limitation with respect to the seizure or forfeiture;

    10. A statement as to any known criminal investigations by other federal agencies of the individual, and, in the case of a corporation, corporate officers or employees;

    11. A statement as to any other known requests for summons or subpoena enforcement against the person or related parties; and

    12. If a pen register or any other electronic device was used in the investigation prior to the issuance of the summons, a statement why such device was used.

  4. Approval is indicated by the signature of the official authorized to issue the summons. Transmit the original and one copy of the summons through the Area Director or designee, to the U.S. Attorney’s office in which venue lies.

  5. The court may issue an order requiring the person summoned to appear before the Secretary or delegate to produce documentation or to give testimony explaining how the documentation was compiled and maintained, and to pay the costs of the proceeding. Any failure to obey the order of the court may result in a contempt charge. All processes in any case under this section may be served in any judicial district in which such person is found.

25.5.11.8  (12-20-2011)
Disclosure

  1. Except as noted below, no officer or employee of the Treasury Department or any component thereof shall:

    1. Publicly name any person to whom a summons has been issued, or release any information to the public concerning that person or the issuance of a summons prior to the time and date set for the appearance or production or records.

    2. Disclose any testimony or material summoned (including the name of the witness) to anyone other than an officer or employee of the Department of the Treasury. This nondisclosure position does not preclude any officer or employee of the Department of the Treasury from disclosing material presented to obtain necessary information for investigative purposes. Any disclosure of tax information must be in accordance with the provisions of IRC § 6103 as explained in this text and IRM 11.3, Disclosure of Official Information Handbook.

  2. Except as provided above, disclosures must be approved by FinCEN. A written request for disclosure must be submitted to the Chief, BSA Policy and Operating for forwarding to the Associate Director, Office of Regulatory Policy and Programs, FinCEN.

Exhibit 25.5.11-1 
Attachment I to TD F 90-22.31, Summons

ATTACHMENT I

TO: (Full legal name and address as listed in Item 1 of TD F90-22.31)

RE: (Full legal name and address of the financial institution(s) under examination. If there is an agency relationship, include the agent license. List each location separately.)

ITEM(S) REQUESTED: (include relevant transaction date(s), account number(s) and description of item(s) requested.)

Exhibit 25.5.11-2 
Attachment II to TD F 90-22.31, Summons

ATTACHMENT II

TO: (Full legal name and address as listed in Item 1 of TD F90-22.31)

RE: (Full legal name and address of the financial institution(s) under examination. If there is an agency relationship, include the agent license. List each location separately.)



DEFINITIONS

The term "document" shall mean the original and any nonidentical copy of written, typed, printed, recorded, transcribed, punched, taped, filmed, or graphic matter, or sound production, however produced or reproduced, of any kind, in the possession, custody, or control of the summoned parties, regardless of where located, and includes, but is not limited to contracts, agreements, orders, diaries, correspondence, communications, memoranda, messages, reports, studies, drawings, papers, agenda, bulletins, notices, announcements, vouchers, brochures, schedules, computer printouts, statements, price lists, journals, ledgers, films, film clips, telegrams, teletypes, and magnetic or recorded tapes. In all cases where any original is not in the possession, custody or control of the summons party/parties, the term "documents" shall include any copy of the original and any nonidentical copy thereof.

IDENTIFYING AND GROUPING DOCUMENTS

In order to facilitate the handling of documents submitted pursuant to this summons, to preserve their identity, and to ensure their accurate and expeditious return, the following procedures should be observed for all such documents:

  1. Documents should be numbered consecutively.

  2. Documents should be grouped according to the individual paragraph of this summons to which they are responsive, and, within each such group, the documents should be arranged, to the extent possible in chronological order. Multi-paged documents should remain intact.

Exhibit 25.5.11-3 
Attachment III to TD F 90-22.31, Summons

Attachment III

TO: (Full legal name and address as listed in Item 1 of TD F90-22.31)

RE: (Full legal name and address of the financial institution(s) under examination. If there is an agency relationship, include the agent license. List each location separately.)

Important -- Reimbursement of Expenses

31 USC § 5318(c)(2) Fees and travel expenses -- Persons summoned under this section shall be paid the same fees and mileage for travel in the United States that are paid witnesses in the courts of the United States.

31 USC § 5318(c)(3) No liability for expenses -- The United States shall not be liable for any expense, other than an expense described in paragraph (2) (above), incurred in connection with the production of books, papers, records, or other data under this section.


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