Trends in and Benefits of FinCEN?s BSA E-Filing System
By FinCEN?s Technology Solutions and Services Division and Office of Outreach Resources
The BSA E-Filing system (E-Filing) is a secure web-based electronic filing system that allows financial institutions to submit Bank Secrecy Act (BSA) forms to FinCEN. The USA PATRIOT Act authorized FinCEN to develop E-Filing to increase the efficiency of the BSA filing process. Since E-Filing?s October 2002 implementation, institutions have benefitted greatly from an ability to use a secure Internet connection to submit BSA forms.
As of December 2008, 77% of all BSA forms were submitted electronically. As of July 2009, financial institutions have e-filed over 48 million forms since the program?s inception; and the number of registered users has grown to more than 21,000, representing approximately 6,500 institutions. In Fiscal Year 2009, more than 1 million BSA forms were submitted each month by financial institutions.
Why Do Institutions Continue to File Using Paper?
Although an increasing number of financial institutions have recognized the benefits of E-Filing, nearly one in four BSA filings continues to be completed using a paper form. To better understand why certain institutions file paper BSA forms, FinCEN spoke with form filers and various Federal regulators.
Financial institutions cited a number of reasons for choosing paper forms. The consistent themes were cost, and organizational processes and culture. Many felt the low volume of their BSA reporting did not warrant conversion to E-Filing (the majority of high volume filers are using E-Filing); others did not have Internet access or had only a slow dial-up connection. Some just felt more comfortable using paper forms. Others stated either that their internal programs and procedures were built to support paper form filing and audit trails, or that moving to E-Filing would require a significant technology investment.
FinCEN is committed to working with all financial institutions that file paper BSA forms to understand the value that E-Filing may provide them. In many cases, these concerns are being addressed through new E-Filing capabilities, such as the use of Adobe Forms for single or small numbers of filings (discrete filings) or to provide paper copies for internal review and approval purposes. Other paper filers may be unaware of the benefits to E-Filing for improving internal BSA filing processes, including for recordkeeping and internal audit purposes, as well as the security and privacy advantages of E-Filing compared with paper forms and traditional mail delivery. For a very small number of financial institutions, the E-Filing system as currently implemented may simply not be financially or operationally a viable filing means at this time.
Paper Filing Statistics
FinCEN also compared the rates at which financial institutions submitted BSA filings, both electronically and using paper forms, for the 2008 calendar year. The results affirmed that, where E-Filing was available for a specific type of BSA filing, institutions largely submitted those filings electronically.8 (See Exhibit 1).
When including those filings that could be completed only using paper forms, the use of specific types of BSA paper forms as a percentage of all BSA filings submitted to FinCEN was relatively small; the exception was CTRs (see Exhibit 2).
FinCEN also reviewed which type of paper form accounted for the largest share of all paper BSA submissions. CTRs were dominant, largely because of the wide variety in size, type, and technological capabilities of the submitting institutions (see Exhibit 3).
Generally, financial institutions from five key States (Texas, New York, California, Florida, and Illinois) accounted for the largest share of paper BSA filings among forms that could be filed electronically (see Exhibit 4).
As might be expected for the CTR-C and SAR-C (casinos), the majority of the paper filings were submitted from the States of New Jersey and Nevada. For other forms, such as the industry-specific SAR forms, the lead filing States appear to reflect centralized filing locations of national or regional companies.
Benefits of Using the BSA E-Filing System
As more than three out of four BSA filings are electronically submitted, it is clear that financial institutions of all sizes, types, and locations have discovered the benefits of using E-Filing. For many institutions, FinCEN, and the government agencies and law enforcement officials accessing the filings, the value proposition results from improved processing efficiencies, cost savings, increased security and higher quality data submissions:
Streamlined BSA Form Submission Process. Financial institutions that use E-Filing are able to submit their filings immediately to FinCEN. E-Filing also provides those institutions with the ability to maintain an ongoing record of their filing submissions for informational or audit purposes. Further, financial institutions can track the status of their filing submissions within the system. These capabilities make E-Filing a better alternative to the more labor-intensive paper form filing and records keeping process.
Faster Routing of Information. CTR and CTR-C form acknowledgements, which serve as a receipt of BSA data submission, are routed back to the filing organization within 48 hours. BSA E-Filing also offers the ability to send Secure Messages and Alerts, allowing critical processing information to be disseminated rapidly to filing organizations. BSA reports submitted through E-Filing are processed and loaded more quickly, resulting in a faster turnaround time for law enforcement and regulators to access and review the data.
Greater data security and privacy. E-Filing provides greater data security and privacy than the use of paper BSA forms. FinCEN?s secure electronic delivery system9 eliminates the potential for delayed, misrouted, or lost deliveries of paper forms that may occur with traditional physical delivery. E-Filing also provides tangible demonstration of FinCEN?s ongoing commitment to protecting financial institutions? sensitive data.
Long Term Cost Savings to Financial Organizations and Government. Longterm cost savings accrue to both filing institutions and the government through elimination of paper review and postal costs. In addition, internal costs savings can be achieved by a reduction in filing errors and data entry time. FinCEN benefits from E-Filing, when compared with paper filing processing, through lower per-item costs, reduced data keying errors,10 and verification and validation of the submitted data.
BSA E-Filing System Features. E-Filing provides features that are not available to paper filers. For example, various submission methods are available for different size financial institutions: a) single-entry (discrete) Adobe forms which perform data validation upon submission; b) batch file submission that contains multiple form documents that can be uploaded using the E-Filing application; or c) a System-to-System bulk file upload for financial institutions (Connect:Direct). Continually updated training, documentation, and user manuals also are available to assist new filers.
BSA E-Filing System Enhancements Recently Completed and Planned for Future Release
Over the past year, FinCEN has added various valuable features within E-Filing for filing institutions. Future features will enhance E-Filing?s value further.
Improved Data Quality Checks. In December of 2008, FinCEN updated E-Filing to provide additional validation checks on CTR and CTR-C batch file submissions. These validations provide additional technical feedback and warnings to filers when submitted files contain significant formatting errors.
Increased Usability through the Adoption of Adobe-based Forms. In June 2009, FinCEN transitioned E-Filing to the use of Adobe based forms. The implementation of Adobe forms capabilities provided additional error checking and validation for institutions filing discrete forms and aligned E-Filing with current industry standards for form processing.
Introduction of SAR Filing Acknowledgements. In September 2009, FinCEN completed the first phase of the SAR Acknowledgments and Validations Project. Phase I involved enhancing the system to provide BSA E-Filers with the following features:
- SAR Acknowledgement files. Acknowledgement files containing a Document Control Number (DCN) are returned to the financial institution for each submitted document. This record can be used as a receipt of a BSA report submission to FinCEN.
- Self-enrollment function. This new capability enables batch filers to register their organization to receive acknowledgements by form type when they are ready to receive and process the acknowledgement files. Discrete filers do not need to register; they automatically receive acknowledgements.
- Updated electronic filing requirements. These updates to filing requirements and specifications, including SAR Acknowledgement Record Layouts and new error codes, make E-Filing more flexible for filers.
Phase II of the project, which FinCEN has scheduled for release in December 2009, will implement additional validation checks on SAR-DI, SAR-C, SAR-SF, and SARMSB submissions. Any information formatted in error will be returned to the filer in an acknowledgement file. Financial institutions can use these quality checks to prevent errors in future BSA data submissions.
Consider Electronic Filing
The many benefits and enhanced features of FinCEN?s E-Filing system, which is provided free to filing institutions, provide compelling reasons for institutions to adopt electronic BSA filing. If your institution still submits BSA filings using paper forms, now may be the right time to adopt E-Filing.
To make that assessment, your institution should determine whether existing IT systems and Internet connections can support E-Filing. Your institution also should consider how using FinCEN?s free E-Filing system may permit greater streamlining of your current BSA report submission processes and enhanced audit and recordkeeping capabilities.
How Do I Enroll?
Once a financial institution has determined that E-Filing is the right choice, enrollment is simple and free. Institutions need only apply for a system account by going to the BSA E-Filing home page located at http://bsaefiling.fincen.treas.gov/, calling the BSA E-Filing Help Desk at 888-827-2778 (option 6), or submitting an enrollment request via email at BSAEFilingHelp@notes.tcs.treas.gov.
For more information about E-Filing and what its adoption can enable your institution to do, visit FinCEN?s ?Take a Tour? feature on the BSA E-Filing home page. If you have further questions about the system, please call or e-mail the BSA E-Filing System Help Desk. The Help Desk is available Monday through Friday 8 a.m. - 6 p.m. ET.
8 Financial institutions can submit seven (7) of the eleven (11) BSA filings electronically. Those seven are: CTR (Currency Transaction Report); CTR-C (Currency Transaction Report by Casinos); DEP (Designation of Exempt Person); SAR-DI (Suspicious Activity Report by Depository Institutions); SAR-C (Suspicious Activity Report by Casinos and Card Clubs); SAR-MSB (Suspicious Activity Report by Money Services Businesses); SAR-SF (Suspicious Activity Report by the Securities and Futures Industries) Financial institutions and persons subject to filing obligations can submit the following BSA filings only using paper forms: FBAR (Report of Foreign Bank or Financial Accounts); 8300 (Report of Cash Payments Over $10,000 Received in a Trade or Business); CMIR (Report of International Transportation of Currency or Monetary Instruments); and RMSB (Registration of Money Services Businesses.
9 All communication between users and the BSA E-filing system is strongly encrypted using Secure Sockets Layer (SSL). Data is transferred from BSA E-filing to the FinCEN system via a direct secure File Transfer Protocol (FTP) connection initiated by FinCEN.
10 The information from paper filings must be manually inputted into the electronic database, whereas e-filed data can be uploaded without manual intervention.
Excerpted from SAR Activity Review Issue 16, page 23
First published on 01/01/2001