Bank Secrecy Act (BSA)

The Bank Secrecy Act (BSA), also known as the Currency and Foreign Transactions Reporting Act, is legislation passed by the United States Congress in 1970 that requires U.S. financial institutions to collaborate with the U.S. government in cases of suspected money laundering and fraud.

The Bank Secrecy Act (BSA), also known as the Currency and Foreign Transactions Reporting Act, is legislation passed by the United States Congress in 1970 that requires U.S. financial institutions to collaborate with the U.S. government in cases of suspected money laundering and fraud. The purpose of the BSA, aside from making money laundering more difficult to propagate, is to prevent banks from becoming unknowing intermediaries in illicit activity.

In order to help prevent money laundering, the BSA requires banks to report transactions involving more than $10,000 in cash from one customer as a result of a single transaction or two or more related transactions that occur within a 24-hour period. Cash is defined as being currency and coins of the United States and any other country or certain monetary instruments such as cashier's checks, bank drafts, traveler's checks or money orders. A personal check is not considered to be cash.

The BSA also requires banks to report suspicious activity that might indicate possible money laundering or fraud. An activity is considered to be suspicious if it involves $5,000 or more in funds or assets that the financial institution suspects may indicate profit from illegal activity or transacted in order to hide illegal activity. Aside from traditional financial institutions such as banks and brokers, a variety of other institutions are required to report suspicious activity under the BSA, including businesses that issue or redeem money orders, casinos and dealers of gemstones and precious metals.

The BSA is sometimes referred to as an anti-money laundering law (AML) or jointly as BSA/AML. Several anti-money laundering acts, including provisions in title III of the USA PATRIOT Act, have been enacted up to the present to amend the BSA. The legislation is enforced by the Financial Crimes Enforcement Network (FinCEN). Reports filed with FinCEN are done so according to the Suspicious Activity Report (SAR) format.

This was first published in November 2009

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