FACTOID # 7: The top five best educated states are all in the Northeast.
 
 Home   Encyclopedia   Statistics   States A-Z   Flags   Maps   FAQ   About 
   
 
WHAT'S NEW
 

SEARCH ALL

FACTS & STATISTICS    Advanced view

Search encyclopedia, statistics and forums:

 

 

(* = Graphable)

 

 


Encyclopedia > Bank Secrecy Act

The Bank Secrecy Act (or BSA, or otherwise known as the Currency and Foreign Transactions Reporting Act) requires U.S.A. financial institutions to assist U.S. government agencies to detect and prevent money laundering. Specifically, the act requires financial institutions to keep records of cash purchases of negotiable instruments, file reports of cash transactions exceeding $10,000 (daily aggregate amount), and to report suspicious activity that might signify money laundering, tax evasion, or other criminal activities. For other uses, see United States (disambiguation) and US (disambiguation). ... In Financial economics, a financial institution acts as an agent that provides financial services for its clients. ... An agency is a department of a local or national government responsible for the oversight and administration of a specific function, such as a customs agency or a space agency. ... Money laundering is the practice of engaging in financial transactions in order to conceal the identity, source and destination of the money in question. ... Cash usually refers to money in the form of liquid currency, such as banknotes or coins. ... A negotiable instrument is a specialized type of contract which obligates a party to pay a certain sum of money on specified terms. ... This article contrasts tax evasion, tax avoidance, tax resistance and tax mitigation. ...


It was passed by the Congress of the United States in 1970. 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 of the USA PATRIOT Act, have been enacted up to the present to amend the BSA. (See 31 USC 5311-5330 and 31 CFR 103.) Congress in Joint Session. ... 1970 (MCMLXX) was a common year starting on Thursday (the link is to a full 1970 calendar). ... Anti-money laundering is a term mainly used in the finance and legal industries to describe the legal controls that require financial institutions and other regulated entities to prevent or report money laundering activities. ... To meet Wikipedias quality standards, this article or section may require cleanup. ... The United States Code (U.S.C.) is a compilation and codification of the general and permanent federal law of the United States. ... The Code of Federal Regulations (CFR) is the codification of the general and permanent rules and regulations (sometimes called administrative law) published in the Federal Register by the executive departments and agencies of the Federal Government of the United States. ...

Contents

Types of Reports

The BSA regulations require all financial institutions to submit five types of reports to the government. (not an exhaustive list of reports)


1. IRS Form 4789 Currency Transaction Report (CTR): A CTR must be filed for each deposit, withdrawal, exchange of currency, or other payment or transfer, by, through or to a financial institution, which involves a transaction in currency of more than $10,000. Multiple currency transactions must be treated as a single transaction if the financial institution has knowledge that: (a) they are conducted by or on behalf of the same person; and, (b) they result in cash received or disbursed by the financial institution of more than $10,000. (31 CFR 103.22)


2. U.S. Customs Form 4790 Report of International Transportation of Currency or Monetary Instruments (CMIR): Each person (including a bank) who physically transports, mails or ships, or causes to be physically transported, mailed, shipped or received, currency, traveler’s checks, and certain other monetary instruments in an aggregate amount exceeding $10,000 into or out of the United States must file a CMIR


3. Department of the Treasury Form 90-22.1 Report of Foreign Bank and Financial Accounts (FBAR): Each person (including a bank) subject to the jurisdiction of the United States having an interest in, signature or other authority over, one or more bank, securities, or other financial accounts in a foreign country must file an FBAR if the aggregate value of such accounts at any point in a calendar year exceeds $10,000. (31 CFR 103.24)


4. Treasury Department Form 90-22.47 and OCC Form 8010-9, 8010-1 Suspicious Activity Report (SAR): Banks must file a SAR for any suspicious transaction relevant to a possible violation of law or regulation. (31 CFR 103.18 − formerly 31 CFR 103.21) (12 CFR 12.11) (Refer to the “Suspicious Activity Reporting” section of this handbook for further detail.)


5. “Designation of Exempt Person” Form TDF 90-22.53: Banks must file this form to designate an exempt customer for the purpose of CTR reporting under the BSA (31 CFR 103.22(d)(3)(i)). In addition, banks use this form biennially (every two years) to renew exemptions for eligible non-listed business and payroll customers. (31 CFR 103.22(d)(5)(i))


Affected transactions

Currency Transaction Report (CTR)

Cash transactions in excess of $10,000 during the same business day. The amount over $10,000 can be either from one transaction or a combination of cash transactions. Filed with the Internal Revenue Service. Seal of the Internal Revenue Service The Internal Revenue Service (IRS) is the United States government agency that collects taxes and enforces the internal revenue laws. ...


Monetary Instrument Log (MIL)

Cash purchases of monetary instruments, such as money orders, cashier's checks and travelers checks, totaling from $3,000 to $10,000, inclusive. Filed with the Internal Revenue Service. // Money Order in the U.S. In the United States, a money order is a type of check intended to provide a safe alternative to sending cash (in the mail). ... A cashiers check (also known as a bank check, official check, tellers check, or treasurers check) is a check issued by a bank on its own account for the amount paid to the bank by the purchaser with a named payee, and stating the name of the... A travelers cheque is a preprinted, fixed-amount check designed to allow the person signing it to make an unconditional payment to someone else as a result of having paid the issuer (usually a bank) for that privilege. ... Seal of the Internal Revenue Service The Internal Revenue Service (IRS) is the United States government agency that collects taxes and enforces the internal revenue laws. ...


Suspicious Activity Report (SAR)

Any cash transaction where the customer seems to be trying to avoid BSA reporting requirements (e.g., CTR, MIL). A SAR must also be filed if the customer's actions indicate that s/he is laundering money or otherwise violating federal criminal law. The customer must not know that a SAR is being filed. These reports are filed with the Financial Crimes Enforcement Network ("FinCEN"). The Financial Crimes Enforcement Network (FinCEN) maintains a comprehensive database of financial records created in 1990 as an arm of the United States Department of the Treasury to combat money laundering. ...


Why we need Suspicious Activity Reporting? • Identify potential and actual illegal activities like Money laundering, terrorist financing, other financial frauds and abuse • Detect and prevent flow of illicit funds • Establishes emerging threats through analysis of patterns & trends • It’s required by law!


Who should file SARs? Depository Institutions • Banks • Savings Association • Savings Association Service Corporations • Credit Unions • Bank Holding Companies • Non-bank subsidiaries of bank holding companies • Edge & Agreement Corporations • U.S. branches & agencies of foreign banks Money Services Businesses (MSBs) • Money Transmitters • Currency dealers or exchangers • Issuers, sellers, or redeemers of money orders • Issuers, sellers, or redeemers of traveler’s checks Casinos & Card Clubs Securities & Futures Industries • Brokers or dealers in securities (“BD”) • Futures commission merchants (“FCM”) (effective May 18, 2004) • Introducing brokers in commodities (“IB”) (effective May 18, 2004) Insurance Companies Mutual Fund Operators


When to file a SAR?


Depository Institutes For any known or suspected violations of federal criminal laws or regulations committed/attempted against or through the institution if it involves or aggregates at least $5,000 in funds or other assets & the bank knows, suspects, or has reason to suspect the funds are: • Obtained from illegal activity • Intended or conducted to hide or disguise funds or assets derived from illegal activity • Designed to evade any reporting requirements of the Bank Secrecy Act (BSA) For any known or suspected federal criminal violations committed/attempted against or through the institution involving funds • Transacted with no business or lawful purpose • Not the sort the customer normally engages • The institution knows of no reasonable explanation for the transaction after examining available facts including the background and possible purpose of the transaction Note: Financial institutions may also report suspicious transactions that they believe are relevant to a violation of law or regulation but whose reporting is not required by the above.


MSBs Any transaction or pattern of transactions conducted or attempted that is suspicious & involves or aggregates funds or assets of at least $2,000 if the MSB knows, suspects, or has reason to suspect the transactions are • Derived from illegal activity or is intended to hide or disguise funds or assets derived from illegal activity • Designed to evade the requirements of the BSA, whether through structuring of other means Any transaction or pattern of transactions that serves no business or apparent lawful purpose & the MSB knows of no reasonable explanation for the transaction after examining all available facts Issuers of money orders & travelers checks are required to report transactions or pattern of transactions that are suspicious & involve or aggregate funds or other assets of at least $5,000 if identification of transactions is derived from review of clearance records or other similar records of items sold or processed.


Securities & Futures Any transaction or pattern of transactions conducted or attempted involving funds or other assets of at least $5,000 if the BD, FCM, or IB knows, suspects, or has reason to suspect the funds are: • Derived from illegal activity • Intended to hide or disguise funds or assets derived from illegal activity • Designed to evade reporting requirements of the BSA or other laws or regulations Any transaction or pattern of transactions (cont) • No business or apparent lawful purpose • Not typical for customer • BD, FCM, or IB knows of no reasonable explanation for transaction after examining all available facts


Filing Deadline


Financial Institutions


• 30 calander days after the date of initial detection of facts that may constitute a basis for the filing • 60 calendar days if no suspect was identified on the date of detection of the incident requiring the filing


Form Used


• Treasury Form TD F 90-22.47 SAR (Depository Institutions) • Treasury Form TD F 90-22.56 SAR-MSB (Money Service Business) • FinCEN 101 SAR-SF (Securities & Futures)


Who all use the SARs Report?


Law Enforcement - To initiate and support money laundering, terrorist financing, and other criminal investigations • Federal law enforcement – DOJ, FBI, DEA, DHS, ICE, USSS, IRS, USPS • State law enforcement • Local law enforcement


Analysts –to identify trends & patterns • FinCEN • Joint agency financial task forces • Law enforcement agencies • Office of Foreign Assets Control (OFAC)


Federal Regulatory Authorities • BSA/AML compliance exams


Referral to FinCEN by regulatory authorities upon discovery of insufficient systems & programs to identify, investigate, document & report suspicious activity may result in: • Civil monetary penalties • Enforcement actions


Financial institution shall retain for 5 years from the date of the filing:


• A copy of any SAR filed; and • The original or business record of any supporting documentation; and • Make all supporting documentation available to FinCEN & any appropriate law enforcement agencies or regulatory authorities


Federal law requires that a financial institution, & its directors, officers, employees, and agents who, voluntarily or by means of a suspicious activity report, report suspected or known criminal violations or suspicious activity may not notify any person involved in the transaction that the transaction has been reported.


Sanctions

There are stiff penalties for individuals and institutions that fail to file CTRs, MILs, or SARs. There are also penalties for those that disclose to its clients that it has filed a SAR about a client. Penalties include extremely high fines and long prison sentences. A fine is money paid as a financial punishment for the commission of minor crimes or as the settlement of a claim. ...


How it affects American citizens

Many regular people will have a CTR filed under the BSA on a U.S. financial transaction at some point. For example, if one withdraws cash to purchase a car that exceeds $10,000 or purchases many traveler's checks with cash for a long vacation abroad. CTRs include the individual's bank account number, name, address, and Social Security Number. SAR reports, required when transactions indicate behavior designed to elude CTRs (or many other types of suspicious activities), include somewhat more detailed information and usually include investigation efforts on the part of the financial institution to assess the validity of transactions, or explaining why they believe you might possibly be structuring the transaction. A single CTR filed for your account is usually of no concern to the authorities, while multiple CTRs from varying institutions or a SAR indicates that activity may be suspicious, as a bank customer though they are meaningless unless you are actually doing something illegal. A financial institution is not allowed to inform a business or consumer that a SAR is being filed. For other uses, see Bank (disambiguation). ... Sample United States Social Security Card In the United States, a Social Security number (or SSN) is a 9 digit number issued to citizens, permanent residents, and temporary (working) residents under section 205(c)(2) of the Social Security Act, codified as . ...


Businesses that primarily deal in cash, such as bars and restaurants can be exempted from having their deposits and withdrawals reported as CTRs, although this exemption is rarely granted. Instead, most banks have computer systems which retains the CTR information and allows duplicate CTR's to be created seamlessly. Tourists sit outside a bar in Chiang Mai, Thailand A Depression-era bar in Louisiana. ... Toms Restaurant, a restaurant in New York made familiar by Suzanne Vega and the television sitcom Seinfeld A restaurant is an establishment that serves prepared food and beverages to order, to be consumed on the premises. ...


Additional information

An entire industry has developed around providing software to analyze transactions in an attempt to identify transactions or patterns of transactions, called structuring, which requires a SAR filing, that qualify for reporting. Financial institutions face penalties for failing to properly file CTR and SAR reports, including heavy fines and regulatory restrictions, even to the point of charter revocation. Needs to be edited. ...


  Results from FactBites:
 
Bank secrecy - Wikipedia, the free encyclopedia (1116 words)
Bank secrecy (or bank privacy) is a legal principle under which banks are allowed to protect personal information about their customers, through the use of numbered bank accounts or otherwise.
Effective bank secrecy is better achieved in certain countries, such as Switzerland or in tax havens, where offshore banks adhere to voluntary or statutory levels of privacy.
Bank secrecy was invented by the 1934 Swiss Banking Act following a public scandal in France, when MP Fabien Alberty denounced tax evasion by eminent French personalities, including politicans, judges, industrialists, church dignitaries and directors of newspapers, who were hiding their money in Switzerland.
Bank Secrecy Act - Wikipedia, the free encyclopedia (1141 words)
The Bank Secrecy Act (or BSA, or otherwise known as the Currency and Foreign Transactions Reporting Act) requires U.S.A. financial institutions to assist U.S. government agencies to detect and prevent money laundering.
The BSA is sometimes referred to as an "anti-money laundering" law ("AML") or jointly as “BSA/AML”.
The BSA regulations require all financial institutions to submit five types of reports to the government.
  More results at FactBites »

 
 

COMMENTARY     


Share your thoughts, questions and commentary here
Your name
Your comments

Want to know more?
Search encyclopedia, statistics and forums:

 


Press Releases |  Feeds | Contact
The Wikipedia article included on this page is licensed under the GFDL.
Images may be subject to relevant owners' copyright.
All other elements are (c) copyright NationMaster.com 2003-5. All Rights Reserved.
Usage implies agreement with terms, 1022, m