Are High-Security Checks Worth It?

by Florian Tanant
The Bank Secrecy Act (BSA) was written in 1970, yet it still puzzles some companies.
Today, we’re providing a breakdown of everything you need to know about it, including tips on remaining compliant with this evolving piece of AML legislation.
BSA stands for Bank Secrecy Act, an anti-money laundering (AML) law passed by the United States Congress in 1970. It’s also known as the Currency and Foreign Transaction Reporting Act.
This US law requires financial institutions to collaborate with the government to fight money laundering. The BSA AML requirements to remain compliant include:
Compliance is ensured by FinCEN, the US Financial Crimes Enforcement Network. Note that BSA is an evolving piece of legislation and includes amendments and guidance for dealing with businesses other than financial institutions.
Today, the law covers verticals as varied as hemp-related businesses, cryptocurrencies, and online casinos, among others. It also overlaps with further pieces of AML regulation such as the USA Patriot Act and the National Defense Authorization Act.
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There are currently five pillars to ensure BSA AML compliance. These are:
It’s worth noting that there were initially only four pillars. The fifth one, pertaining to customer due diligence, was only added in 2018, following FinCEN’s CDD Final Rule.
The Bank Secrecy Act is first and foremost aimed at US financial institutions. However, the term encompasses more types of businesses than banks and brokers. Under the BSA, financial institutions can be:
Moreover, companies within certain industries fall within the definition of financial institutions if they meet specific requirements.
Casinos and gambling establishments, for instance, must have an annual gaming revenue of more than $1,000,000 and be licensed, to be subject.
BSA compliance is enforced by the Financial Crimes Enforcement Network (FinCEN). Its mission is to “safeguard the financial system from the abuses of financial crime, including terrorist financing, money laundering, and other illicit activity”.
Note that some AML regulations can also be checked by the Financial Industry Regulatory Authority (FINRA), which writes and enforces rules that govern registered brokers and broker-dealer firms in the United States.
Reporting plays a big part in BSA compliance. There are five key types of reports to fill:
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The first thing to do in order to establish an effective BSA compliance program is to go over the aforementioned five pillars.
Since the BSA and AML are so closely linked, you should also check our AML checklist.
Key steps to build into your process include:
SEON is a complete fraud prevention system based on data enrichment and risk scoring. The modular nature of our data is what makes it a tool of choice for several companies dealing with AML regulations. Here is what we offer:
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A number of companies offer BSA and AML certification programs, which aim to train, test, and prepare individuals for BSA compliance. The price and duration of each program will vary depending on the provider and scope.
BSA AML compliance software is designed to monitor transactions, create real-time alerts, and automatically fill the appropriate reports pertaining to BSA law.
Companies who fail to comply with BSA AML mandates risk severe fines as well as potential imprisonment for staff deemed responsible for this. In the USA, where the BSA applies, civil penalties imposed by banking regulators can be as high as $1 million for every single day the violation occurs. Similar AML legislation in the UK can result in up to 14 years of imprisonment, and you can expect similar consequences in most countries.
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Communication Specialist | Florian helps tech startups and global leaders organise their thoughts, find their voices, and connect with customers worldwide.
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