4.26.2  Program Structure

Manual Transmittal

May 23, 2014

Purpose

(1) This transmits revised text for IRM 4.26.2, Bank Secrecy Act, Program Structure.

Material Changes

(1) Terminology and titles are updated to current usage.

(2) Style and punctuation are updated to conform to the IRM Style Guide and the Plain Writing Act of 2010.

Effect on Other Documents

This supersedes IRM 4.26.2 dated April 5, 2011.

Audience

The intended audience is employees of the Bank Secrecy Act Program in the Small Business/Self-Employed (SB/SE) Division, and can be referenced by all field compliance personnel.

Effective Date

(05-23-2014)


William P. Marshall
Director, Fraud/BSA
Small Business/Self-Employed

4.26.2.1  (04-05-2011)
Overview of Program Structure

  1. This section describes the regulatory and organizational structure of the IRS SB/SE Bank Secrecy Act (BSA) examination program.

4.26.2.2  (05-23-2014)
Regulatory Structure

  1. Anti-money laundering statutes are found in two separate titles of the United States Code:

    • 31 USC 5311 et seq. (Title 31), excluding section 5315, commonly referred to as the Bank Secrecy Act (BSA)

    • 26 USC 6050I (Title 26), Internal Revenue Code

4.26.2.2.1  (05-23-2014)
Regulatory Structure of Title 31

  1. The Department of the Treasury has primary responsibility for implementing and enforcing the BSA. The Secretary of the Treasury delegated the authority to administer the BSA to the Director, Financial Crimes Enforcement Network (FinCEN). FinCEN re-delegated responsibility for assuring civil compliance with the law to various Federal agencies including the Internal Revenue Service. Treasury Directive 15–41 (See IRM Exhibit 4.26.1–2 ) and 31 CFR 1010.810(b)(8) delegate the responsibility to examine and assure compliance with the requirements of 31 CFR Chapter X for certain entities to the IRS.

  2. Most entities under IRS' jurisdiction are commonly referred to as non-bank financial institutions (NBFIs). IRS also has the delegated authority to examine banks and other financial institutions that are not examined by federal bank supervisory agencies or other federal functional regulatory agencies for compliance with the BSA. Thresholds determine if some financial institutions are subject to the BSA. (See IRM 4.26.5.) NBFIs currently include:

    1. Money Services Businesses (MSBs), subject to certain transaction thresholds, including, Dealers in Foreign Exchange; Check Cashers; Issuers of Traveler's Checks or Money Orders; Sellers of Traveler's Checks or Money Orders; Providers of Prepaid Access; Sellers of Prepaid Access; and Money Transmitters.

    2. Casinos and Card Clubs (including Indian Tribal casinos).

    3. Insurance companies subject to the Anti-Money Laundering (AML) program requirements of the BSA.

    4. Dealers in precious metals, precious stones, and jewels subject to the AML program requirements of the BSA.

    5. Credit Unions that are state chartered and not federally insured.

  3. FinCEN is delegated the primary regulatory authority for Title 31. This includes writing of regulations and imposing civil penalties.

  4. FinCEN Counsel can be consulted for legal analysis and interpretation of Title 31 law and regulations. All requests for technical advice relating to BSA matters must be routed through the Chief, BSA Policy for transmission to FinCEN. IRS Office of Chief Counsel should not be asked to render advice on Title 31 issues, except for Report of Foreign Bank and Financial Accounts (FBAR) issues. IRS Criminal Tax may provide legal advice concerning the criminal aspects of Title 31, including asset forfeiture.

  5. Communications with FinCEN must be routed through the BSA Liaison to FinCEN. Contact information is available on the BSA SharePoint site. BSA field personnel are not to contact FinCEN directly.

4.26.2.2.2  (05-23-2014)
Regulatory Structure of Title 26

  1. IRC 6050I is part of Title 26, the Internal Revenue Code, under the regulatory authority of IRS Office of Chief Counsel.

  2. Requests for technical advice should be routed through normal channels to the Chief, BSA Policy for transmission to the Office of Chief Counsel.

4.26.2.3  (11-17-2006)
Organizational Responsibilities

  1. Within the IRS SB/SE Operating Division, the Director, Fraud/BSA, is responsible for oversight and policy direction for the BSA Program.

4.26.2.3.1  (05-23-2014)
Responsibilities of the Director of Fraud/BSA

  1. The Director of Fraud/BSA has the following responsibilities:

    1. Serves as principal advisor and consultant to the IRS Commissioner on all issues involving BSA strategic plans, programs, and policies.

    2. Formulates short- and long-range program policies, strategies, and objectives for BSA policy, ensuring a consistent approach. Designs and develops programs to solve complex BSA policy issues.

    3. Directs research and analysis on BSA issues and trends for input to the overall SB/SE strategic plan, policies, and procedures. Provides feedback to SB/SE on BSA issues and trends in order to understand and address taxpayers' needs and behavior patterns. Develops and tests alternative treatments. Develops appropriate measures to monitor impact and effectiveness of treatments.

    4. Analyzes progress against strategic plans and identifies opportunities for improvement. Ensures adherence to operational procedures and controls.

    5. Serves as focal point for development and implementation of risk-based BSA models and strategies.

    6. Coordinates program activities with other top level IRS executives to prepare Service-wide policies, address cross-functional issues, develop strategies, and ensure consistency of approach. Policies reflect population characteristics, needs, and behavior patterns.

    7. Directs the development of activities to build leveraged partnerships. Collaborates with stakeholders to ensure the integrity of feedback as part of policy-making and ensures the linkage of policy to practice.

    8. Manages all human, physical, information technology, and financial resources assigned to the BSA organization. Allocates these resources in accordance with overall strategies to further the accomplishment of specific goals.

4.26.2.3.2  (04-05-2011)
Responsibilities of Chief, Policy and Operations

  1. The Chief, Policy and Operations reports to Director Fraud/BSA and serves as an advisor in all facets of BSA activities.

  2. The Chief, Policy and Operations has the following responsibilities:

    1. Formulates short- and long-range program strategies, policies, and objectives specific to BSA customers in order to :
      1. Improve BSA compliance.
      2. Strengthen enforcement activities.
      3. Deliver prompt, effective and equitable service to BSA customers.
      4. Leverage resources through proactive partnerships with state and federal agencies.

    2. Sets program goals and priorities in coordination with FinCEN.

    3. Implements BSA policy.

    4. Implements and monitors accomplishment of BSA program goals and the annual BSA work plan.

    5. Partners with Stakeholder Liaison, FinCEN, and industry groups to design, develop, and implement programs to assist BSA customers in complying with the BSA.

    6. Monitors trends affecting compliance of BSA customers and responds to changes needed.

    7. Conducts BSA territory level program reviews.

4.26.2.3.3  (05-23-2014)
Responsibilities of Chief, BSA Policy

  1. The Chief, BSA Policy reports to Chief, BSA Policy and Operations and serves as an advisor in all facets of BSA activities and furnishes information concerning policies of the BSA and interpretation of federal laws and regulations.

  2. The Chief, BSA Policy has the following responsibilities:

    1. Identifies and promotes best practices.

    2. Coordinates with FinCEN in developing IRS BSA procedures and policies.

    3. Develops and implements IRS policies and strategies addressing money laundering.

    4. Develops and implements consistent guidelines and standards for Title 31 and Form 8300 examinations.

    5. Provides technical advice and assistance to all BSA field territories.

    6. Provides BSA program oversight.

    7. Sets goals and develops risk-based compliance models.

    8. Develops and implements the BSA Program Letter.

    9. Provides input to the BSA Strategic Plan.

    10. Prepares analysis of plan accomplishments and other measures.

    11. Develops and communicates BSA policy changes.

    12. Identifies emerging business practices and potential areas of noncompliance.

    13. Provides oversight on high-profile programs and establishes appropriate guidelines.

    14. Reviews and analyzes program progress against operational plans and identifies areas for improvement.

    15. Interfaces with state, federal, and international enforcement and regulatory agencies charged with BSA oversight.

4.26.2.3.4  (05-23-2014)
Responsibilities of Chief, BSA Workload Identification, Selection, Delivery, and Monitoring (WISDM)

  1. The Chief, BSA Workload Identification, Selection, Delivery, and Monitoring (WISDM) reports to Chief, BSA Policy and Operations and serves as an advisor in all facets of BSA workload including the BSA work plan, BSA staffing, and quantitative and qualitative accomplishments.

  2. The Chief, BSA WISDM has the following responsibilities:

    1. Provides centralized oversight and program coordination of BSA workload selection and classification.

    2. Identifies and selects workload for BSA field territories using a risk-based approach.

    3. Develops standardized policy and program direction for ordering, classifying, and delivering BSA examinations.

    4. Develops and monitors the BSA work plan.

    5. Develops and revises workload studies to ensure allocation of resources is equitable and reflects efficiency.

    6. Provides technical reviews of BSA closed cases through the National Quality Review System (NQRS).

    7. Provides quality feedback on BSA cases measured by compliance with the Quality Attributes.

    8. Provides oversight of the BSA time reporting and transmission through the Examination Returns Control System (ERCS).

    9. Coordinates research projects for BSA.

    10. Maintains the Title 31 database.

    11. Assists in maintaining the ERCS database for BSA purposes.

4.26.2.3.5  (04-05-2011)
Responsibilities of BSA Field Territory Managers

  1. Each BSA Field Territory Manager reports to the Chief, BSA Policy and Operations and serves as an advisor in all facets of workload planning activities.

  2. The BSA Field Territory Manager has the following responsibilities:

    1. Administers the annual BSA work plan at the territory level.

    2. Identifies and resolves emerging compliance issues at the territory level and elevates such issues to Headquarters.

    3. Develops and delivers BSA services and strategies to improve customer service, consistency, and efficiency.

    4. Coordinates and controls territory examination activities to achieve uniform compliance with directives.

    5. Ensures effective utilization of staffing.

    6. Ensures a smooth flow of information, directives, and functional communications.

    7. Prepares and submits administrative reports.

    8. Conducts group level program reviews.

4.26.2.3.6  (05-23-2014)
Responsibilities of CTR Operations Program Manager

  1. The Currency Transaction Reporting (CTR) Operations Program Manager reports to the Chief, BSA Policy and Operations. The Department Managers for Edit and Error Resolution and BSA Compliance report to the CTR Operations Manager.

  2. The CTR Operations Program Manager has the following responsibilities to ensure the BSA mission is accomplished through:

    1. Processing and correcting paper Forms 8300.

    2. Processing and correcting paper FBAR forms.

    3. Processing filer correspondence and telephones inquiries.

    4. Maintaining consolidated BSA closed case files.

    5. Supporting FinCEN.

    6. Assessing penalties on Form 8300 and FBAR filings.

    7. Coordinating the collection of FBAR civil penalties though the SB/SE Division Counsel and the Bureau of the Fiscal Service.

    8. Assisting filers of BSA forms resolve technical issues.

    9. Providing research/certified documents/ testimony for tax and Title 31 cases.

    10. Responding to ex parte orders issued under IRS 6103(i).

    11. Supporting computer security program requirements.

    12. Supporting BSA WISDM staff in case-building.


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