Yesterday’s “Oversight of the Financial Crimes Enforcement Network (FinCEN)” hearing was long overdue and many of the members did not let the time go to waste. Getting to the bottom of the effectiveness of FinCEN and the anti-money laundering (AML) regime quickly became the theme of the three-hour hearing.

Measuring Success

Representative Jim Himes (D‑CT) opened the hearing by explicitly asking how FinCEN measures and defines success in terms of its enforcement activity. FinCEN Acting Director Himamauli “Him” Das said he could not provide concrete data, but that Bank Secrecy Act (BSA) records have been searched by government officials “over two million times in the last five years” and the data has been used in “tens of thousands of investigations.”

Not letting the issue go, Representative Patrick McHenry (R‑NC) then dug in deeper asking, “What percentage of the BSA reports in FinCEN’s monthly database lead to convictions?” Again, Acting Director Das said, “We do not have precise metrics,” but he also noted that, “We have a law enforcement awards program in place [designed] to identify instances in which BSA information has translated into actual prosecutions.” Acting Director Das recognized that the awards program is anecdotal in nature, but he said that it was proof that the information was getting used.

Finally, Representative David Kustoff (R‑TN) brought up the point again asking, “If you were talking to any of my constituents, how would you describe the effectiveness or efficiency of FinCEN?” Again, Acting Director Das did not have an explicit answer to offer, but he noted this time that, “In terms of this hearing, it’s clear that we need to do a better job in terms of communicating how effective FinCEN’s work is and how effective we work with law enforcement and the intelligence community.”

As I noted in my statement for the record ahead of the hearing, almost any additional information would be greatly helpful in establishing the effectiveness of FinCEN and the AML regime. From a technical standpoint, it could help better inform what the most efficient enforcement practices are. And from a more general standpoint, it could help better inform both policymakers and the public about what law enforcement is doing with all this financial data.

Financial Crimes Enforcement Network Improvements Act

With the need for oversight in mind, Representative Warren Davidson (R‑OH) used the hearing to introduce the “Financial Crimes Enforcement Network Improvement Act.” In short, the bill would make the director of FinCEN subject to Senate confirmation, create a new audit and investigation process, and create a civil liberties protection officer.

One area of the bill that is particularly relevant to the current conversation is a request for information detailing FinCEN’s enforcement activity. Namely, the bill calls for FinCEN to report to Congress how many reports have been received, reviewed, requested by other government agencies, led to a secondary investigation, and resulted in a conviction, settlement, or additional charges in an ongoing investigation.

These surface layer statistics could help greatly improve the public’s understanding of FinCEN’s effectiveness. And this change is long overdue––Norbert Michel noted in Forbes this week that the General Accounting Office (GAO) was having trouble pinning these numbers down all the way back in 2002, and FinCEN has never provided the data. Congress did make some headway under the National Defense Authorization Act where the Attorney General is required to submit performance metrics to the Treasury secretary (Section 6201 on page 1179), but this information should also be available to Congress and the public.

With that said, there are a few areas Congress could improve in the Financial Crimes Enforcement Network Improvement Act. For instance, Congress could roll the civil liberties officer’s duties (Section 5 of the bill) into the audit and oversight that will be performed by the Office of Inspect General (OIG). Considering the OIG will already be “conducting audits and investigations [on the] protection of the civil liberties and privacy of American citizens by [FinCEN],” it’s likely that the added level of bureaucracy would be unnecessary.

Looking Forward

Early in the hearing, Acting Director Das recognized that he was providing qualitative, not quantitative measures of success. And later he was clear that he is “happy to work with [Congress] in terms of other measures or indicia of success as well to be able to make a better case for what we do.” Now it’s up to Congress to welcome his offer and move forward with new quantitative reporting requirements so the public can see what is actually being done with their financial data.