The Bank Secrecy Act Fighting Money Laundering Globally, Part Two

By Excerpted from the NEW Fraud Examiners Manual, 2003 U.S. Edition ©2003

The July/August “FraudBasics” covered the USA Patriot Act, passed in the wake of 9-11. Here we continue with a precursor, the Bank Secrecy Act, which has affected anti-money laundering efforts worldwide. 

The Bank Secrecy Act (BSA), which went into effect in 1970, was the first major piece of legislation aimed at detecting and preventing money laundering. The purpose of the law as stated in section 5311 is “to require certain reports or records where they have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings.” The BSA sets forth a system of reporting and recordkeeping requirements designed to help track large or unusual financial transactions.

The BSA consists of two titles. Title I contains provisions requiring that financial institutions and securities brokers and dealers keep extensive records of the transactions and accounts of their customers. It is codified in Title 12 of the United States Code (U.S.C.), Sections 1829b and 1951–1959. Title II of the BSA (originally entitled Currency and Foreign Transactions Reporting Act) requires banks, “financial institutions” (which include casinos, securities brokers and dealers, currency exchanges, and others), and, in some cases, individuals to report to the government certain transactions. Title II is codified at 31 U.S.C., §§ 5311–5330.

Title I – Recordkeeping 

The regulations governing recordkeeping are set forth in Chapter 31 of the Code of Federal Regulations at Part 103, Subpart C. Recordkeeping requirements are set forth for banks, non-bank financial institutions, securities brokers, casinos, and currency dealers and exchangers. All institutions are required to keep a record of any financial transaction of more than $10,000.

These regulations provide, in part, that banks must keep for five years an original, microfilm, or other copy of certain documents relating to demand deposits and checking and savings accounts. The records that must be retained include:

  • signature cards;
  • statements, ledger cards, or other records disclosing all transactions (that is, deposits and withdrawals);
  • copies of both sides of customers’ checks, bank drafts, money orders, and cashier’s checks of more than $100 drawn on the bank, or issued and payable by it;
  • identity of each purchaser of a certificate of deposit; and
  • each deposit slip or credit ticket reflecting a transaction in excess of $100.

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