Many years ago, before becoming a security clearance defense attorney, I was an investigator for the Defense Counterintelligence and Security Agency (then-U.S. Office of Personnel Management). The job was frequently tedious, repetitive, and thankless, but it did also have its entertaining moments. One of those was watching peoples’ incredulous reactions when confronted with the details of a questionable financial transaction they made in their personal life, sometimes years prior.
If you’ve never been subjected to this line of questioning during a security clearance background investigation, you may be surprised to learn that, yes, the government does review your finances as part of the process, albeit not in the way you may think.
Absent serious counter-intelligence or criminal indicators that result in the case being referred for a different type of investigation, the government doesn’t peek into your bank accounts or review your credit card transactions in the normal course of a background investigation. Security officials won’t know if you’ve been running up charges at strip clubs or buying copious amounts of alcohol. And they won’t see if you’ve been Venmo-ing a domestic employee you’ve been paying off the books (although that’s independently reportable on the SF-86 as a failure to pay taxes when required).
What the government will see is any monetary transaction flagged by a financial institution as potentially suspect under the federal Bank Secrecy Act (BSA), along with cash purchases of negotiable instruments and reports of cash transactions exceeding $10,000 in a single day.
The latter two categories are relatively straightforward, although clearance holders should be aware that structuring cash transactions to avoid the $10,000 reporting threshold is a federal offense. The former, however, is exceedingly broad and sometimes results in soccer moms, recreational gamblers, small business owners, and folks with overseas connections all getting swept up into a vast database run by a secretive federal agency called the Financial Crimes Enforcement Network, or “FinCEN.”
Under the BSA, financial institutions are required to file a “Suspicious Activity Report” with FinCEN within 30 days after the questionable transaction. Purportedly “suspicious” transactions can include anything from sending money overseas to a country where the individual has no obvious connections; to minimal casino gaming with large transactions; to transactions that are out of pattern for the particular customer – and an exceedingly wide swath of other activity that is open to interpretation. In other words, if you do anything in life that is interesting, unusual, or just unusual for you, there is a non-negligible possibility that a record of that event has been reported to the government by your financial institution as potentially suspicious.
Fortunately, as long as you have a legal, credible, and truthful explanation for the transaction, it’s not likely to have any impact on the ultimate adjudication of your security clearance case. But there are exceptions to this, including cases where someone is demonstrating a gambling addiction, paying off a blackmailer, or supporting activities in a foreign country that may be inimical to U.S. national security interests or foreign policy. When in doubt, remember that money always leaves a trail, and it isn’t a hard one for the government to follow.
This article is intended as general information only and should not be construed as legal advice. Although the information is believed to be accurate as of the publication date, no guarantee or warranty is offered or implied. Laws and government policies are subject to change, and the information provided herein may not provide a complete or current analysis of the topic or other pertinent considerations. Consult an attorney regarding your specific situation.