IRS Audits - Part 4 Examining Process

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IRS Audits

Chapter 26. Anti-Money Laundering

Section 4. Currency and Banking Retrieval System

4.26.4  Currency and Banking Retrieval System

4.26.4.1  (01-01-2003)
Overview

  1. The Currency and Banking Retrieval System (CBRS) is a system of databases operated by the Detroit Computing Center (DCC). Information Returns required under 26 USC, such as Form(s) 8300, and Currency Transaction Reports required under 31 USC Chapter 53, are filed at DCC, with the exception of Form 4790 which is filed with Customs. DCC enters the reports, including Form 4790 information received from Customs, onto various databases. Access to the databases is made available to government agencies engaged in criminal, tax and other regulatory matters by a system of passwords.

4.26.4.2  (01-01-2003)
CBRS User's Guide

  1. To obtain a current Currency and Banking System (CBRS) Users Guide, call the Detroit Computing Center (DCC) help desk. The help desk telephone number changes. A current help desk number is available on the IRS DCC web site at http://www.dcc.irs.gov . The guide describes the features of CBRS and provides detailed instructions on how to use the system. An electronic version of the Users Guide is available.

  2. A compliance liaison at DCC is available to assist with special projects and CBRS questions.

4.26.4.3  (01-01-2003)
AML Reports Found on CBRS

  1. Reports relating to the Anti-Money Laundering (AML) program on the Currency and Banking Retrieval System (CBRS) include:

    • Form 4789, Currency Transaction Report (CTR)

    • Form 8362, Currency Transaction Report by Casinos (CTRC)

    • Form 8852, Currency Transaction Report by Nevada Casinos (CTRC-N)

    • Form 4790, Report of International Transportation of Currency & Monetary Instruments (CMIR)

    • Form 8300 (IRS and FinCEN), Report of Cash Payments Over $10,000 Received in a Trade or Business

    • Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR)

    • Form TD F 90-22.47, Suspicious Activity Report (SAR) for banks

    • Form TD F 90-22.47, Interim Suspicious Activity Report for MSBs

    • Form TD F 90-22.49, Suspicious Activity Report for Casinos (SARC)

    • Form TD F 90-22.55, Money Service Business Registration Form

     

4.26.4.4  (01-01-2003)
Access and Security

  1. Revenue agents and compliance officers are required to access the Currency and Banking Retrieval System (CBRS) as a part of anti-money laundering compliance examinations and reviews. Examiners may need to retrieve information from CBRS in the course of other income tax or compliance examinations.

  2. Unique passwords are required for CBRS access.

  3. Additional profiles are required for access to the Nonbank Financial Institution (NBFI) database and the Currency Underreporter Case System (CASE).

4.26.4.4.1  (01-01-2003)
User Identification and Passwords

  1. An examiner requests a CBRS user profile by submitting Form 5081, Automated Information System User Registration/Change Request, Catalog # 23590R. The examiner’s manager must sign this form. It is forwarded through the local Security Office to DCC.

  2. DCC will issue the examiner a User ID and password. After the receipt of the User ID, the user can access CBRS and will be prompted to choose a new password. It must be changed online every thirty days.

4.26.4.4.2  (01-01-2003)
Anti-Money Laundering Coordinator Access

  1. The permanent user profile (User ID) determines the degree of access to the Currency and Banking Retrieval System (CBRS). In order to add, edit, delete, or even retrieve certain types of information from the Nonbank Financial Institution (NBFI) database, a special profile must be requested. Each Area is expected to have only two or three individuals with this type of access. These individuals usually include the anti-money laundering (AML) coordinator(s) or an individual who normally does data entry.

  2. The AML coordinator follows the same procedure outlined for any user. However on Form 5081, the AML coordinator should request AML coordinator access.

4.26.4.5  (01-01-2003)
Researching CBRS

  1. Instruction on how to use the Currency and Banking Retrieval System (CBRS) can be found in the CBRS Users Guide. A new screen " SB/SE Area Code" has been added to the CBRS Main Menu selections. The current Users Guide does not provide special instructions for Area Code screen use. Usage is similar to the ZIP screen. For example, on the Area Code screen all Money Services Business registrations in an SBSE Area can be viewed by entering the Area Code number and checking RMSB.

4.26.4.5.1  (01-01-2003)
Examiner Uses of CBRS

  1. CBRS is useful to compliance personnel generally for locating currency transactions. For example, it can be used in an indirect method income examination. (Refer to Section 15 for general program considerations.)

  2. Examiners conducting Form 8300 compliance reviews under 26 USC 6050I may use Currency Transaction Reports (CTRs) filed on the reviewed entity to assist in determining when Forms 8300 should have been filed by the reviewed entity.

  3. Examiners conducting Title 31 examinations may also use CTRs filed on the examined entity to assist in determining when currency reports should have been filed by the examined entity. They also use it to:

    • Determine the filing history of the examined entity. These can be compared to the Currency Transaction Reports (CTRs), Currency Transaction Reports by Casinos (CTRCs), etc. retained by the taxpayer to identify discrepancies and/or failures to file.

    • Query for transactions conducted by owners, managers and employees of the financial institution. This could detect unreported transactions of the financial institution that were instead reported under the individual’s name.

    • Query by the names of transactors. This query provides an additional search method when there is a retained CTR but the examiner has not been able to find a record of its filing on CBRS using filer criteria.

     

  4. Examiners may also use money services business (MSB) registration information in both income tax and anti-money laundering (AML) compliance examinations. Supporting documentation such as the MSB’s annual estimate of business volume and agent list may also be useful. While agent list requests are coordinated through FinCEN, the annual estimate of business volume is simply maintained in the MSB’s files and may be requested directly.

4.26.4.5.2  (01-01-2003)
Anti-Money Laundering Coordinator Uses of CBRS

  1. Anti-money laundering (AML) coordinators use the Currency and Banking Retrieval System (CBRS) to identify nonbank financial institutions (NBFIs).

    • Identification Number (IDN), address, or name (NAM) searches on CBRS may disclose cash transactions that are not consistent with the type of business listed.

    • The Occupation (OCC) database is described subsequently in this section.

    • Identified financial institutions are compared with the Nonbank Financial Institution (NBFI) database inventory for the Area and entities not already in inventory are added.

     

  2. AML coordinators use CBRS and the OCC database to update any Area inventory of businesses likely to be required to file Form 8300.

  3. Anti-money laundering (AML) coordinators use CBRS to select which entities in their Area inventories should be examined.

  4. Money Services Business registrations provide detailed data such as number of agents which can assist the coordinator in making risk based selections for compliance examinations.

4.26.4.6  (01-01-2003)
NBFI Database

  1. The Currency and Banking Retrieval System (CBRS) contains the Nonbank Financial Institution (NBFI) database, in which the Area maintains its inventory of all entities subject to Bank Secrecy Act compliance examinations by IRS.

4.26.4.6.1  (01-01-2003)
Examiner Use of NBFI Database

  1. All anti-money laundering (AML) examiners with access to the Currency and Banking Retrieval System (CBRS) can retrieve information from the Nonbank Financial Institution (NBFI) database.

  2. All AML examiners should have CBRS access.

  3. Examiners use the NBFI database to:

    • Preplan a compliance examination, using the types of financial service shown as an initial guide,

    • Conduct a compliance examination verifying the compliance history provided by the NBFI against that shown on the record,

    • Determine, after consultation with the program coordinator or manager, whether penalties should be recommended.

     

  4. Steps to access the NBFI database are presented in the following table:

    STEP ACTION TO QUERY RESULT
    1 Access CBRS Main Menu CBRS Main Menu Appears
    2 Select NBFI Database NBFI Main Menu Appears
    3 Choose "Query." This selection requires an entry of either the Area code or zip code(s). Selection choices are on NBFI Main Menu at the bottom of the screen.
    4 Search by name, identification number, or business code. Determine business codes by typing "B" in the response area at the bottom of the NBFI main menu screen. Selection choices are on NBFI Main Menu at the bottom of the screen.
    5 Press "Enter." New screen shows all possible fields, which can be displayed.
    6 Select desired fields and press "Enter." New screen shows results of search with fields selected.
    7 Select one or more entities for which a full screen display is desired and press "Enter." Full screen for selected entity displays.
    8 Press "Enter." To view full screen for next entity selected
    9 At Next Response type "R." To return to the search summary
    10 Or type "M." To go to the NBFI menu
    11 Or type "E." To exit

     

4.26.4.6.2  (01-01-2003)
AML Coordinator Use of NBFI Database

  1. The Title 31/AML Coordinator for each Area is responsible for maintaining the Currency and Banking Retrieval System (CBRS) Nonbank Financial Institution (NBFI) database.

  2. Only those with coordinator access can update this database. See IRM 4.26.4.4.

  3. The AML coordinator uses this database to:

    • Record newly identified financial institutions

    • Record the date the institution is first notified that it is a financial institution subject to the Bank Secrecy Act

    • Select financial institutions for educational efforts

    • Record educational efforts

    • Select financial institutions for compliance examinations

    • Record the results of the compliance examinations

    • Record other information under Comments

    • Verify the information contained in the Quarterly Report

     

4.26.4.6.2.1  (01-01-2003)
Adding Entities To The NBFI Database

  1. The Title 31/AML coordinator is responsible for adding each newly identified nonbank financial institution in the Area to the Nonbank Financial Institution (NBFI) database in order to maintain a current inventory of financial institutions.

  2. The steps to add an entity are shown in the following table:

    STEP ACTIONS TO ADD RESULT
    1 Access CBRS Main Menu CBRS Main Menu Appears
    2 Select NBFI Database from list of Main Menu options NBFI Main Menu appears
    3 Type "A" in the first response area. A screen with field labels but no data appears
    4 Type in the data for each field. Move to the next field by tabbing otherwise there may be blank spaces, which will cause data to sort incorrectly. Data appears in the fields
    5 Type the code for the primary business activity first, then the next most profitable activity, and so on. Determine business codes by typing "B" in the response area at the bottom of the screen on the NBFI main menu. The codes will become named activities after the entity has been added.
    6 Comment space is available for any Area use. Some Areas use this to record the exact date of the L-1052.
    7 Press "Enter." The next Add screen appears.
    8 Type "M." To return to the NBFI menu.
    9 To ensure that the entity was added, query the database for the entity.  

  3. An AML coordinator may also update the NBFI database by sending a file on a diskette. The Detroit Computing Center should be contacted to determine the format to be used.

4.26.4.6.2.2  (01-01-2003)
Updating Entries on the NBFI Database

  1. The Title 31/AML coordinator is responsible for updating each identified nonbank financial institution in the Area to reflect the date that the entity was first informed that it was a Nonbank Financial Institution (NBFI). The results of educational efforts or compliance examinations must also be entered in order to ensure a complete compliance history.

  2. The steps to update an entity on the NBFI database are shown in the following table:

    STEP ACTIONS TO UPDATE RESULT
    1 Access CBRS Main Menu. CBRS Main Menu appears.
    2 Select NBFI Database from list of Main Menu options. NBFI Main Menu appears
    3 Choose Query NBFI Database by typing "Q" at the first response area. This selection requires an entry of either the Area code or zip code(s). Selection choices are on NBFI Main Menu at the bottom of the screen.
    4 Search by name, identification number, or business code. Selection choices are on NBFI Main Menu at the bottom of the screen.
    5 Press "Enter." New screen shows all possible fields that can be displayed.
    6 Select desired fields and press "Enter." New screen shows results of search with fields selected.
    7 Select one or more entities for which a full screen display is desired and press "Enter." Full screen for selected entity displays.
    8 Begin edit process by typing over data to be edited. Changes appear as typed.
    9 Type in appropriate penalty code.

    • "A" =No penalty

    • "B" =Letter 1112 issued

    • "C" =Civil penalty recommendation

    • "D" =Criminal penalty-Case accepted by CID.

    		 The codes appear as typed.
    10 Press "Enter" to complete update of the entity. Text at bottom of screen states that the entity has been updated and codes become text.
    11 At Next Response type "R." To return to the search summary.
    12 Or type "M." To go to the NBFI menu.
    13 Or type "E." To exit.

4.26.4.6.2.3  (01-01-2003)
Deleting Entities From The NBFI Database

  1. The Title 31/AML coordinator is responsible for deleting identified nonbank financial institutions (NBFI) in order to maintain a current inventory.

  2. Only current entities should be on the NBFI database.

  3. The steps to delete an entity on the NBFI database are detailed in the following table:

    STEP ACTIONS TO DELETE RESULT
    1 Access CBRS Main Menu. CBRS Main Menu appears.
    2 Select NBFI Database from list of Main Menu options. NBFI Main Menu appears.
    3 Choose Query NBFI Database by typing "Q" at the first response area. This selection requires an entry of either the Area code or zip code(s). Selection choices are on NBFI Main Menu at the bottom of the screen.
    4 Then search by name, identification number, or business code. Selection choices are on NBFI Main Menu at the bottom of the screen.
    5 Press "Enter." New screen shows all possible fields that can be displayed.
    6 Select desired fields and press "Enter." New screen shows results of search with fields selected.
    7 Select one or more entities for which a full screen display is desired and press "Enter." Full screen for selected entity displays.
    8 To delete the entity, type "Y" after the text "Delete this Entity ?" at the bottom of the screen. The default is "N." The entity will appear as deleted on the summary screen.

4.26.4.6.2.4  (01-01-2003)
Counting Types of Entities on the NBFI Database

  1. At the end of each quarter the Area Title 31/AML coordinator is responsible for determining the total number of nonbank financial institutions (NBFIs) within the Area. The total is broken down by the primary financial service offered by each entity. This information has already been entered during the identification and updating process when the business codes are shown in the order they produce income to the business.

  2. The steps to count or tally the NBFI database are shown in the following table. The final result is a tally screen that shows the total number of NBFIs by business codes.

    STEP ACTION TO TALLY RESULT
    1 Access Main Menu on CBRS. CBRS Main Menu appears.
    2 Select NBFI Database NBFI. Main Menu appears.
    3 Choose Tally NBFI Database by typing "T" at the first response area. Type "XX" in business type to show that a tally of all types is requested. Selection choices are on NBFI Main Menu at the bottom of the screen. The Tally Screen appears.
    4 Print Screen to obtain a printout. End of quarter printouts are used in determining Quarterly Report information.

4.26.4.6.2.5  (01-01-2003)
Reconciling NBFI Count to Quarterly Report

  1. Anti-money laundering coordinators are required to report inventory on the Quarterly Report. Refer to Exhibits 3-1, 3-2, and 3-3 of Section 3. The Quarterly Report Title 31 inventory information must agree with the inventory information from the NBFI database. Use the following table to move from the NBFI database categories to the Quarterly Report categories.

    When the NBFI Database says: The Quarterly Report Category is:
    1A Licensed Currency Dealer/Exchanger Currency Exchanger
    1B Unlicensed Currency Dealer/Exchanger Check Casher
    2 From Issuers, Redeemers, or Cashiers Issuer of Monetary Instruments
    2 From Issuers, Sellers, Redeemers Seller/Redeemer of Monetary Instruments
    3A Licensed Transmitters 3B Unlicensed Transmitters 4 Telegraph Companies Money Transmitter
    5A & 5B Licensed /Unlicensed Casinos Casino/Card Club
    6 A Domestic Agent or Agency of Foreign Banks Agent of Foreign Bank
    7 Banks and Other Financial Institutions Not regularly audited for safety and soundness by Federal Agencies Unregulated Banks & Credit Unions
    8 Other Other. (Do not enter anything in this area without explanation.)

4.26.4.7  (01-01-2003)
Special Reports

  1. The Detroit Computing Center (DCC) can execute special computer reports on request. A requested report may be required when the volume of transactions and information is so large that it prohibits analysis at a remote terminal.

  2. Examples of standardized special reports are:

    • Table 37/CBRS Match Report: This report matches the documents on the CBRS to the Examination pipeline inventory on Table 37 for individual cases in Status 06, 08, 10, and 12. The report is issued by group and includes the TIN of the taxpayers that have the matched cash activity. This report is issued quarterly to ensure that agents and managers are aware of cash activity on the cases already in inventory or awaiting classification at the campuses.

    • Large Dollar Casino Reports: These reports list casino activity in amounts of $50,000 and greater. They are issued by Area in zip code order on an annual basis to provide case lead possibilities.

    • Large Dollar 8300 Reports: These reports list 8300 activity in amounts of $50,000 and greater. They are issued by Area in zip code order on an annual basis to provide case lead possibilities.

    • Filers of Incomplete/Incorrect Forms 8300: This report lists entities that have filed incomplete or incorrect Forms 8300, and the number of such forms filed by them for the calendar year. It is issued by Area in alphabetical order on an annual basis to provide leads for compliance efforts and educational opportunities.

    • The Currency Underreporter Case System Report is an annual report provided to each Area, which identifies potential underreporters indicated by analysis of the CBRS system.

     

4.26.4.8  (01-01-2003)
Securing Copies of Filed Reports

  1. In general, if specific data contained in a currency transaction document is considered essential to an examination, the examiner should screen print all full documents. If the volume of data prohibits screen prints, the examiner should request a printout of the currency transaction documents on file from the Detroit Computing Center (DCC).

  2. Photocopies of currency transaction documents should only be requested in those situations where it is essential to have evidential documentation, such as in a judicial court proceeding (civil or criminal).

  3. To obtain certified copies of filed currency transaction documents, a request containing the Document Control Number (DCN) is made in memorandum form to DCC.

4.26.4.9  (01-01-2003)
Security and Disclosure

  1. The responsibility for the security of Currency and Banking Retrieval System (CBRS) information is placed with each person having knowledge or physical custody