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Money Laundering

1 min read
Nov 12, 2018

Money laundering is a continuing problem occurring all over the world. In 1970, the United States Congress enacted the Bank Secrecy Act (BSA), also known as the Currency and Foreign Transactions Reporting Act. This act requires that U.S financial institutions collaborate with the U.S. government in cases of suspected money laundering and fraud. The Act works to minimize money laundering and fraud in America and protects financial institutions from becoming unknowing intermediaries in these illegal acts.

Here’s a bit more about BSA and what it entails.

To help prevent money laundering, BSA requires financial institutions to report transactions that involve more than $10,000 in cash from one customer or several transactions that involve these amounts if they are processed within a 24-hour period. Here, cash can be considered as coins, currency (U.S. or otherwise), cashier’s checks, bank drafts, traveler’s checks or money orders. Personal checks would not be considered a cash transaction.

Another way BSA works to prevent fraud and money laundering is by requiring financial institutions to report suspicious activity involving funds or assets of $5,000 or more if it is suspected this money may be a profit from illegal activity or used to hide illegal activity. Institutions that must adhere to the BSA include banks, credit unions, brokers, businesses that issue or redeem money orders, casinos and dealers of gemstones and precious metals.

Financial institutions may call in a third party to make sure they’re up to BSA code. Here, excellent vendor management must be utilized to ensure that whoever is called in is familiar with all aspects of the BSA and has an innate understanding of the financial institution and how it is being run.

Several money laundering acts have been introduced since the BSA has gone into effect that work to amend the act. Legislation continues to update to meet the ongoing needs of the country in preventing these illegal activities. Hopefully, it will continue to be effective in minimizing these crimes once and for all.

Learn how to measure BSA risk, here.


Related: What Is A Compliance Management System And Why Your FI Needs One

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