Mission :

Criminal Investigation (CI) serves the American public by investigating potential criminal violations of the Internal Revenue Code and related financial crimes in a manner that fosters confidence in the tax system and compliance with the law.

Headquarters:

1111 Constitution Ave NW
Room 2501
Washington , DC 20224

Nancy J. Jardini, Chief, Criminal Investigation
Richard Speier, Jr., Deputy Chief, Criminal Investigation

IRS Criminal Investigation (CI) is comprised of approximately 4,400 employees worldwide, approximately 2,800 of which are special agents whose investigative jurisdiction includes tax, money laundering and Bank Secrecy Act laws. While other federal agencies also have investigative jurisdiction for money laundering and some bank secrecy act violations, IRS is the only federal agency that can investigate potential criminal violations of the Internal Revenue Code.

Compliance with the tax laws in the United States relies heavily on self-assessments of what tax is owed. This is called voluntary compliance. When individuals and corporations make deliberate decisions to not comply with the law, they face the possibility of a civil audit or criminal investigation which could result in prosecution and possible jail time. Publicity of these convictions provides a deterrent effect that enhances voluntary compliance.

As financial investigators, CI special agents fill a unique niche in the federal law enforcement community. Today’s sophisticated schemes to defraud the government demand the analytical ability of financial investigators to wade through complex paper and computerized financial records. Due to the increased use of automation for financial records, CI special agents are trained to recover computer evidence. Along with their financial investigative skills, special agents use specialized forensic technology to recover financial data that may have been encrypted, password protected, or hidden by other electronic means.

Criminal Investigation’s conviction rate is one of the highest in federal law enforcement. Not only do the courts hand down substantial prison sentences, but those convicted must also pay fines, civil taxes and penalties.

The Criminal Investigation strategic plan is comprised of three interdependent programs: Legal Source Tax Crimes; Illegal Source Financial Crimes; and Narcotics Related Financial Crimes. These three programs are mutually supportive, and encourage utilization of all statutes within CI’s jurisdiction, the grand jury process, and enforcement techniques to combat tax, money laundering and currency crime violations. Criminal Investigation must investigate and assist in the prosecution of those significant financial investigations that will generate the maximum deterrent effect, enhance voluntary compliance, and promote public confidence in the tax system.

Violations that are within the investigative jurisdiction of Criminal Investigation are cited and summarized below: 

Table of Contents

• Title 18
• Title 26
• Title 31

On July 1, 19 19, the IRS Commissioner created the Intelligence Unit to investigate widespread allegations of tax fraud. To establish the Intelligence Unit, six United States Post Office Inspectors were transferred to the Bureau of Internal Revenue to become the first special agents in charge of the organization that would one day become Criminal Investigation.  They formed the nucleus that built the Intelligence Unit into an elite group of highly trained, dedicated professionals, who are recognized as the finest financial investigators in the world.

The Intelligence Unit quickly became renowned for the financial investigative skill of its special agents.  It attained national prominence in the thirties for the conviction of public enemy number one, Al Capone, for income tax evasion, and its role in solving the Lindbergh kidnapping.  From these promising beginnings the Intelligence Unit expanded over the intervening decades, investigating tax evasion by ordinary citizens, prominent businesspersons, government officials, and notorious criminals.

In July 1978, the Intelligence Unit changed its name to Criminal Investigation (CI).  Over the years CI’s statutory jurisdiction expanded to include money laundering and currency violations in addition to its traditional role in investigating tax violations.  However, Criminal Investigation’s core mission remains unchanged.  It continues to fulfill the important role of helping to ensure the integrity and fairness of our nation’s tax system.

Since CI’s inception in 1919 to the present, the conviction rate for Federal tax prosecutions has never fallen below 90 percent.  This is a record of success that is unmatched in Federal law enforcement. 

If you suspect or know of an individual or company that is not complying with the tax laws, report this activity. Reports of suspected tax fraud can be made by phone, mail or your local IRS walk-in office.

By phone:  

You can contact the IRS toll free at 1-800-829-0433 .

International callers may call their US Embassy or call 215-516-2000 (this is not a toll-free number).

The American system of taxation is based on the premise that all income is taxable (which includes illegally earned income). To prove fraud, money laundering or Bank Secrecy Act violations, IRS Criminal Investigation must prove that a taxpayer willfully attempted to hide income from the Federal Government. Their methods of proof and investigative activities lead IRS special agents into nearly every legal as well as illegal business in America .

The Annual Business Plan ( ABP ) sets forth priorities and guidance for Criminal Investigation (CI) business operations for FY 2004. This guidance is intended to assist the area and field offices’ efforts in developing local plans and strategies consistent with the Strategy and Program Plan.

The FY 2004 ABP is comprised of four major strategies encompassing both compliance and business improvement components. The overall CI Compliance Strategy sets forth general priorities to reinforce our core mission with emphasis on tax enforcement. Investigative priorities remain in the following order.

• Legal Source Tax Crimes
• Illegal Source Tax and Financial Crimes
• Terrorist Financing Crimes
• Narcotics Related Financial Crimes (consistent with the Organized Crime Drug Enforcement Task Force (OCDETF) reimbursement)

Strategy:

Increase support of compliance efforts in Operating Divisions through increased application of resources in tax administration investigations.

Criminal Investigation will continue to focus its investigative resources on Legal Source tax investigations to increase compliance with tax laws. Criminal Investigation will work closely with the other operating divisions to investigate and prosecute significant violators.

The operational priorities for this strategy are:

Tax Compliance

Fraud Referral Program: Criminal Investigation will continue to promote fraud awareness and actively support efforts to enhance the fraud referral program. Field Offices will timely evaluate referrals and conduct quarterly four-way conferences and formulate work plans for joint investigations.

Refund Crimes: Criminal Investigation will continue to combat refund-related crimes through its Questionable Refund Program (QRP) and the Return Preparer Program ( RPP ). Criminal Investigation will focus efforts on the activities of unscrupulous preparers who promote abusive or fraudulent schemes.

Abusive Tax Schemes: Criminal Investigation will partner with Small Business/Self-Employed (SB/SE) and Large & Mid-Size Business (LMSB) to develop strategies to identify and combat promoters of abusive tax schemes.

Non-Filer: The investigation of egregious high-income, high impact non-filers remains a priority. Significant emphasis has been placed on investigations of non-filers who espouse frivolous arguments.

Employment Tax: Employment tax investigations will continue to be a high priority with special emphasis currently placed on employee leasing schemes. All field offices are also encouraged to focus on other high impact employment tax schemes such as, split payment and independent contractor schemes.

Corporate Fraud

Criminal Investigation will partner with LMSB in identifying and investigating alleged violations by corporate executives with focus on employment and income tax violations, pension fund fraud, bankruptcy fraud or off shore tax shelter activities engaged in by large corporations. Case development in this area should be actively pursued.

Electronic Crimes and Technology-Based Tax Crimes (Domestic and International)

Criminal Investigation will partner with other operating divisions in researching and identifying non-compliance in the e-commerce sector. Electronic Commerce businesses present a new challenge because web site registration procedures inhibit identifying individuals. Electronic Crimes (E-Crimes) are those in which computers are used to facilitate and commit sophisticated financial crimes including those committed via the Internet. Criminal Investigation will continue to emphasize investigations where advanced technology is an integral part of the crime.

Strategy:

Establish key stakeholder relationships to assist in identifying and investigating egregious financial crimes which adversely affect tax administration.

Criminal Investigation will continue to support investigations of financial crimes, including tax and money laundering that adversely affect tax administration. Financial crimes involving money and the concealment of money as a source of income results in tax evasion.

The operational priorities for this strategy are:

Corporate Fraud

Criminal Investigation will develop partnerships and coordinate with the U.S. Attorney Offices and other federal and state agencies to identify and investigate high impact corporate fraud. Criminal Investigation will prioritize investigations involving tax fraud, accounting and financial fraud and other corporate criminal activity in an effort to foster corporate responsibility and protect America 's shareholders, workers, and the U.S. economy.

Compliance and White Collar Crimes

Criminal Investigation will continue to focus appropriate resources to investigate white collar crimes including tax fraud, money laundering, public corruption, bankruptcy fraud, technology crimes, and international commerce. Criminal Investigation will continue to partner with U.S. Attorney Offices to investigate significant, high impact egregious financial investigations, and support the efforts of the Financial Investigative Task Forces and Suspicious Activity Report Review Teams.

International and Domestic Terrorism

Since September 11, 2001, CI has played a prominent role in the investigation of individuals and organizations affiliated with international and domestic terrorist activities. Criminal Investigation will continue to participate in the Federal Bureau of Investigation’s Joint Terrorism Task Forces and the United States Attorney's Anti-Terrorism Task Forces. Criminal Investigation will use its expertise to analyze complex financial information to assist in disrupting and dismantling terrorist financing. Criminal Investigation will also assist the Office of Foreign Asset Control in freezing accounts controlled by "charitable" organizations and hawalas suspected of raising or facilitating the movement of funds used to support terrorism.

Electronic Crimes and Technology-Based Tax Crimes (Domestic and International)

Criminal Investigation will coordinate efforts with the U.S. Attorney Offices and other federal and state law enforcement to combat criminal activity involving computer technology. Electronic Crimes are those in which computers are used to facilitate and commit sophisticated financial crimes including those committed via the Internet. Criminal Investigation will continue to emphasize in vestigations where advanced technology is an integral part of the crime.

Organized Crime Drug Enforcement Task Force (OCDETF) Narcotics

Criminal Investigation supports national law enforcement strategies and initiatives by investigating and recommending prosecution of domestic and international narcotics traffickers and related money-laundering organizations. Criminal Investigation will devote appropriate resources to high-level multi-agency narcotics investigations warranting OCDETF designation in accordance with OCDETF Program reimbursable funding.

Business Component Strategies and Operational Priorities

Strategy:

Increase efficiency of Criminal Investigation by improvements in business systems and training.

Criminal Investigation continues to develop and enhance established information system projects in order to increase our efficiency through improvements in business systems and training.

The operational priorities for this strategy are:

Improve efficiency and reduce elapsed time on criminal subject investigations

Criminal Investigation will identify and implement specific actions to reduce elapsed time by 7.5 percent during FY 2004.

Reduce administrative burden

Several timesaving processes were developed and will be implemented in FY 2004. A streamlined Special Agent Report (SAR) process will be implemented nationwide. Criminal Investigation Electronic Records Management Information System (CIERMS) is a record management system to house all CI workpapers and records and will facilitate efficient workflows. This system will be piloted in FY 2004.

Electronic Crimes

Electronic Crimes has established the Computer Crime Development Center (CCDC). The CCDC will provide centralized support to Computer Investigative Specialists with advanced training, evaluation of new products and techniques, processing advanced electronic evidence and will serve as a technical resource to the field.

Partner with Modernization and Information Technology Services (MITS)

Criminal Investigation will upgrade their computer operating systems to Microsoft Windows XP Professional and Microsoft Office XP Professional. This conversion will be implemented in FY 2004. The XP operating systems are the foundation for all information technology enhancements for CI.

Strategy:

Improve employee productivity through improvement in recruitment and retention.

Criminal Investigation's prior operational priority under this strategy focused on the special agent workforce. This was expanded to include all non-1811 investigative support staff, the development of CI leadership, and to improve employee satisfaction by the reduction of administrative burden.

The operational priorities for this strategy are:

Recruit the highest quality candidates for all vacancies

Open announcements for a national recruitment effort to reinforce special agent staffing. We will actively recruit quality candidates in preparation of significant hiring in FY 05.

Employee Satisfaction

Utilize the employee satisfaction survey results and employee suggestion programs to identify areas of improvement in effort to retain an experienced workforce.

Improve productivity by reduction of administrative burden

In response to previous Survey Feedback Action verbatim responses, "Project Process Improvement" was initiated to streamline policy and procedures to reduce paperwork and administrative burden. Several timesaving process improvements were developed and will be implemented in FY 2004. Criminal Investigation Electronic Records Management Information System will facilitate efficient workflows and reduction of administrative burden. This system will be piloted in FY 2004. Additionally, a streamlined SAR process has been tested and will be implemented in FY 2004.

Identify and develop CI leadership candidates

Provide development opportunities and progressively responsible assignments in support of the Leadership Candidate Identification and Leadership Development Programs.

Criminal Investigation: Electronic Crimes Program

As financial investigators, IRS -Criminal Investigation ( IRS -CI) fills a unique niche in the federal law enforcement community. Today’s sophisticated schemes to defraud the government and the American economy demand the analytical ability of financial investigators to wade through complex arrays of financial records.  Records of transactions are moving from paper ledgers to computers to off-site, online storage. As a result, IRS -CI is developing tools and techniques to follow and find those records, wherever they may be.

IRS -CI designed the Electronic Crimes Program (ECP) to organize our growing expertise in computer and network forensics. Computer Investigative Specialists (CIS) use specialized equipment and techniques to preserve digital evidence and to recover financial data, including data that may have been encrypted, password protected or hidden by other electronic means.    
 
Program Strategy Overview

The Electronic Crimes Program’s mission is to support IRS special agents in the collection and analysis of digital evidence.  As the incidence of computers found during enforcement actions has risen from 5% to 95%, the reliance on ECP personnel to secure and analyze digital data has grown as well.   In the past, agents might find a single personal computer; now they encounter multiple computers, often linked together in a network, each having the capacity to hold several truckloads of documents.

Computer Investigative Specialists participate in search warrants with investigating agents and are responsible for the seizure and processing of evidence contained in various types of digital media.  Their primary mission is to secure the data, reduce it by eliminating programs and other files of non-evidentiary value, and then return the critical information to the investigating agent.  The agent can then electronically review evidence, which is much faster than the old manual paper procedures used in the past.  This technique, together with the scanning of paper documents, puts the entire investigation in a digital format that allows the investigation team and prosecutors to locate items of interest, move files among themselves and digitally present evidence in today’s electronic courtrooms.

Data Input and Research Facilities

In the rapidly evolving world of electronic crimes, CI’s agents must be proficient with both new computers and software and dated technology that may still be used by those committing financial crimes.  The Electronic Crimes Program maintains two facilities to assist with this task.  The Data Input Center in Kentucky is a state-of-the-art scanning and transcription center capable of converting volumes of paper evidence into digital format.  A research and training facility was recently opened in Virginia to focus on developing and enhancing techniques for processing digital evidence, using new technology, warehousing existing technology, and providing training to CISs.  These facilities enable agents across the country and around the world to follow a target through the wire on the back of the box into cyberspace where the evidence of an electronic crime may be found.

ILOOK©

ILOOK© is a forensic software tool developed and owned by IRS -CI. This two-part product automates the hard drive analysis process and makes it possible for a CIS to timely review the multi-gigabyte drives found in today’s computers.  The ILOOK Imager is a Linux-based product that allows the Computer Investigative Specialist to image almost every PC-based machine encountered, including mass data storage systems and non-Microsoft operating systems. 

ILOOK Investigator, the analysis portion of the product, recovers all data (including deleted files) from the target drive image and assists the investigator search for specific details. It also allows the investigator to insert foreign language character sets to search for information.  ILOOK© is supported by the FBI and NASA and is distributed free to state and local law enforcement agencies.

IRS Criminal Investigation (CI) is comprised of approximately 2,800 Special Agents whose investigative jurisdiction includes tax, money laundering and Bank Secrecy Act laws. While other federal agencies also have investigative jurisdiction for money laundering and some bank secrecy act violations, IRS is the only federal agency that can investigate potential criminal violations of the Internal Revenue Code.

Compliance with the tax laws in the United States relies heavily on self-assessments of what tax is owed. This is called voluntary compliance. When individuals and corporations make deliberate decisions to not comply with the law, they face the possibility of a civil audit or criminal investigation which could result in prosecution and possible jail time.

Financial investigations are by their nature very document intensive. Specifically, they involve records, such as bank account information and real estate files, which point to the movement of money. Any record that pertains to, or shows the paper trail of events involving money is important. The major goal in a financial investigation is to identify and document the movement of money during the course of a crime. The link between where the money comes from, who gets it, when it is received and where it is stored or deposited, can provide proof of criminal activity.

Tax evasion, public corruption, health care fraud, and telemarketing fraud are just a few of the types of crimes that revolve around money. In these cases, a financial investigation often becomes the key to a conviction.  Traditional law enforcement relies on investigative tools such as crime scene analysis, physical evidence, fingerprint identification or eyewitness accounts. The limitations of these techniques become obvious to those who are trying to prove wrongdoing in a sophisticated financial crime. With no proof, there is no conviction.

What are the Major Areas of Financial Investigations?

For Criminal Investigation financial investigations fall into three interdependent categories:  Legal Source Tax Crimes, Illegal Source Financial Crimes, and Narcotics-Related Financial Crimes.  These three areas are mutually supportive and create a well-rounded law enforcement program which addresses the growing fraud in legal industries as well as penetrate the nucleus of money laundering operations and drug trafficking organizations.  The overall CI Business Plan sets forth general priorities to increase emphasis on legal source tax cases. 

Focusing on Legal Source Tax Crimes:

Criminal Investigation's primary resource commitment is to develop and investigate legal source tax crimes.  These investigations involved legal industries and occupations, and more specifically, legally earned income.  Fraud in legal industries has been termed "white collar" crime because it involves income tax violations by individuals who are not involved in other criminal activity.  Some of the tax violations include income tax evasion, failure to file, or filing a false tax return.  The crimes can include frivolous filers/nonfilers who challenge the constitutionality of the American tax system, employment tax cases, claims for fraudulent refunds, abusive trust schemes, and unscrupulous tax return preparers. 

Focusing on Illegal Source Financial Crimes:

Illegal source financial crimes involve money obtained through illegal sources such as health care fraud or telemarketing fraud.  This money is a part of the untaxed underground economy which threatens the strength of the American economy.  Failure to investigate these crimes erodes public confidence in the tax system.  This program encompasses all tax and tax-related violations, as well as money laundering and currency violations.  The crimes can include overbilling of Medicare, kickbacks to public officials, activities to obtain money through telemarketing scams, securities fraud, ponzi schemes, or even gaming (book-making) activities.

Focusing on Narcotics-Related Financial Crimes:

The primary objective of Criminal Investigation's involvement in narcotics related financial crimes is to reduce the profit and financial gains of the drug trafficking and money laundering organizations.  The money obtained through narcotics crimes is also a part of the untaxed underground economy which threatens the strength of the American economy.  To learn more about CI's participation in narcotics-related financial crimes, see our Narcotics webpage.  

U.S. Code Statutes For Which CI Has Jurisdiction

Criminal Investigation's top priority is the investigation of violations of the tax law which falls under Title 26 of the U.S. Code. However, CI special agents lend their financial investigative expertise to money laundering and narcotics investigations conducted in conjunction with other law enforcement agencies at the local, state and federal levels.

Violations that are within the investigative jurisdiction of Criminal Investigation are cited in the Internal Revenue Manual ( IRM ) Part IX.  Specifically, Criminal Investigation Management Information System (CIMIS), Chapter 8.

In Summary

As financial investigators, CI Special Agents fill a unique niche in the federal law enforcement community. Today's sophisticated schemes to defraud the government and the American economy demand the analytical ability of financial investigators to wade through complex paper and computerized financial records. Due to the increase in the automation of financial records, CI Special Agents are trained in recovering computer evidence. Along with their investigative skills, Special Agents use specialized equipment to recover financial data that may have been encrypted, password protected, or hidden by other electronic means.

Criminal Investigation's conviction rate is one of the highest in federal law enforcement. Not only do the courts hand down substantial prison sentences, but those convicted may also be ordered to pay fines, civil taxes and penalties.

Criminal Investigation's (CI) primary resource commitment is to develop and investigate Legal Source Tax Crimes. The prosecution of these cases is key to supporting the Service's overall compliance goals, enhancing voluntary compliance with the tax laws, and promoting fairness and equity in our tax system. Legal Source Tax investigations involve taxpayers in legal industries and legal occupations, who earned income legally, but choose to evade taxes by violation of tax laws.

The Legal Source Tax Crimes Program includes those cases that threaten the tax system, such as the Questionable Refund Program (QRP) cases, unscrupulous return preparers and frivolous filers/non-filers who challenge the legality of the filing requirement. Additional important elements of the program are excise tax and employment tax investigations. This Program emphasizes the importance of cooperation between Service compliance functions as well as with Chief Counsel's Office and Department of Justice Tax Division.

One look at the daily newspaper is proof enough that crimes dealing with or motivated by money make up the majority of current criminal activity in the nation. Tax evasion, public corruption, health care fraud, and even drug trafficking are all examples of the types of crimes that revolve around money. In these cases, a financial investigation often becomes the key to a conviction.

Traditional law enforcement relies on investigative tools such as crime scene analysis, physical evidence, fingerprint identification or eyewitness accounts. The limitations of these techniques become obvious to those who are trying to prove wrongdoing in a sophisticated financial crime. With no proof, there is no conviction.

When the Internal Revenue Service astounded Public Enemy Number 1, Alphonse Capone by obtaining a conviction for tax evasion and demanding millions of dollars in back taxes, Capone said, "They can't collect legal taxes from illegal money." But it's really pretty simple: No matter what the source of income -- all income is taxable.

And this creates a real problem for drug dealers. What are they going to do with their money -- so that IRS won't find it?

For the IRS , money laundering and narcotics investigations are the compliance effort to address criminal violations of the Bank Secrecy Act, the Money Laundering Control Act of 1986 and section 6050(I) of the Internal Revenue Code.

Why a Financial Investigation?

Financial investigations are by their nature very document intensive. Specifically, they involve records, like bank account information and real estate files, which point to the movement of money. Any record that pertains to, or shows the paper trail of events involving money is important. The major goal in a financial investigation is to identify and document the movement of money during the course of a crime. The link between where the money comes from, who gets it, when it is received and where it is stored or deposited, can provide proof of criminal activity.

Criminal Investigation's contribution to the war on narcotics is vital but sometimes difficult to recognize, because the work of IRS special agents usually doesn't make the headlines. The long hours of tracking down and documenting financial leads isn't glamorous, but it does allow an investigation to go right to the door of the leader of the narcotics organization. A complete financial analysis and reconstruction of a drug organization's financial activity as it relates to unreported income on tax returns and money laundering can often be critical to making the conviction.

History

Criminal Investigation (CI) was established in 1919 and commenced its first narcotics investigation of an opium trafficker in Hawaii in the early 1920's, obtaining tax evasion charges against the leader of that organization.

The CI Narcotics Program's goal is to utilize the financial investigative expertise of its special agents to disrupt and dismantle, through investigation, prosecution and asset forfeiture, the country's major drug and money laundering organizations.

Federal Statutes, Task Forces and Strategies Regarding IRS Narcotics Investigations

Definition of Terms

Currency Transaction Report ( CTR ) - Form 4789: Filed by financial institutions that engage in a currency transaction in excess of $10,000.

Suspicious Activity Report (SAR) - Form TD F 90-22.47: Filed by financial institutions on transactions or attempted transactions involving at least $5,000 that the financial institution knows, suspects, or has reason to suspect the money was derived from illegal activities.

Report of Foreign Bank and Financial Accounts (FBAR) - Form TD F 90-22.1: Filed by individuals to report a financial interest in or signatory authority over one or more accounts in foreign countries, if the aggregate value of these accounts exceed $10,000 at any time during the calendar year.

Report of Cash Payments Over $10,000 Received in a Trade or Business -Form 8300: Filed by persons engaged in a trade or business who, in the course of that trade or business, receive more than $10,000 in cash in one transaction or two or more related transactions within a twelve month period.

Report of International Transportation of Currency or Monetary Instruments (CMIR) - Form 4790: filed by persons who physically transport, mail or ship currency or other monetary instruments in an aggregate amount exceeding $10,000 at any one time into or out of the United States.

Federal Statutes

Internal Revenue Code – CI has sole jurisdiction for criminal violations of the Internal Revenue Code (IRC), Title 26 of the United States Code. The IRC, Section 61(a) defines gross income as ". . . all income from whatever source derived." This has been held by the courts to include income earned from illegal activities such as drug trafficking. The primary criminal statutes violated include evasion of income tax, false income tax returns, and failure to file tax returns, among others.

Additionally, IRC, Section 6050(i), requires anyone involved in a trade or business, except financial institutions, to report currency received for goods or services in excess of $10,000. This requirement has provided a significant impediment to the use of illicit profits by narcotics traffickers for the purchase of luxury items such as vehicles, jewelry and boats. Financial institutions report similar information on a Currency Transaction Report.

A new law, Title 31, Section 5331 of the United States Code, was passed in 2001 as a result of the USA Patriot Act and duplicates the reporting provisions of IRC, Section 6050(i). Dual reporting of this information will now be made to both the IRS and the Treasury Department's Financial Crimes Enforcement Network (FinCEN).

Money Laundering Control Act of 1986 – CI investigates and recommends criminal prosecution for violations of Title 18, United States Code, Sections 1956 and 1957. These statutes make illegal certain financial transactions constituting laundering, hiding, or use of proceeds generated through specified unlawful activities, such as narcotics trafficking and embezzlement, among others.

Bank Secrecy Act – The Currency and Foreign Transactions Reporting Act, Public Law No. 91-508, Title II, along with financial institution record-keeping requirements, became known as the Bank Secrecy Act (BSA). The BSA mandates the reporting of certain currency transactions conducted with a financial institution, (Form 4789), the disclosure of foreign bank accounts (TD F 90-22.1), and the reporting of the transportation of currency exceeding $10,000 across United States borders (Form 4790).

Asset Forfeiture – The asset forfeiture program is one of the federal government's most effective tools against drug trafficking, money laundering, and organized crime. In conjunction with other federal, state, and local law enforcement agencies, CI uses asset forfeiture statutes to dismantle criminal enterprises by seizing and forfeiting their assets. Most of CI's seizures and forfeitures are the result of Title 18 and Title 31 money laundering and currency investigations.

Criminal Investigation (CI) Supports National Strategies and Initiatives:

Criminal Investigation supports national law enforcement strategies and initiatives by investigating and recommending prosecution of domestic and international narcotics traffickers and related money-laundering organizations. CI follows the money trail, tracing the profits from the illegal activity back to the criminal.

National Money Laundering Strategy

In October 2001, the U.S. Departments of Treasury and Justice released the Money Laundering Strategy for 2001  . This strategy reflects a national commitment to a coordinated, effective fight against money laundering and other financial crimes. Specifically, the primary goal of the strategy is:

To focus our resources against major money laundering organizations, this Strategy mandates that law enforcement (1) establish inter-agency task forces in High Risk Money Laundering and Related Financial Crimes Areas (HIFCAs), (2) intensify use of federal criminal and civil asset forfeiture laws, (3) enhance intra-agency, inter-agency, and international coordination of money laundering investigations, (4) expand efforts to dismantle the Black Market Peso Exchange (BMPE), and (5) recommend legislation necessary to correct deficiencies in current money laundering laws, thereby strengthening law enforcement's ability to fight money laundering organizations.

Criminal Investigation supports this strategy through the investigation and prosecution of domestic and international narcotics traffickers and related money laundering organizations.

High Intensity Money Laundering and Related Financial Crime Area (HIFCA) Task Forces

Mandated in the National Money Laundering Strategy, HIFCAs occupy the flagship role in the nation's efforts to disrupt and dismantle large-scale money laundering systems and organizations. The designation of a  HIFCA  is intended to concentrate law enforcement efforts at the federal, state, and local level on combating money laundering in high-intensity money laundering zones, whether based on drug trafficking or other crimes. The 2001 Money Laundering Strategy announced the designation of two new HIFCA locations: Northern District of Illinois (Chicago) and Northern District of California (San Francisco). The four HIFCAs named in the 2000 strategy were: New York/New Jersey; San Juan/Puerto Rico; Los Angeles; and a "systems HIFCA," designed to address cross-border currency smuggling in Texas/Arizona to and from Mexico. HIFCAs are composed of all relevant federal, state, and local enforcement authorities; prosecutors; and federal financial supervisory agencies as needed. They work closely with the High Intensity Drug Trafficking Areas (HIDTA) and Organized Crime Drug Enforcement Task Forces (OCDETF) and focus on collaborative investigative techniques.

Office of National Drug Control Policy (ONDCP)

As part of the Anti-Drug Abuse Act of 1988, the President established the  Office of National Drug Control Policy to oversee the nation's effort to combat illegal drugs. As part of that oversight authority, the Director of the ONDCP established a National Drug Control Strategy. This strategy directed agencies involved in counter-narcotics activities to focus their efforts on reducing the demand for drugs through treatment and prevention and by attacking and disrupting the drug supply through aggressive law enforcement and increased international cooperation.

Organized Crime Drug Enforcement Task Force (OCDETF)

The Organized Crime Drug Enforcement Task Force (OCDETF) Program was created and is managed by the Department of Justice "to identify, investigate, and prosecute members of high-level drug trafficking enterprises, and to destroy the operations of those organizations." IRS CI is substantially reimbursed for the resources it commits to the war on narcotics trafficking and has been a participating member of OCDETF since its inception in 1982. During FY 2001, CI participated in 38% of the OCDETF investigations.

High Intensity Drug Trafficking Area (HIDTA)

The High Intensity Drug Trafficking Areas (HIDTA) Program was established by the Anti-Drug Abuse Act of 1988, to provide assistance to federal, state and local law enforcement agencies operating in areas most adversely affected by drug trafficking. The Director of the Office of National Drug Control Policy (ONDCP) has oversight authority over the  HIDTA Program . There are 28 locations designated as HIDTA.   HIDTA initiatives focus on the investigation of money laundering violators and the identification and confiscation of the profits derived from the illegal sale of narcotics. Criminal Investigation supports HIDTA by dedicating special agents and other resources to the initiatives. CI provides the financial investigative perspective necessary to meet the goals of the National Drug Control Strategy.

The Annual Business Plan ( ABP ) sets forth priorities and guidance for Criminal Investigation (CI) business operations. This guidance is intended to assist the area and field offices’ efforts in developing local plans and strategies consistent with the Strategy and Program Plan.

The ABP is comprised of four major strategies encompassing both compliance and business improvement components. The overall CI Compliance Strategy sets forth general priorities to reinforce our core mission with emphasis on tax enforcement. Investigative priorities remain in the following order.

• Legal Source Tax Crimes
• Illegal Source Tax and Financial Crimes
• Terrorist Financing Crimes
• Narcotics Related Financial Crimes (consistent with the Organized Crime Drug Enforcement Task Force (OCDETF) reimbursement)

Compliance Component Strategies and Operational Priorities

Strategy:

Increase support of compliance efforts in Operating Divisions through increased application of resources in tax administration investigations.

Criminal Investigation will continue to focus its investigative resources on Legal Source tax investigations to increase compliance with tax laws. Criminal Investigation will work closely with the other operating divisions to investigate and prosecute significant violators.

The operational priorities for this strategy are:

Tax Compliance

Fraud Referral Program: Criminal Investigation will continue to promote fraud awareness and actively support efforts to enhance the fraud referral program. Field Offices will timely evaluate referrals and conduct quarterly four-way conferences and formulate work plans for joint investigations.

Refund Crimes: Criminal Investigation will continue to combat refund-related crimes through its Questionable Refund Program (QRP) and the Return Preparer Program ( RPP ). Criminal Investigation will focus efforts on the activities of unscrupulous preparers who promote abusive or fraudulent schemes.

Abusive Tax Schemes: Criminal Investigation will partner with Small Business/Self-Employed (SB/SE) and Large & Mid-Size Business (LMSB) to develop strategies to identify and combat promoters of abusive tax schemes.

Non-Filer: The investigation of egregious high-income, high impact non-filers remains a priority. Significant emphasis has been placed on investigations of non-filers who espouse frivolous arguments.

Employment Tax: Employment tax investigations will continue to be a high priority with special emphasis currently placed on employee leasing schemes. All field offices are also encouraged to focus on other high impact employment tax schemes such as, split payment and independent contractor schemes.

Corporate Fraud

Criminal Investigation will partner with LMSB in identifying and investigating alleged violations by corporate executives with focus on employment and income tax violations, pension fund fraud, bankruptcy fraud or off shore tax shelter activities engaged in by large corporations. Case development in this area should be actively pursued.

Electronic Crimes and Technology-Based Tax Crimes (Domestic and International)

Criminal Investigation will partner with other operating divisions in researching and identifying non-compliance in the e-commerce sector. Electronic Commerce businesses present a new challenge because web site registration procedures inhibit identifying individuals. Electronic Crimes (E-Crimes) are those in which computers are used to facilitate and commit sophisticated financial crimes including those committed via the Internet. Criminal Investigation will continue to emphasize investigations where advanced technology is an integral part of the crime.

Strategy:

Establish key stakeholder relationships to assist in identifying and investigating egregious financial crimes which adversely affect tax administration.

Criminal Investigation will continue to support investigations of financial crimes, including tax and money laundering that adversely affect tax administration. Financial crimes involving money and the concealment of money as a source of income results in tax evasion.

The operational priorities for this strategy are:

Corporate Fraud

Criminal Investigation will develop partnerships and coordinate with the U.S. Attorney Offices and other federal and state agencies to identify and investigate high impact corporate fraud. Criminal Investigation will prioritize investigations involving tax fraud, accounting and financial fraud and other corporate criminal activity in an effort to foster corporate responsibility and protect America's shareholders, workers, and the U.S. economy.

Compliance and White Collar Crimes

Criminal Investigation will continue to focus appropriate resources to investigate white collar crimes including tax fraud, money laundering, public corruption, bankruptcy fraud, technology crimes, and international commerce. Criminal Investigation will continue to partner with U.S. Attorney Offices to investigate significant, high impact egregious financial investigations, and support the efforts of the Financial Investigative Task Forces and Suspicious Activity Report Review Teams.

International and Domestic Terrorism

Since September 11, 2001, CI has played a prominent role in the investigation of individuals and organizations affiliated with international and domestic terrorist activities. Criminal Investigation will continue to participate in the Federal Bureau of Investigation’s Joint Terrorism Task Forces and the United States Attorney's Anti-Terrorism Task Forces. Criminal Investigation will use its expertise to analyze complex financial information to assist in disrupting and dismantling terrorist financing. Criminal Investigation will also assist the Office of Foreign Asset Control in freezing accounts controlled by "charitable" organizations and hawalas suspected of raising or facilitating the movement of funds used to support terrorism.

Electronic Crimes and Technology-Based Tax Crimes (Domestic and International)

Criminal Investigation will coordinate efforts with the U.S. Attorney Offices and other federal and state law enforcement to combat criminal activity involving computer technology. Electronic Crimes are those in which computers are used to facilitate and commit sophisticated financial crimes including those committed via the Internet. Criminal Investigation will continue to emphasize in vestigations where advanced technology is an integral part of the crime.

Organized Crime Drug Enforcement Task Force (OCDETF) Narcotics

Criminal Investigation supports national law enforcement strategies and initiatives by investigating and recommending prosecution of domestic and international narcotics traffickers and related money-laundering organizations. Criminal Investigation will devote appropriate resources to high-level multi-agency narcotics investigations warranting OCDETF designation in accordance with OCDETF Program reimbursable funding.

Business Component Strategies and Operational Priorities

Strategy:

Increase efficiency of Criminal Investigation by improvements in business systems and training.

Criminal Investigation continues to develop and enhance established information system projects in order to increase our efficiency through improvements in business systems and training.

The operational priorities for this strategy are:

Improve efficiency and reduce elapsed time on criminal subject investigations

Criminal Investigation will identify and implement specific actions to reduce elapsed time by 7.5 percent during FY 2004.

Reduce administrative burden

Several timesaving processes were developed and will be implemented in FY 2004. A streamlined Special Agent Report (SAR) process will be implemented nationwide. Criminal Investigation Electronic Records Management Information System (CIERMS) is a record management system to house all CI workpapers and records and will facilitate efficient workflows. This system will be piloted in FY 2004.

Electronic Crimes

Electronic Crimes has established the Computer Crime Development Center (CCDC). The CCDC will provide centralized support to Computer Investigative Specialists with advanced training, evaluation of new products and techniques, processing advanced electronic evidence and will serve as a technical resource to the field.

Partner with Modernization and Information Technology Services (MITS)

Criminal Investigation will upgrade their computer operating systems to Microsoft Windows XP Professional and Microsoft Office XP Professional. This conversion will be implemented in FY 2004. The XP operating systems are the foundation for all information technology enhancements for CI.

Strategy:

Improve employee productivity through improvement in recruitment and retention.

Criminal Investigation's prior operational priority under this strategy focused on the special agent workforce. This was expanded to include all non-1811 investigative support staff, the development of CI leadership, and to improve employee satisfaction by the reduction of administrative burden.

The operational priorities for this strategy are:

Recruit the highest quality candidates for all vacancies

Open announcements for a national recruitment effort to reinforce special agent staffing. We will actively recruit quality candidates in preparation of significant hiring in FY 05.

Employee Satisfaction

Utilize the employee satisfaction survey results and employee suggestion programs to identify areas of improvement in effort to retain an experienced workforce.

Improve productivity by reduction of administrative burden

In response to previous Survey Feedback Action verbatim responses, "Project Process Improvement" was initiated to streamline policy and procedures to reduce paperwork and administrative burden. Several timesaving process improvements were developed and will be implemented in FY 2004. Criminal Investigation Electronic Records Management Information System will facilitate efficient workflows and reduction of administrative burden. This system will be piloted in FY 2004. Additionally, a streamlined SAR process has been tested and will be implemented in FY 2004.

Identify and develop CI leadership candidates

Provide development opportunities and progressively responsible assignments in support of the Leadership Candidate Identification and Leadership Development Programs.

Criminal Investigation’s (CI) Financial Institution Fraud Program, addresses criminal violations involving fraud against banks, savings and loan associations, credit unions, check cashers, and stockbrokers. Criminal Investigation is a major contributor in the effort to combat financial institution fraud, and the United States Attorneys’ recognize CI’s financial investigative expertise in this complex area.

The ability to bring income tax and money laundering charges augments prosecutor’s effectiveness in combating fraud committed against financial institutions, whether the violators work within or outside of the financial institution.

During FY2001 CI continued its involvement in bank fraud working groups and in financial institution task forces at the field level, and the Interagency Bank Fraud Working Group at the Headquarters level. This group is composed of regulatory and law enforcement agencies that either regulate financial institutions or investigate fraud committed against them. The group seeks to improve coordination between agencies and regulators in the investigation and prosecution of financial institution fraud.

Criminal Investigation recognizes the potential for individuals and organizations to use the Internet to facilitate income tax evasion and money laundering. Criminal Investigation has taken proactive steps to combat fraud involving the Internet and is an active participant in the Cyberbanking Working Group to study electronic money and devise safeguards to protect consumers. This group is comprised of representatives of regulatory and law enforcement agencies.

The use of Sight Drafts, also known as Bills of Exchange, to defraud financial institutions has proliferated with the upsurge in use by radical militia groups. These fictitious financial instruments resemble bank cashier’s checks and have been issued in amounts exceeding $10 billion. Criminal Investigation has taken an aggressive role in these investigations by using the charge of Title 18 USC Section 514 (Fictitious Obligations). This statute was enacted to prosecute individuals and groups who use sham instruments to defraud financial institutions as well as the IRS .

Currency Transaction Reports and Suspicious Activity Reports continue to be an effective source of information regarding financial institution fraud. Criminal Investigation follows up on Currency Transaction Reports and/or Suspicious Activity Reports with the reporting financial institution. Direct contact is made with the financial institution, enhancing the constructive and cooperative relationship CI has established with the banking industry.

Criminal Investigation's Role in Terrorist Financing Investigations

IRS Criminal Investigation special agents have a combined accounting and law enforcement background. These combined skills make IRS special agents unique Federal Agents.  They are experts at following financial transactions, analyzing key pieces of detailed financial information and putting together an otherwise confusing, jigzaw-type puzzle of financial transactions, that outline expenditures, life-style changes and acquisition of assets. Discovering where the money came from and where it went is what IRS special agents do best.

These unique skills enable them to analyze complex, often unusual, financial transactions, and are best utilized to combat terrorism involving:

• The leadership and members of extremist groups who have committed tax, money laundering, or currency violations; 
• Persons engaged in fundraising activities to support terrorism, especially if tax exempt organizations are being utilized; 
• Terrorism investigations involving complex, extensive or convoluted financial transactions.

Since September 11, 2001 , IRS special agents have responded to all requests for assistance - in whatever capacity - as needed by the Government.  For example, IRS special agents conducted grid searches at the crash sites at the World Trade Center and in Pennsylvania, sifted through rubble searching for evidence at the New York landfill and provided extra security at several locations.

Some of IRS Criminal Investigation's more traditional investigative assignments in connection with the September 11th attack include:

Special Assignments in the Middle East.  Special Agents from IRS CI are currently assigned to use those skills as part of an interagency effort to trace and recover Iraqi assets, including both official assets of the former regime and illicit assets looted and held by or on behalf of Saddam Hussein, his associates, their families, front companies, etc. The financial investigative process for the assignment is very similar to the routine duties IRS CI special agents are trained to address including complex tax schemes and narcotics money laundering where nominees and layered transactions are conducted with artificial entities to hide and conceal money.

CI Computer Investigative Specialists (CIS) assistance to terrorist investigations.  Today most financial records are stored on computers.  CI’s Computer Investigative Specialists (CIS) are experts in extracting financial records stored in computer hard drives, computer networks, and even the Internet.  CISs take part in every IRS criminal and counterterrorism investigation that involves the acquisition of digital evidence.  CI owns the rights to the primary tool used in this work, the “ILook Investigator,” which is a suite of forensic tools that significantly shortens the time needed to analyze digital evidence seized from targets’ computers.  ILook is also widely used by law enforcement and other government agencies investigating terrorism and terrorist activities.

Strategic Information Operations Center (SIOC). Headquartered at the FBI in Washington, DC, this is the centralized location for all of the information obtained by the below-mentioned task forces as well as any other state, local or federal information relating to terrorist activity. Federal agents from numerous bureaus work together, bringing their own unique investigative skills, to review, analyze and further investigate the accumulated information. IRS Criminal Investigation managers and agents are reviewing the financial leads.

Joint Terrorism Task Force (JTTF). The Federal Bureau of Investigation's JTTFs were created to strengthen efforts to combat terrorism by enhancing cooperation between federal, state and local law enforcement agencies throughout the country. Thirty-four JTTFs have been established. Prior to September 11, 2001 , each federal agency had one member on the JTTF -- membership included all federal agencies who have GS-1811 agents and state and local police. Support by IRS Criminal Investigation has increased since the September 11, 2001 attack.

Office of Foreign Assets Control (OFAC), the Department of the Treasury and the Deputy Attorney General, Department of Justice coordinate this activity. The President's Counter-terrorism initiative calls for the establishment of a Foreign Terrorism Asset Tracking (FTAT) Center in Washington, DC under the office of Foreign Assets Control (OFAC). This center employs the investigative skills and analytical capabilities of Treasury enforcement agencies to identify terrorist fundraising activities - then pursue these leads to determine if legal cause exists to civilly or criminally forfeit the assets.

Anti-Terrorism Task Forces. On September 17, 2001 , the Attorney General issued instructions to each United States Attorney to establish an Anti-Terrorism Task Force within each judicial district. The task forces will be part of a national network that will coordinate the dissemination of information and the development of investigative and prosecutive strategy through the country. The task forces will be a conduit of information about suspected terrorists between the federal and local agencies. Intelligence about terrorist networks obtained by federal agencies will be disseminated through these task forces to the local police officials who can help monitor those networks in their localities. The task forces will also serve as a coordinating body for implementing the operational plan for the prevention of terrorism. And, the task forces will serve as a standing organizational structure for a coordinated response to a terrorist incident in that district.

High Intensity Money Laundering and Related Financial Crime Area (HIFCA) Task Forces. (Mandated in the National Money Laundering Strategy) HIFCAs occupy the flagship role in the nation's efforts to disrupt and dismantle large-scale money laundering systems and organizations. The designation of a HIFCA is intended to concentrate law enforcement efforts at the federal, state, and local level on combating money laundering in high-intensity money laundering zones, whether based on drug trafficking or other crimes. The 2001 Money Laundering Strategy announced the designation of two new HIFCA locations: Northern District of Illinois (Chicago) and Northern District of California (San Francisco). The four HIFCAs named in the 2000 strategy were: New York/New Jersey; San Juan/Puerto Rico; Los Angeles; and a "Southwest Border systems HIFCA," designed to address cross-border currency smuggling in Texas/Arizona to and from Mexico. HIFCAs are composed of all relevant federal, state, and local enforcement authorities; prosecutors; and federal financial supervisory agencies as needed. They work closely with the High Intensity Drug Trafficking Areas (HIDTA) and Organized Crime Drug Enforcement Task Forces (OCDETF) and focus on collaborative investigative techniques. In 2003 The HIFCA Executive Board approved a South Florida HIFCA which is centralized in Miami.

What is Money Laundering?

The term “money laundering” refers to the activities and financial transactions that are undertaken specifically to hide the true source of the income. In most cases, the money involved is earned from an illegal enterprise and the goal is to give that money the appearance of coming from a legitimate source.

Why is IRS Involved in Money Laundering Investigations?

One look at the daily news is proof that the crimes dealing with or motivated by money make up the majority of criminal activity in the nation. Tax evasion, public corruption, health care fraud, money laundering and drug trafficking are all examples of the types of crimes that revolve around money. In these cases, a financial investigation often becomes the key to a conviction. For this reason, IRS is one of the key agencies involved in money laundering investigations.

Money laundering is a very complex crime involving intricate details, often involving numerous financial transactions and financial outlets throughout the world. Criminal Investigation has the financial investigators and expertise that is critical to “follow the money trail.”

Criminal Investigation focuses on money laundering where the underlying conduct is a violation of the income tax laws. According to the IRS , money laundering is the means by which criminals evade paying taxes on illegal income by concealing the source and the amount of profit. Money laundering is in effect tax evasion in progress.

When no other crimes could be pinned to Al Capone, the Internal Revenue Service obtained a conviction for tax evasion. As the astonished Capone left the courthouse he said, "This is preposterous. You can't tax illegal income!" But the fact is income from whatever source derived (legal or illegal) is taxable income. 

Had the money laundering statutes been on the books in the 1930's, Capone would also have been charged with money laundering. However, since October 1986, with the passage of the Money Laundering Control Act, organized crime members and many others have been charged and convicted of both tax evasion and money laundering.

When a criminal has a large amount of illegal income, they have to do something with it in order to hide it from the IRS . They attempt to launder it to make it appear as if it was from a legitimate source, allowing them to spend it or invest it in assets without having to worry about the IRS and tax consequences.

One of the ways to launder illegal proceeds is to move the money out of the United States and then bring it back in a clean form, often disguised as loan proceeds. Another method is to channel or co-mingle the money through various business activities to give the appearance that the money was derived from a legal source. 

Why a Financial Investigation?

Financial investigations are by their nature very document intensive. They involve records, such as bank account information or real estate files, which point to the movement of money. Any record that pertains to or shows the sequence of events involving money movement is important. The major goal in a financial investigation is to identify and document the movement of money during the course of a crime. The link between where the money comes from, who gets it, when it is received and where it is stored or deposited, can provide proof of criminal activity.

IRS investigations of illegal income cases involving money laundering are critical components of the nations National Money Laundering Strategy. The long hours of tracking and documenting financial leads allows an investigation to go right to the door of the money launderers and eventually to the leader of the illegal enterprise. A complete financial analysis and reconstruction of the illegal activity (i.e. a drug organization or an abusive trust scheme) will document the financial activities related to unreported income on tax returns and money laundering which is usually key to securing a conviction.

Money laundering creates an underground, untaxed economy that harms our country’s overall economic strength. It is a global threat that erodes our financial systems. 

Internal Revenue Code

IRS has sole investigative jurisdiction for criminal violations of the Internal Revenue Code (IRC), Title 26 of the United States Code. The IRC, Section 61(a) defines gross income as ". . . all income from whatever source derived." This has been held by the courts to include income earned from illegal activities such as drug trafficking, embezzlement, extortion, healthcare fraud, bankruptcy fraud and numerous other crimes. The primary criminal statutes include evasion of income tax, false income tax returns, and failure to file tax returns, among others.

Additionally, IRC, Section 6050 I, requires anyone involved in a trade or business, except financial institutions, to report currency received for goods or services in excess of $10,000 on a Form 8300. This requirement has created a significant impediment to the use of illicit profits by narcotics traffickers and others engaged in illegal activity for the purchase of luxury items such as vehicles, jewelry and boats. Financial institutions report similar information on a Currency Transaction Report.

Federal Statutes and Acts Passed by Congress

Title 31, USC Section 5331 – was passed in 2001 as a result of the USA Patriot Act and duplicates the reporting provisions of IRC, Section 6050I (Form 8300). Dual reporting of this information will now be made to both the IRS and the Treasury Department's Financial Crimes Enforcement Network (FinCEN).

Title 31 USC Section 5332 –Also as a result of the USA Patriot Act was the passage of Title 31 USC 5332, Bulk Cash Statute. Criminal Investigation has jurisdiction to investigate violations of this statute. This affects anyone who transports or attempts to transport currency or other monetary instruments of more than $10,000, from a place within the United States to a place outside of the United States, or from a place outside the United States to a place within the United States, and knowingly conceals it with the intent to evade the reporting requirements of 31 USC 5316. 

Title 18 USC Section 1960 – IRS has the jurisdiction to investigate violations under Title 18 USC 1960 which requires Money Service Businesses to be registered with the Federal Government.

Bank Secrecy Act – The Currency and Foreign Transactions Reporting Act, Public Law No. 91-508, Title II, along with financial institution record-keeping requirements, became known as the Bank Secrecy Act (BSA). The BSA mandates the reporting of certain currency transactions conducted with a financial institution, (Form 4789), the disclosure of foreign bank accounts (TD F 90-22.1), and the reporting of the transportation of currency exceeding $10,000 across United States borders (Form 4790).

Money Laundering Control Act of 1986 – Criminal Investigation investigates and recommends criminal prosecution for violations of Title 18, USC , Sections 1956 and 1957. These statutes make it illegal to conduct certain financial transactions with proceeds generated through specified unlawful activities, such as narcotics trafficking, Medicare fraud and embezzlement, among others.

Asset Forfeiture – The asset forfeiture program is one of the federal government’s most effective tools against drug trafficking, money laundering, and organized crime. In conjunction with other federal, state, and local law enforcement agencies, Criminal Investigation uses asset forfeiture statutes to dismantle criminal enterprises by seizing and forfeiting their assets. Most of Criminal Investigation's seizures and forfeitures are the result of Title 18 and Title 31 money laundering and currency investigations. 

Criminal Investigation was established in 1919 and commenced its first narcotics investigation of an opium trafficker in Hawaii in the early 1920's, bringing the only charge we could; tax evasion. At that time, millions of dollars were being laundered through financial institutions, going untaxed and being used to purchase assets. There was no paper trail at the financial institution other than bank account records, if the money was deposited. There was no requirement for banks to report the large amounts of currency transactions.

In 1970, Congress passed the Bank Secrecy Act (BSA). With the enactment of the BSA came the introduction of the Currency Transaction Report ( CTR , Form 4789), Report of International Transportation of Currency or Monetary Instruments (CMIR, Form 4790) and Report of Foreign Bank and Financial Accounts (FBAR, Form TD F 90-22.1).

The BSA created the paper trail needed by law enforcement to track untaxed dollars and the millions of dollars being laundered through U.S. banks. IRS has been able to follow this paper trail to disrupt and dismantle, through investigation, prosecution and forfeiture of assets, the country's major drug and money laundering organizations.

The Currency Transaction Report ( CTR ) came into existence with the passage of the Currency and Foreign Transactions Reporting Act, better known as the Bank Secrecy Act (BSA), in 1970. By 1975 only 3,418 CTRs had been filed in the United States.

When the first version of the CTR was introduced the only way a suspicious transaction of less than $10,000 was reported to the government was if a bank teller called an agent and provided the information. This was due, primarily, to the concern by financial institutions about the Right to Financial Privacy. On October 26, 1986, with the passage of the Money Laundering Control Act, the Right to Financial Privacy was no longer an issue. As part of the Act, Congress had stated that a financial institution could not be held liable for releasing suspicious transaction information to law enforcement. As a result, the next version of the CTR had a suspicious transaction check box at the top. This was in effect until April 1996 when the Suspicious Activity Report (SAR) was introduced.

Currency reporting has changed since its introduction in 1970. There are now several different requirements for several different types of financial institutions as well as non-financial institutions.
The various currency forms, their reporting requirements, and the number filed in calendar year 2003 are shown in this chart: