What is The Bank Secrecy Act (BSA)?

The Bank Secrecy Act (BSA) is the United States of America’s most crucial anti-money laundering regulation: financial institutions must ensure they meet involving compliance obligations.

Since it’s the introduction, the Bank Secrecy Act demands financial institutions to work with the US government to fight against financial crime. Also known as the ‘Currency and Foreign Transactions Reporting Act’, the BSA is concerned about preventing money laundering, although it has been amended over the years by legislation such as the Patriot Act, which expanded its sight to include terrorist financing activities.

The BSA is intended to fight against money laundering and to ensure that banks and financial institutions are not used as tools to facilitate it. Under the BSA, institutions have to work to detect and monitor potential money laundering activities and report them to authorities to enforce activities.

The Bank Secrecy Act is administered by the Financial Crimes Enforcement Network (FinCEN) which imposes a variety of obligations to financial institutions. To meet those obligations, senior management must make sure that they have full understanding of the legislation itself.

BSA Compliance: What You Need To Know

To achieve compliance with the BSA, financial institutions should follow AML regulations and prepare reports. That process involves the following important considerations:

AML Compliance Program

The BSA requires financial institutions to develop their Anti Money Laundering (AML) program. An efficient BSA-AML Compliance Program has to suit the needs of the financial institutions they serve, including their risk profiles. The main elements of an AML compliance program are as follows:

Internal Systems And Controls: An AML program should be built around a set of written standards that are designed to assist employees to detect and monitor money laundering activities and financial crimes.

Compliance Officer: A principal should be appointed to oversee the development and application of their institution’s program. Additionally, providing oversight for internal controls, the Compliance Officer’s responsibility is to arrange independent auditing and analyzing their institutions’ AML compliance program.

BSA Training: Fundamental training in BSA-AML compliance should be provided to all employees. Employees with a greater level of responsibility may need enhanced training or certification.

Independent Audits: A regular schedule of independent audits should be established in order to test the ongoing effectiveness of an AML program. Audits must be conducted by qualified third-parties.

Reporting & Record Keeping

The BSA involves numerous reporting and filing obligations with FinCen relating to specific risk profiles. Those obligations include:

Currency Transaction Reports (CTR): Currency transaction reports have to be filed for cash transactions above $10,000. This demand concerns only the physical exchange of money (cash and paper) between parties.

Form 8300: Certain businesses, which receive above than $10,000 in cash in a single transaction with multiple related transactions within 24 hours, must file Form 8300.

Suspicious Activity Reports (SAR): A report that should be made from a financial institution, such as a bank, credit union, or money services, if firms believe that a customer's behavior is suspicious.

Foreign Bank and Financial Account Report (FBAR): An annual filing demand for individuals holding accounts with foreign banks equal to or above than $10,000. While the FBAR is generally filed by the account-holder, financial professionals filing on behalf of a client has to register the file as an institution.

The majority of FinCen reports have to be filed electronically, using the BSA e-filing system: organizations has to apply to FinCen for a username and password before they can use the system.

Moreover, BSA filing requirements, financial institutions have to keep detailed records of suspicious activities. In particular, institutions have to keep a log of purchases of monetary tools (such as a bank, travelers, and cashiers’ checks) between $3,000 to $10,000. For those situations, the log has to record and verify the identities of purchasers and aggregate the value of their transactions.

Why is The Bank Secrecy Act Compliance Important?

In succeeding BSA compliance, financial institutions demonstrate their commitment to regulators in the fight against financial crimes.

The American Government is committed to fighting against money laundering and imposing penalties for BSA violations –that could range from $10,000 dollars for record-keeping violations, to over $200,000 for more serious violations. 

Beyond the financial consequences of non-compliance, organizations that violate BSA may lose their value. Their reliability is reduced by customers. With Sanction Scanner, you can comply with BSA regulations. Learn how we help your business.  

Request a demo and learn how Sanction Scanner prevents your firm from the Financial Crime.