Assessing the Effectiveness of Organized Crime Control Strategies ...

Another audit by the US General Accounting Office (1994) documents the limitations of the
reporting requirement for the movement of over $10,000 in currency into or out of the US. Just a
fraction of currency being smuggled across the American border is seized. The audit concluded
that the volume of smuggled currency cannot be ascertained due to the clandestine nature of the
activity. The smuggling of cash is impeding efforts to control money laundering.
The evidence from the United Kingdom does not invite greater optimism. As of 1995, 16,000
suspicious transaction reports had been filed—60-fold the number initially predicted (Levi,
1997:7). Fewer than one-half of one percent of these reports have been found to lead to new
investigations or have had a significant impact on the outcome of a case (Levi, 1997:8). Levi
(1997:7) notes that these reports, “seldom provide information that would enable the police or
customs to mount a surveillance operation on a target offender. The information does help to
build up a profile, and multiple reports on the same person or on connected persons may trigger
more detailed investigation, but mainly if the person is “already” known or under investigation
anyway.” Levi adds that because just a small proportion of reports receive more than routine
checks on criminal intelligence databases, the proportion of reports that would yield evidence of
crime, if followed up thoroughly, is unknown.
Gold and Levi (1994:87) express doubts about the potential of suspicion-based disclosure
systems to detect major crime because the evidence indicates that large-scale offenders tend to be
aware that large deposits in legitimate financial institutions will create problems for them. Gold
and Levi point out that such offenders adapt to these reporting requirements and this accounts for
an increase in the use of exchange bureaus and for the use of financial systems in European
countries with less stringent reporting rules. They add that there is little evidence that financial
institutions have been successful in spotting the misuse of front companies that intermingle
crime-related with legitimate proceeds. In general, the surveillance of business accounts by bank
staff tends to be minimal. Most transactions classified as suspicious are unsophisticated and
involve personal accounts of known individuals.
In 1988, Australia established one of the most advanced reporting systems via its Cash
Transaction Reporting Agency (now referred to as AUSTRAC). By 1993, approximately 90
percent of cash transactions over A$10,000 were electronically conveyed to AUSTRAC (Levi,
1997:8). In addition to the reporting of significant transactions, this system has a suspicious
transaction reporting component. Between 1990 and 1993, 1.6 million significant transactions
were reported. In 1994-95, AUSTRAC received 36,000 reports of international currency
transfers, close to one million reports of cash transactions, and 3.6 million reports of
international capital transfers. The estimated cost of supplying these reports in 1992 was A$3.5
million. According to Levi (1997), the Australian Tax Office made modest claims regarding the
value of the significant transaction reports, because their efforts were focused on transactions
deemed to be suspicious. Law enforcement authorities, too, have made few claims about the
impact of significant transaction reports. The Australian Senate Standing Committee on Legal
and Constitutional Affairs called for the retention of significant transaction reports partly on the
basis of the view that it was too early to comment on their forensic value (Levi, 1997:9).
Between 1990 and 1995, just over 20,000 suspicion-based reports were forwarded to
AUSTRAC. The additional revenue generated by AUSTRAC averages $13 million per year,
Research and Statistics Division / Department of Justice Canada | 25