Nicholas Anthony
The Financial Crimes Enforcement Network (FinCEN) has released its 2024 “Year in Review” report, and things are not looking good. Once again, the agency has highlighted lackluster statistics in an attempt to justify financial surveillance in the United States.
Let’s start at the top and work our way down. Under the Bank Secrecy Act, banks and other financial institutions are required by law to report customers under certain circumstances. According to FinCEN’s report, more than 27.5 million reports were filed in 2024 (Table 1). That’s roughly 75 thousand reports a day.
The vast majority of the reports (20.5 million) were filed as currency transaction reports, or CTRs, when people made a cash transaction of $10,000 or more. Suspicious activity reports, or SARs, made up the next biggest batch of reports (4.7 million). According to FinCEN’s latest data, the most common reasons for filing a suspicious activity report are that transactions were close to $10,000, there were concerns about the source of funds, and that transactions had no “apparent” economic purpose (Figure 1).
Is the Bank Secrecy Act Effective?
Working our way down, FinCEN provided a few limited data points regarding how the Internal Revenue Service (IRS), Homeland Security, and Federal Bureau of Investigation (FBI) use the reports.
When it comes to the IRS’s criminal investigations, FinCEN reported that only 13.3 percent of the investigations conducted in 2024 originated from reports required under the Bank Secrecy Act (Figure 2). That’s down from 13.9 percent of investigations FinCEN reported in 2023 and down from the 15.8 percent of investigations reported in 2022.
While it’s unfortunate that FinCEN does not provide context for these percentages, we can get a better idea of what these numbers mean in practice by looking to the IRS’s 2024 data book. Given that the IRS conducted 2,667 investigations, that means only around 370 investigations originated from a Bank Secrecy Act report.
So, despite financial institutions spending $59 billion a year complying with this regime and filing more than 27 million reports on customers to the government, the reports only initiated 370 criminal investigations (Figure 3).
Unfortunately, the data on Homeland Security’s investigations didn’t provide as much detail. Although FinCEN provided a table dedicated to how many financial investigations, arrests, and convictions were conducted by Homeland Security, it’s unclear what those data points had to do with the reports filed under the Bank Secrecy Act.
The only clue about a connection is a caption reading “Financial analysis of [Bank Secrecy Act] reporting benefited the vast majority of the following.” This caption is better than last year’s report, which provided similar data and said nothing, but it’s not much better. The public is left to guess whether these cases started with a report, were helped by a report later on, or something else entirely. It’s not even clear that all of the cases listed had any connection to the reports.
Still, let’s steelman it and assume the data points are directly tied to the reports required under the Bank Secrecy Act. Even then, the numbers are not exactly in their favor. Homeland Security had 800 financial crime convictions and 9,000 total convictions in 2024.
For the folks keeping score at home, 27.5 million reports possibly aiding 800 to 9,000 convictions is a success rate of 0.002 to 0.03 percent.
Get a Warrant
With that said, it would be a mistake to say the data are completely useless. FinCEN’s report noted that 87.3 percent of the IRS’s criminal investigations recommended for prosecution “have a primary subject with a related [Bank Secrecy Act] filing.” Likewise, for the FBI, 40 percent of “organized crime drug enforcement program” investigations and 32 percent of “complex financial crime program” investigations were “linked” to Bank Secrecy Act reports.
The problem, however, is that there is a fundamental difference between investigations that originated with a report and investigations that benefited from a report.
The Bank Secrecy Act regime is built upon the idea that banks and other financial institutions must be forced to report their customers to the government because crime would otherwise go unnoticed. However, the numbers FinCEN provided suggest that most of the financial information that is reported is helpful only after criminal activity was noticed and law enforcement took a closer look. If that is indeed the case, then there is no reason to justify mandating that these reports be filed instead of requiring law enforcement to obtain them through the warrant process.
There is no denying that allowing law enforcement to proceed without warrants would make their jobs easier. But that is not how the system is supposed to work in this country. The founders saw firsthand how dangerous an overly aggressive government could be. Therefore, the Constitution was put in place to restrict the powers of government and protect the people. More specifically, the Fourth Amendment was put in place to protect Americans from unreasonable searches.
Government officials may have gotten away with chipping away at the Fourth Amendment and building a surveillance regime on the grounds that it would catch tax cheats and combat terrorists. But what they really built is a system to surveil largely mundane activity. Again, more than 74 percent of the 27.5 million reports were filed for nothing more than a $10,000 cash transaction. It’s time for that to change.
FinCEN’s report adds to the growing evidence that the Bank Secrecy Act regime is both costly and ineffective. It’s time for Congress to step in and reform the law to restore financial privacy.