Bank Secrecy Act
From Wikipedia, the free encyclopedia
The Bank Secrecy Act (or BSA, or otherwise known as the Currency and Foreign Transactions Reporting Act) requires U.S.A. financial institutions to assist U.S. government agencies to detect and prevent money laundering. Specifically, the act requires financial institutions to keep records of cash purchases of negotiable instruments, file reports of cash transactions exceeding $10,000 (daily aggregate amount), and to report suspicious activity that might signify money laundering, tax evasion, or other criminal activities.
It was passed by the Congress of the United States in 1970. The BSA is sometimes referred to as an "anti-money laundering" law ("AML") or jointly as “BSA/AML”. Several anti-money laundering acts, including provisions of the USA PATRIOT Act, have been enacted up to the present to amend the BSA. (See 31 USC 5311-5330 and 31 CFR 103.)
Contents |
[edit] Affected transactions
[edit] Currency Transaction Report (CTR)
Cash transactions in excess of $10,000 during the same business day. The amount over $10,000 can be either from one transaction or a combination of cash transactions. Filed with the Internal Revenue Service.
[edit] Monetary Instrument Log (MIL)
Cash purchases of monetary instruments, such as money orders, cashier's checks and travelers checks, totaling from $3,000 to $10,000, inclusive. Filed with the Internal Revenue Service.
[edit] Suspicious Activity Report (SAR)
Any cash transaction where the customer seems to be trying to avoid BSA reporting requirements (e.g., CTR, MIL). A SAR must also be filed if the customer's actions indicate that s/he is laundering money or otherwise violating federal criminal law. The customer must not know that a SAR is being filed. These reports are filed with the Financial Crimes Enforcement Network ("FinCEN").
[edit] Sanctions
There are stiff penalties for individuals and institutions that fail to file CTRs, MILs, or SARs. There are also penalties for those that disclose to its clients that it has filed a SAR about a client. Penalties include extremely high fines and long prison sentences.
[edit] How it affects American citizens
Many regular people will have a CTR filed under the BSA on a U.S. financial transaction at some point. For example, if one withdraws cash to purchase a car that exceeds $10,000 or purchases many traveler's checks with cash for a long vacation abroad. CTRs include the individual's bank account number, name, address, and Social Security Number. SAR reports, required when transactions indicate behavior designed to elude CTRs (or many other types of suspicious activities), include somewhat more detailed information and usually include investigation efforts on the part of the financial institution to assess the validity of transactions, or explaining why they believe you might possibly be structuring the transaction. A single CTR filed for your account is usually of no concern to the authorities, while multiple CTRs from varying institutions or a SAR indicates that activity may be suspicious, as a bank customer though they are meaningless unless you are actually doing something illegal. A financial institution is not allowed to inform a business or consumer that a SAR is being filed.
Businesses that primarily deal in cash, such as bars and restaurants can be exempted from having their deposits and withdrawals reported as CTRs, although this exemption is rarely granted. Instead, most banks have computer systems which retains the CTR information and allows duplicate CTR's to be created seamlessly.
[edit] Additional information
An entire industry has developed around providing software to analyze transactions in an attempt to identify transactions or patterns of transactions, called structuring, which requires a SAR filing, that qualify for reporting. Financial institutions face penalties for failing to properly file CTR and SAR reports, including heavy fines and regulatory restrictions, even to the point of charter revocation.
