The "look-back," a requirement to hire outside consultants to sift through a bank's past transaction data, has become one of the most feared provisions in enforcement orders.

Once limited primarily to fair lending cases, regulators are increasingly using look-backs when acting against a bank for failures in its anti-money-laundering policies. They frequently require institutions to pore over months or years of old data to detect suspicious activities that may have been missed.

Though look-backs vary in scope, period covered, and methodology, bankers argue that they are a costly new burden, sucking up money and personnel but yielding few demonstrable benefits. Regulators defend them as a way to ensure a bank's systems are working properly, and both sides say their use is on the rise.

"Banks are doing more look-backs because they are being required as part of possible failure[s] or enforcement by regulators," said Richard Small, the global anti-moneylaundering leader at GE Money, the consumer and small-business financial services division of General Electric Co., and a former top anti-laundering official at Citigroup Inc. and the Federal Reserve Board, where he was a deputy associate director in the division of banking supervision. "It's more prominent as part of enforcement," he said.

It is unclear exactly how many look-backs have been required in recent years. Regulators do not always use the term, instead sometimes describing them as outside audits or internal reviews, and many look-backs are required informally in a nonpublic enforcement action. Anti-laundering consultants estimate, however, that their use has doubled in the past year, based on the number of cases they have.

"It probably has stepped up in the past three years," said Teresa Pesce, a principal at KPMG who worked at HSBC Holdings PLC when it was required to do a look-back. "There have been some obvious failures in institutions, Riggs [National Bank] is an example of them. There are big institutions they would expect to do more than they were" doing.

The cost of a look-back is similarly unclear; it depends on the size of the institution, the number of transactions it is required to sift through, and the period regulators want examined. Carmina Hughes, the executive director of Daylight Forensic and Advisory LLC and a former Fed anti-laundering official, estimated that look-backs cost a bank $500,000 to $15 million.

David Caruso, the chief executive officer and managing director of Dominion Advisory Group LLC, said look-backs typically cost at least $1 million and can run well past $10 million.

The variance in cost reflects disparities in what regulators require. Sometimes, a review will cover only a few months and require only a sampling of the data. Other times, banks must sort through everything from more than a year of data.

The purpose of the look-back does not usually vary, however. Regulators require a bank to fix an anti-laundering deficiency and then test the new monitoring system to find whether the bank missed possibly suspicious activity in the past. So far this year, several banks have been required to do such reviews.

For example, the Federal Deposit Insurance Corp. issued an order March 15 against Eurobank of Puerto Rico requiring it to hire an outside consultant to review all transactions from September 2006 to March 2007.

A week earlier, the FDIC signed a cease-and-desist order with United Roosevelt Savings Bank of New Jersey over anti-money-laundering compliance problems, requiring the bank to review its transactions from January 2006 to March 2007 for unreported possible suspicious activity.

Ann Jaedicke, the Office of Comptroller of the Currency's deputy comptroller for compliance policy, said no hard-and-fast rule governs when to require a look-back. It is applied on a case-by-case basis, she said, and "it really is hard to predict where or why we might use them."

But some consultants said such reviews are more commonly required by the Fed and the FDIC. Daylight Forensic's Ms. Hughes said the Federal Reserve Bank of New York has required several banks from Europe, Asia, and Latin America to do look-backs.

On March 7, for example, the New York Fed required Banco de la Argentina and its New York branch to install new transaction monitoring software and to review all transactions for the 12 months up to June 20, 2006.

"I don't know if [regulators] are doing reviews [a] on geographic basis. It seems like it," Ms. Hughes said.

Many bankers argue that as look-backs become more common, they are also less useful. In interviews, several bankers and consultants described look-back orders as punitive, designed to discourage other banks from anti-laundering lapses.

"If it's now 2007 and the control failure occurred in 2005, 2004 ... is there going to be any value to law enforcement, any value to the government in finding things that happened two or three years ago and reporting it now?" Mr. Small said. "That's one of the gaps that has not been identified: Is there value in the look-back? So you'll hear some ... say lookbacks are nothing more than a punitive measure."

Mr. Small said that if look-backs are valuable, it is not being communicated to the industry. "If there really is value and it's not just a punitive measure, then the supervisors need to be more forthcoming in the value," he said.

Robert Serino, a counsel at Buckley Kolar LLP, said that given the expense to the bank, look-back value must clear a high bar.

"Was it really worth it? If you make one or two cases out of 5,000 reviews?" he asked. Any look-back puts a bias on the bank or consultant to find more activity, he said, leading to filings on actions that may not really be suspicious.

Dominion Advisory's said look-backs are meant to be a warning to others in the industry to ensure that their standards are sufficient. "One of the factors regulators consider in issuing an enforcement action is the impact it will have on the industry," he said. "It's a very efficient way for the regulators to provide information to the industry about an issue they consider very serious."

But regulators argue that the reviews are good tests of a new system and that they provide useful information on suspicious activity that was missed the first time around. "I have heard the Financial Crimes Enforcement Network say they have seen good data produced by doing a look-back," said an FDIC official who spoke on condition of anonymity.

No data is available, however. Steve Hudack, a spokesman for Fincen, said it is difficult to segregate suspicious-activity reports found during look-backs and determine whether they led to criminal cases.

Regulators and money-laundering consultants also disagree on what sparked the surge in look-backs. Many consultants pointed to fines against AmSouth Bancorp. in 2004 - $50 million for failure to file SARs - and the public anti-laundering problems at Riggs - which paid more than $20 million in fines before being sold to PNC Financial Services Group Inc.

"Once something occurs in one case, you see it in future cases," said Mr. Serino, the lawyer at Buckley Kolar. "So as you've identified a remedy ... you can fall into a habit as a regulator that if it worked last time why wouldn't it work here."

Mr. Caruso said look-backs are rising because regulators are expecting banks to have had enough time to comply with Bank Secrecy Act changes enacted in the 2001 Patriot Act.

"I wonder if it seems there's more look-backs now because we are farther along in the BSA compliance," he said. "We are now four or five years into the expectation cycle. There's been plenty of notification by regulators that they are serious about this ... I think it's a situation where regulators said the industry has had the time they need. The penalty for failure will be more severe than they have been in the past."

But the OCC's Ms. Jaedicke said no specific event has triggered more look-backs.

"It really is driven much more by the individual situation in the bank that's subject to the enforcement action," she said. "I wouldn't tie it necessarily to actions with Riggs or AmSouth or any other bank. It has to do with what the deficiencies are in a particular bank that is being placed under an enforcement action and whether the examiners and the attorneys involved believe there's a need to go back and do those look-backs."

It is important once a flaw has been found to ensure that the bank has not been letting suspicious activity go undetected, she said. "It's to make sure that if a bank had a deficient [Bank Secrecy Act] program ... someone goes back and looks to see if there was information that should have been placed in the hands of law enforcement," she said.

Whatever their cause or usefulness, look-backs appear here to stay. Many consultants said that, as transaction-monitoring technology improves, more banks would be required to test past activity.

"Banks' monitoring systems and their ability to attack suspicious activity will continue to be under a great deal of scrutiny by regulators, and as long as that scrutiny continues there will be many opportunities for these look-backs to continue," Ms. Hughes said. "Until monitoring becomes more second nature to everyone, then we'll continue to see these."

Gil Schwartz, a partner in Schwartz & Ballen LLP, agreed that more look-backs are probably on the horizon. As it becomes easier to process transactions, he said, look-backs "become much more standard operating procedure."