What federal legislation regulates financial institutions in regards to suspicious activity?
The Bank Secrecy Act (BSA), 31 USC 5311 et seq establishes program, recordkeeping and reporting requirements for national banks, federal savings associations, federal branches and agencies of foreign banks.
Under the Bank Secrecy Act (BSA), financial institutions are required to assist U.S. government agencies in detecting and preventing money laundering, such as: Keep records of cash purchases of negotiable instruments, File reports of cash transactions exceeding $10,000 (daily aggregate amount), and.
The BSA provides a foundation to promote financial transparency and deter and detect those who seek to misuse the U.S. financial system to launder criminal proceeds, finance terrorist acts, or move funds for other illicit purposes.
The BSA is sometimes referred to as an "anti-money laundering" (AML) law or jointly as “BSA/AML,” and is codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-1960, 31 U.S.C. 5311-5314, 5316-5336, and includes notes thereto.
Firms must comply with the Bank Secrecy Act and its implementing regulations ("AML rules"). The purpose of the AML rules is to help detect and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.
There are numerous agencies assigned to regulate and oversee financial institutions and financial markets in the United States, including the Federal Reserve Board (FRB), the Federal Deposit Insurance Corp. (FDIC), and the Securities and Exchange Commission (SEC).
The Suspicious Activity Reporting System (SARS), created by the five federal financial supervisory agencies and the Financial Crimes Enforcement Network (FinCEN), is two years old. SARS has processed approximately 150,000 reports of suspicious activity submitted by depository institutions.
This regulation requires every national bank to file a Suspicious Activity Report (SAR) when they detect certain known or suspected violations of federal law or suspicious transactions related to a money laundering activity or a violation of the BSA.
The Bank Secrecy Act
The BSA authorizes the Department of the Treasury to impose reporting and other requirements on financial institutions and other businesses to help detect and prevent money laundering.
The board of directors is ultimately responsible for the bank's BSA/AML compliance and should provide oversight for senior management and the BSA compliance officer in the implementation of the bank's board-approved BSA/AML compliance program.
What does FinCEN regulate?
Today, FinCEN is one of Treasury's primary agencies to oversee and implement policies to prevent and detect money laundering.
In those cases, you may have to wait as long as 90 days for the issue to be fully resolved. If the bank or credit union determines that the transactions were in fact authorized, it must provide you with written notice before taking the money that was credited to you during the investigation out of your account.
FinCEN exercises regulatory functions primarily under the Currency and Financial Transactions Reporting Act of 1970, as amended by Title III of the USA PATRIOT Act of 2001 and other legislation, which legislative framework is commonly referred to as the "Bank Secrecy Act" (BSA).
A Suspicious Activity Report (SAR) is a document that financial institutions, and those associated with their business, must file with the Financial Crimes Enforcement Network (FinCEN) whenever there is a suspected case of money laundering or fraud.
The purpose of the BSA is to combat some of the most common forms of suspicious activity, including money laundering, theft, tax evasion, financial fraud, and more.
Under the light of the Bank Secrecy Act and the USA Patriot Act regulations, banks and financial institutions are required to take a risk-based approach to AML/CFT and implement measures.
The goal of regulation is to prevent and investigate fraud, keep markets efficient and transparent, and make sure customers and clients are treated fairly and honestly. The FDIC regulates a number of community banks and other financial institutions. To determine who regulates your bank, go to FDIC Bank Find.
The Federal Reserve's supervision activities include examinations and inspections to ensure that financial institutions operate in a safe and sound manner and comply with laws and regulations. These include an assessment of a financial institution's risk-management systems, financial conditions, and compliance.
The Federal Trade Commission enforces a variety of antitrust and consumer protection laws affecting virtually every area of commerce, with some exceptions concerning banks, insurance companies, non-profits, transportation and communications common carriers, air carriers, and some other entities.
The Bureau of Investigation serves as the coordinator for state and local law enforcement agencies seeking information from the U.S. Department of Treasury's Financial Crimes Enforcement Network (FinCEN).
Who investigates federal financial crimes?
United States Department of the Treasury Financial Crimes Enforcement Network.
The United States Department of the Treasury is fully dedicated to combating all aspects of money laundering at home and abroad, through the mission of the Office of Terrorism and Financial Intelligence (TFI).
As is evident from the list above, the regulations and reporting requirements implemented pursuant to the BSA apply broadly to the financial activities of many businesses and not just banks.
Section 326 of the USA PATRIOT ACT requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account or changes an existing account. This federal requirement applies to all new customers and current customers.
Under section 326 of the Act, the regulations issued by Treasury must require banks to implement and comply with reasonable procedures for verifying the identity of any person seeking to open an account, to the extent reasonable and practicable.
