IRS Announces CI-FIRST to Improve Data Sharing with Banks

Taking a more collaborative approach to fighting financial crime, the Internal Revenue Service (IRS) recently announced a new initiative for working with banking institutions to fight tax crime.

Enforcement under the Bank Secrecy Act (BSA) has been a high priority for the IRS. Under the BSA, banking and financial entities provide reports, known as Suspicious Activity Reports (SARs), to the IRS that can help to identify activities like money laundering, offshore tax evasion, or tax fraud. While announcing its new initiative, the IRS highlighted stats from 2022-2024 that demonstrate its use of BSA data as it conducts criminal tax investigations. Some of those statistics include:

• Using BSA data, IRS-Criminal Investigations (CI) uncovered tax fraud of $21.1 billion associated with financial crimes.
• The agency seized $8.2 billion in holdings and assets related to tax and other crime, and it collected $1.4 billion in restitution from defendants on behalf of victims.
• During the 2022-2024 time frame, more than 87% of criminal investigations referred for prosecution related to the BSA filing. Prosecution of those cases resulted in a 97.3% conviction rate, which returned average sentences of 37 months in prison.

Agency and institutions collaborate to identify money laundering

With this headwind from 2024, IRS:CI the implementation of CI-Feedback in Response 5o Strategic Threats (FIRST) aims at improving communication to financial institutions around the use of SARs.  Along with improving the subpoena process, IRS-CI will discuss how SARs are used along with how banks might boost the effectiveness of SARs. 

Lauren Kohr, strategic engagement officer for IRS: CI, said, “behind all of these metrics are real crimes with real victims. A lot of times people look at BSA data or the Bank Secrecy Act as a regulatory requirement, but it’s really one of the sharpest tools law enforcement has as whole has to trace fraud illicit money and dismantle these criminal networks.”

During the 2022-2024 timeframe, IRS-CI agents ran almost one million searches on SARs per year for the last three years. Interestingly, approximately 70% of cases opened by IRS:CI included a SAR reporting a currency transaction under $40,000. About 50% of SARs received during that time were for transaction amounts less than $22,230.00.

The IRS also notes information provided through the BSA is used by IRS:CI to identify tax fraud related to pandemic-era relief, as well as drug trafficking.

Guy Ficco, IRS:CI Chief, said, “public-private partnerships thrive when everyone mutually benefits, and to enhance our partnership with the financial industry, we plan to launch CI-FIRST which will promote information-sharing, streamline processes and demonstrate how valuable BSA data is to criminal investigations.”

Like the man said, partnerships work when everyone benefits. We will keep you posted.

Compliance concerns? Talk with our experienced tax lawyers today

CI-FIRST aims to develop common ground between the IRS and banking institutions. If you are aware of irregularities in your own business or personal finances, reach out to the attorneys at Robert J. Fedor, Esq., L.L.C. at 440-250-9709 or set up a consultation. We can help you understand if you are outside the lines and what you can do to avoid the attention of your bank—or the IRS. 

If you’re looking for deeper insights, be sure to check out our resource, Since You Asked: 15 Common and Concerning Tax Law Questions and Answers. This comprehensive guide tackles frequently asked questions about tax law and provides clear, thoughtful answers to help you better understand your situation—and when it’s time to seek legal counsel. It’s a valuable tool for anyone navigating the complexities of the IRS and tax compliance.