WASHINGTON — The Treasury Department's Financial Crimes Enforcement Network mismanaged its system for tracking enforcement cases, allowing some cases to expire before the agency had the chance to impose civil money penalties, according to a government watchdog.
In a report by the Treasury's Office of Inspector General issued last week, the watchdog found that seven cases between January 2008 and May 2014 reached their statute of limitations, six years after the initial violation occurred, which kept Fincen from collecting civil money penalties. Another 13 cases were reported as closed before they could be concluded because they were too old, the report found.
The result appears to be that Fincen lost money, but it's unclear how much because of a lack of data, the inspector general said. Some cases, which were referred from law enforcement partners, were never recorded in the system. In the same time period, Fincen also closed 184 cases without documenting the reason for it.
The agency's troubles were exacerbated in 2014 when the agency began using a new case management system that had "known performance problems," the IG said. Unable to use the system to track civil money penalties, Fincen enforcement staffers instead relied on Excel spreadsheets to keep logs of the important cases.
Fincen also mismanaged case files involving civil money penalties in a number of other ways, according to the report. For instance, some of the cases in the system lacked proper documentation — including explanations for the penalty amounts imposed.
Out of 21 enforcement cases reviewed in the report, 19 were found to lack crucial documentation. When asked about those missing elements, Fincen officials said "some of the missing documentation might have been saved in caseworkers' own emails or backed-up computer files," the report said. But when the watchdog asked for those missing documents, "the officials told us that they could not produce the documents because of limited staff," according to the report.
In addition, in a few instances caseworkers were able to approve their own recommendations to close cases, a practice that the watchdog found "contrary to good internal control and Fincen policies and procedures."
Partner agencies also complained about a "lack of feedback from Fincen" on the cases they had sent the agency. The Office of Inspector General asked Fincen to provide those regulators quarterly updates on referred cases, as it does with the IRS.
The inspector general also found glaring inconsistencies in the data contained in Fincen's case management system. In certain cases, for example, the reported fine value was incorrect or missing, resulting in an overall gap of $1 billion from the actual fines assessed.
Fincen told the inspector general that these inconsistencies were a result of the recent conversion to the new case management system. "They told us that cleansing the [new system's] data was not a priority because they were understaffed," the report said.
In response, Fincen said it had already taken a number of measures to address these issues since its reorganization in 2013.
"Through the course of the six years included in the scope of this audit, many changes occurred at Fincen involving people, processes and technology," Fincen's acting director, Jamal El-Hindi, said in a statement included in the report. "We appreciate the fact that the resulting recommendations are in line with the processes and procedures which have already been put in place."
