What is the Money Laundering Control Act?

The Money Laundering Control Act of 1986 is a United States Act of Congress that made money laundering a federal crime. It prohibits individuals from engaging in a financial transaction with proceeds that were generated from certain specific crimes, known as Specified Unlawful Activities (SUAs). There is no minimum value, the transaction does not need to involve a financial institution and the individual does not need to succeed in disguising the money for the action to be a crime.

What is the Bank Secrecy Act?

The Bank Secrecy Act (BSA), also known as the Currency and Foreign Transactions Reporting Act and sometimes referred to as Anti-Money Laundering law (AML) or jointly as BSA/AML is the US law that requires financial institutions in the US to detect, deter, prevent and disrupt money laundering activity and terrorist financing networks. Every financial institution must have a written, board-approved AML program to ensure compliance with the BSA. In 2001, The US Patriot Act amended the BSA, requiring financial institutions to maintain more formal AML programs requiring certain types of financial institutions to use a Customer Identification Program (CIP) with risk-based approach.

How do you comply with the Bank Secrecy Act?

To comply with the BSA, all financial institutions must have a customer identification program (CIP) in place and use a risk-based approach to identify and verify all customers to ensure they are who they say they are. This includes maintaining a record of the information used to verify the person’s identity, and determining if a person appears on a Sanction list. The BSA requires financial institutions to have a system of internal controls in place to assure ongoing compliance, including ongoing monitoring of the business relationship. They must also have a designated individual responsible for coordinating and monitoring day-to-day compliance and provide AML compliance training for all appropriate personnel. As part of its AML program, BSA regulation also requires all financial institutions to monitor the account for suspicious activity and report to The Financial Crimes Enforcement Network (FinCEN) if found.

What are the penalties for non-compliance with BSA/AML regulations?

Failure to comply with BSA/AML laws and regulations has severe consequences. Any individual found guilty of wilful BSA regulation violation is subject to criminal fines of up to $250,000 or five years in prison, or both.  If the individual wilfully violates BSA regulation while also breaking another law or committing other criminal activity, they are subject to a fine of up to $500,000 or ten years in prison, or both. Institutions that violate BSA rules can be subject to a fine of up to $1million or twice the value of the transaction, whichever is greater. The federal banking agencies and FinCEN also have the authority to bring civil penalty actions. They can remove individuals and institutions from banking and can issue fines of hundreds of millions of dollars.

How can I ensure compliance with US money laundering regulations?

The most reliable way to ensure your business is complying with the BSA and that your CIP is fit for purpose is to adopt an electronic verification platform. SmartSearch completes full AML checks in seconds and documents every check to ensure you have a full and complete compliance record. Every AML check includes sanctions and PEP screening with enhanced due diligence triggered on any matches, while our ongoing monitoring alerts you to any changes you need to be aware of.

Who needs to comply with the Bank Secrecy Act?

The BSA requires all traditional financial institutions - banks, savings associations credit unions and thrifts – as well as non-bank financial institutions - securities dealers and money services businesses - to perform anti-money laundering checks, keep records of those checks and alert authorities of anything suspicious, in order to maintain a compliant position.