Money laundering (ML) is a big problem – the amount of money that is laundered each year is estimated at between 2% to 5% of global GDP, or $800 million to $2 trillion USD – that the BSA seeks to not just fight but also to ensure that the financial system is not used to unknowingly facilitate ML. In this effort, financial institutions and obliged entities must have stringent AML, KYC and CFT measures in place.
Among other measures, the Bank Secrecy Act requirements impose money laundering controls on financial institutions and many other businesses, including the requirement to report and to keep records of various financial transactions, specifically those over the sum of $10,000 in cash and of a suspicious nature, in an IRS/FinCEN Form 8300 filing.
The body responsible for overseeing the Bank Secrecy Act is FinCEN or the ‘Financial Crimes Enforcement Network’, the United States of America’s Financial Investigative Unit (FIU) that combats domestic and international; terrorism financing, money laundering and other financial crimes.
The five pillars of an effective BSA/AML process are;
The FinCEN Files, a financial investigation by the International Consortium of Investigative Journalists (which priorly released the Panama Papers on prominent persons’ tax evasion and shell companies activity) released in 2020, blew open glaring regulatory issues with the reporting requirements of the BSA.
The global financial regulatory body the FATF’s or ‘Financial Action Task Force’ Travel Rule – the requirement to report transactions of more than $1,000 – is seen as following in the footsteps of the Bank Secrecy Act.
The BSA, commonly known as the Currency and Foreign Transactions Reporting Act, requires financial institutions to submit a number of different types of reports; Currency Transaction Reports, Suspicious Activity Reports, Foreign Bank Account Report (FBAR), Currency and Monetary Instrument Report (CMIR) and Designation of Exempt Person.
There are hefty fines and penalties for those failing to report under the Bank Secrecy Act.