The Bank Secrecy Act (BSA) was enacted in 1970 to help combat financial crimes. This law requires financial institutions to assist United States government agencies in detecting and preventing money laundering, tax evasion and other financial misconduct.
Understanding the BSA is critical for anyone who’s facing white collar crimes, such as money laundering, because it’s often a factor in the case.
Key components of the Bank Secrecy Act
The BSA requires that financial institutions file Currency Transaction Reports (CTRs) for transactions exceeding $10,000. This helps authorities track large sums of money that could be linked to illegal activities. Additionally, financial institutions must file Suspicious Activity Reports (SARs) when they detect potentially suspicious or unusual transactions, regardless of the amount.
Another important aspect of the BSA is the requirement for financial institutions to implement anti-money laundering programs. These programs include measures such as customer due diligence, employee training and internal controls designed to identify and report suspicious activities effectively.
The role of financial institutions
Financial institutions play a crucial role in the enforcement of the BSA. They must maintain accurate record-keeping and reporting practices to ensure compliance with the law. This includes monitoring customer transactions, conducting thorough background checks and promptly reporting any suspicious activities to the Financial Crimes Enforcement Network (FinCEN).
The impact on individuals and businesses
The mandatory reporting requirements can sometimes lead to false accusations about individuals. For example, a person who works for cash might make several small deposits per week that add up to considerable amounts. They may be reported even though their income is legal.
A complaint based on the BSA may lead to criminal charges. A defendant should understand exactly what constitutes an illegal activity so they can determine how to handle their defense strategy.