The mission of the Office of Fraud Enforcement (OFE) is to promote compliance by strengthening the IRS’ response to fraud and by mitigating emerging threats. This includes:

Purpose: This section of the Fraud Handbook provides guidance and procedures for Bank Secrecy Act (BSA) Title 31 cases, Form 8300, (Report of Cash Payments Over $10,000 Received in a Trade or Business), and addressing Reports of Foreign Bank and Financial Accounts (FBAR) violations.

Audience: BSA compliance employees, Small Business/Self-Employed (SB/SE) compliance employees, Office of Fraud Enforcement employees and Criminal Investigation (CI) employees.

Policy Owner: Director, Office of Fraud Enforcement, SB/SE.

Program Owner: Office of Fraud Enforcement, Policy, SB/SE.

Primary Stakeholders: Criminal Investigation and SB/SE.

If indications and/or affirmative acts of intentional or willful BSA Title 31, Form 8300, or FBAR violations are discovered, the examiner will discuss the potential violations with the compliance group manager. The examiner, with the approval of the compliance group manager, will contact the fraud enforcement advisor (FEA) for guidance by submitting a request through the Specialist Referral System (SRS). For subsequent case meetings with the FEA, the examiner will not need to submit a request using the SRS, as long as the same case is being discussed. If the examiner is considering only a civil referral to FinCEN, the involvement of the FEA is at the discretion of the examiner and compliance group manager. The web address of the SRS is: https://srs.web.irs.gov/default.aspx.

BSA examiners should talk to their manager when they encounter any of the following common indicators of fraud specific to BSA examinations: (These are not all inclusive.)

It is important to remember that these are potential indicators of intent and will not automatically lead to fraud.

The FEA will assist by recommending an action plan and provide suggestions for interviews which will further develop the case to determine if there are firm indications of fraud.

If the decision to involve the FEA is made, the examiner will complete Form 13639, Fraudulent Intent Referral Memorandum (FIRM). Form 13639 documents the involvement of the FEA, the plan for developing the case with respect to the willfulness issue, and the referral recommendations of the FEA.

The examiner documents indications and/or affirmative acts of willfulness in item 4 of Form 13639. The FEA documents the referral recommendations by checking one of the boxes in item 7 of Form 13639 and lists the reason(s) for recommendations made in the Explanation section of the Form 13639.

Civil enforcement referrals on Form 5104 are reviewed by the BSA Group Manager and if approved are submitted to the Territory Manager (TM). See IRM 4.26.8.5.4 for detailed instructions on how to prepare Form 5104.

If further examination is warranted to determine if a violation was willful:

Upon completing the plan of action for further examination to determine whether a violation was willful, the examiner, BSA group manager and FEA will discuss the results and reach a decision regarding a criminal referral.

If further development is not warranted to determine whether a violation was willful, the FEA will indicate so in item 7a of Form 13639.

The FEA will assist the examiner in considering if a Prime Lead Memo to CI or a Form 5346 to Exam is warranted, and if appropriate, will assist with the preparation of such.

BSA Title 31 Case Procedures:

FBAR Procedures:

Form 8300 Procedures:

See IRM 25.1.12.9, BSA Leads to CI, for procedures to follow when evidence of the violations does not meet the criminal/local criteria requirements for a referral by the examiner to CI.

If firm indications of willful BSA, FBAR, or Form 8300 violations exist and criminal criteria (criteria used by CI for case acceptance) are met:

See IRM 4.26.17.5.3, FBAR Title 31 Criminal Referrals, for additional procedures pertaining to FBAR cases.

The following procedures apply only to Title 31 cases. See IRM 4.26.8.6.4, Preparing and Processing Form 2797, for additional guidance when preparing Form 2797 for a BSA violation. Most Form 8300 examinations are conducted under Title 26. See IRM 4.26.11, BSA Examiner Responsibilities for Form 8300/6050I Examinations, for additional guidance. The preparation and processing of Form 2797 for Title 26 examinations is prescribed in IRM 25.1.3.3, Preparation of Form 2797.

The examiner is required to use the current version of Form 2797 located on the IRS Catalog. The web address of the IRS Catalog is http://publish.no.irs.gov/catlg.html

When preparing Form 2797 for a BSA violation, the examiner will follow the general instructions associated with the form (Page 4) and the following specific instructions:

See IRM 25.1.3.3, Preparation of Form 2797 - Referral Report of Potential Criminal Fraud Cases, for detailed instructions concerning the processing of Form 2797.

The procedures prescribed below do not apply to Form 8300 examinations conducted under Title 26.

A memorandum of understanding (MOU) between IRS and FinCEN provides:

If return information is included in the referral, access to and use of IRC 6103 protected information, such as IDRS data, for non-tax purposes is prohibited. Its use may constitute a violation of IRC 7213 and/or IRC 7213A (unauthorized disclosure and/or unauthorized access). See IRM 4.26.14, Disclosure, for further information on disclosure restrictions and BSA, except when a related statute determination has been made. Information obtained from Title 26 examinations cannot be included in Title 31 criminal referrals (Form 2797), if a related statute determination has not been made. A disclosure violation may also occur even when a related statute determination has been made, if the person to whom the disclosure is made does not have a "need to know" the tax information included in the referral. Thus, Title 31 criminal referrals will not include Title 26 return information except when a related statute determination is made. A copy of the related statute determination memorandum must be attached to the Form 2797.

Prior to the disposition conference, it may be helpful for the BSA group manager to contact the SB/SE BSA Liaison (hereafter referred to as BSA Liaison) and/or the CI FinCEN liaison for assistance in determining whether parallel civil and criminal action may be appropriate.

During the disposition conference, if the case is accepted for criminal investigation, CI, the FEA and BSA participants should discuss the possibility of parallel civil and criminal actions. See Policy Statement 4-26 (formerly P-4-84), Criminal and Civil Aspects in Enforcement, under IRM 1.2.1.5.11. A civil penalty may be imposed, notwithstanding the fact that a criminal penalty is imposed with respect to the same violation. Parallel referrals may be desirable when protecting the statute of limitations or for other reasons.

If a case warrants parallel civil and criminal actions, it should be noted on the Form 5104 referral. Once a related statute determination has been made, the entire case becomes a Title 26 case, thereby allowing return information to be used.

Before the civil referral is considered by FinCEN, the CI FinCEN liaison will review the referral for compatibility with CI's needs. FinCEN will not receive the referral for civil enforcement action until this review is completed.

When the BSA examiner identifies indicators of fraud during an examination a discussion must be held with their manager. If the BSA manager concurs, the FEA will be contacted by submitting a request through the Specialist Referral System (SRS). The FEA, the BSA examiner and the BSA manager will meet to discuss the case. The FEA determines if the evidence supports local criminal criteria requirements. If criminal criteria is not met but BSA and the FEA believe the information should be shared with CI, the following actions will be taken:

A BSA Prime Lead Memorandum should be considered, but not limited to, the following scenarios:

Form 15221, Bank Secrecy Act Prime Lead Memorandum, provides a brief synopsis of activity occurring, as well as areas of noncompliance, is completed by the BSA examiner with the assistance of the FEA. All the necessary information should be attached along with a copy of all supporting documentation, including electronic copies of all supporting evidence; cash checks (front and back), money orders, wire transmission receipts, a spreadsheet of wires and/or other similar records. If the documents are not available electronically or readily convertible to electronic, they should be made available once a Special Agent requests access to them from the BSA examiner.

BSA notifies CI the case will be maintained in the group for 30 days. CI has 30 days to review the PLM and supporting documents and establish a meeting with the FEA and BSA examiner to discuss the PLM and decide whether the information is viable and can be used. (CI does not have to accept or decline the PLM but can hold it for future usage as the information in the PLM is so current and it may not be usable until the following tax year.) After 30 days, the case will be closed to Enterprise Computing Center (ECC).

The CI Supervisory Special Agent can request an extension to the 30 days in writing to the BSA territory manager. Together, they will decide if an extension is warranted and if so, will determine an acceptable extension date. The FEA manager will be copied when an extension is submitted to the BSA territory manager.

If CI initiatives a criminal investigation from any information in the PLM, CI will assign a source code in the Criminal Investigation Management Information System (CIMIS) of "SBSE BSA Prime Lead" . Any spin-off investigations are to be coded similarly.

Quarterly, CI will provide the OFE FDS with a report regarding the number of Prime Leads. The OFE will provide a quarterly report to BSA Case Selection of received PLMs and investigations initiated from them.

Evidence of customers engaging in substantial check cashing, money order purchase/redemption, wire transmission, structuring, etc. should be captured on Form 5346, Examination Information Report.

A BSA lead to Exam should be considered, but not limited to, the following scenarios:

It is crucial that copies of supporting evidence (cashed checks - front and back, money orders, wire transmission receipts, customer cards, sales orders, identifications, etc.) are included.

The examiner will prepare the Form 5346, retain a copy of each form for the case file, and forward via secured email the completed Form 5346 with attachments (scanned supporting documents) to the BSA group manager for approval.

Upon approval, the BSA group manager will email the forms for consideration of a income or employment tax exam to the BSA coordinator at: *sbse bsa info report/referrals@irs.gov.