Overview of the Bank Secrecy Act
The United States Bank Secrecy Act (BSA) was implemented in 1970 and has since been one of the most important sources of regulation for American (and, in effect, global) finance, with wide-ranging effects across the sector. The BSA was conceived primarily as a tool to obligate financial institutions to aid the government in efforts against money laundering and other financial crimes. Since its implementation, the BSA has been amended several times, and its role in money laundering and terrorist financing prevention is now shared with the USA PATRIOT Act.
Among other provisions, the BSA requires financial institutions to: maintain detailed records of all cash transactions; file reports (Currency Transaction Reports [CTRs] or Report of International Transportation of Currency or Monetary Instruments [CMIRs], as applicable) regarding all cash transactions, currency exchanges, and transport of certain monetary instruments totalling more than $10,000 (this figure may be reached with a single transaction or transfer or a series that appears to be linked); and notify the government of all transactions that appear suspicious (regardless of the amount). In addition, financial institutions must create Monetary Instrument Logs (MLIs) for cash purchases of monetary instruments, such as money orders, cashier’s checks and traveler’s checks, in value totaling $3,000 to $10,000. These various requirements were intended to increase the difficulty of engaging successfully in money laundering, tax evasion, and terrorist financing.
Individuals and financial institutions that fail to meet BSA requirements can face severe penalties, including fines and prison sentences.