Security Clearance Process

Unreported Income or Large Transfers Raise Flags for Clearance Holders

Approximately half of all security clearance holders are now enrolled in Continuous Evaluation (CE) and more are getting enrolled each day as reinvestigation timelines come due. Most reinvestigations are deferred after review of the SF-86 application and other checks are completed. CE enrollment for DoD contractors is input into the Defense Information Security System and the clearance holder’s information is added to the list of checks being continuously run through various systems. One of those checks involves a bureau in the Department of Treasury called the Financial Crimes Enforcement Network (FinCEN) which flags certain transactions that are out of the norm.

As an example, Joe Clearance Holder decides to withdraw $60,000 from his Thrift Savings Plan funds to pay for some home upgrades and a pool installation. In accordance with the Bank Secrecy Act, banks must report transfers, incoming or outgoing, for amounts over a specific amount and when this notification reaches FinCEN it is flagged because Joe is identified by the system as being enrolled in CE. The agency responsible for granting Joe’s clearance is notified of the transaction for review and an adjudicative determination. If Joe reported this transfer to his Facility Security Officer (FSO) prior to the flag, then the review process is quick and easy. If he did not, then more information must be obtained from Joe before the flag can be resolved.

As I always advise, getting out in front of potential issues is preferable and will help mitigate concerns before they become issues. Transparency and honesty will show you have nothing to hide and are above board.


  1. Some government employees and on-site contractors may have access to an online reporting tool that indeed makes this quick and easy.

  2. Until banks and financial institutions have consistent strictly enforced reporting regulations for transactions this is all moot. Too many banks (especially local ones) can and do justify not reporting transactions for favored customers for valid reasons. The “banks must report” is a myth. But, then again these triggers are going to give investigator’s job security when the “more information” needs to be obtained.

  3. Say if one has a regular savings account with the same bank they have a checking account with…no thrift savings plan. At what amount does one need to report their withdrawal from their savings account ?

  4. I believe the limit is $10,000. And I think that is a daily total, so dont try one withdrawal/transfer for $6,000 and another one an hour later :slight_smile:

  5. Gotcha. I’m assuming it is safe to transfer/withdraw less than 10k then ? even if one withdraws/transfers 6k…and decides to do another similar transaction an hour later (lesser amount of course), as long as the total is below the 10k threshold for the day, it’s fine.

  6. USD $10,000 is the amount for banks in the US - whether this comes from fincen or not I’m not sure. They also look for ‘staging’ of money deposits/withdrawals as well so as to look for patterns of NOT going above 10k. For example - you had 110K but you didnt want to trigger any checks, or so you thought, so you figured you’re break up your deposits into 9k increments. When you start depositing those 9k amounts periodically…you STILL trigger a fincen/banking alert.

  7. And even if you have to file a report, it is no big deal. Just make sure to report it if you are required to… check with your security office beforehand to make sure.

  8. Yeah makes sense. My FSO stated that for internal transfers like from savings to checking account or any withdraw from savings, no need to report, but if there is a large deposit, mostly around the 10k+ range or even if it is in small increments over a short time frame into either accounts, will need to report.

  9. Is there any recent DOD guidance about reporting gains from cryptocurrency?

    The only information I can find is from a Feb 2018 Document (Page 6) in which cryptocurrency does not need to be reported →

    I would also like to provide Evidence B from the IRS for this year tax reporting on cryptocurrency → IRS Rules On Reporting Bitcoin And Other Crypto Just Got Even More Confusing

  10. Couple of things of note regar - for some agencies and some positions this amount can be more or less than 10K. If in doubt check with your security office/fso to ensure you are in compliance.