In Episode 10 of the FinCEN Report Podcast, our CEO Jonathan Wilson spoke with Jim Lee, Chief of the IRS Criminal Investigative Division, about his investigation and prosecution of money laundering and financial crimes.
About Jim Lee and the IRS Criminal Investigative Division
Jim Lee has been part of the IRS Criminal Investigative Division for more than 20 years, being appointed Chief in 2020.
As Chief, he manages a team of more than 3,100 employees, including 2,100 special agents in 20 Field Offices and 11 foreign countries. He leads and oversees some of the most significant investigations of financial crimes involving tax, money laundering, public corruption, cyber, ID theft, narcotics and terrorist-financing.
The Criminal Investigative Division has one of the highest conviction rates in U.S. law enforcement, with a conviction rate of over 90% for cases accepted for prosecution. During the past fiscal year, the Criminal Investigative Division initiated more than 2,550 criminal investigations, identifying over $31 billion from tax and financial crimes and seizing more than $7 billion from the perpetrators.
Mr. Lee is often quoted to say, “If you violate the law and end up in the crosshairs of an IRS-CI special agent, you are likely going to jail.”
How the IRS Criminal Investigation Division Benefits from the CTA
Our podcast discussion focused on the Corporate Transparency Act and ways that the IRS Criminal Investigative Division might use the data collected by FinCEN from Beneficial Ownership Reports to identify money launders and other financial criminals.
Mr. Lee emphasized that the IRS CI is “all about the data” and that most of the investigative leads they pursue come from other data sources from the Bank Secrecy Act (or “BSA”). “Our team follows the money,” he said. During 2022, 70% of IRS CI’s investigative time was spent on tax evasion, with the other 30% going to money laundering and drug trafficking cases.
We talked about the potential for using artificial intelligence (AI) tools to plumb the databases that IRS CI can access. Once reporting companies complete their initial Beneficial Ownership Reports during 2024, IRS CI will be able to compare a company’s tax returns and associated disclosures of cash flows against its BOI Report under the Corporate Transparency Act. Identifying discrepancies and statistically significant outliers is a potential application of AI.
Mr. Lee said that he remains open to the prospect of “public private partnerships” to explore the connections between AI and the wide range of data sources available to the IRS CI.
The Corporate Transparency Act takes effect on January 1, 2024 and it will require more than 30 million U.S. companies to file BOI Reports with FinCEN, disclosing personally identifiable information about each beneficial owner of the company.
