The Bank Secrecy Act (BSA) is a U.S. federal law that was enacted in 1970. Its primary purpose is to combat money laundering and other financial crimes, including terrorist financing. The BSA sets forth certain requirements and regulations aimed at preventing banks and other financial institutions from being used as tools for illegal activities.
6 Things You Need to Know About the BSA
1. History
The Financial Record-Keeping and Reporting of Currency and Foreign Transactions Act of 1970, commonly known as the "Bank Secrecy Act" (BSA), establishes the framework for financial institutions to counteract money laundering. This legislation, referenced as "31 U.S.C. 5311 et seq.," serves as a cornerstone in the regulatory landscape for credit unions.
2. Recordkeeping and Reporting
At its core, the BSA mandates financial institutions to maintain meticulous records of cash transactions and submit reports for cash purchases exceeding $10,000 in aggregate on a given business day. These measures are in place to identify and report activities suggestive of money laundering, tax evasion, or other illicit financial endeavors.
3. Key Reports
Credit unions must familiarize themselves with three critical reports under the BSA:
- Currency Transaction Report (CTR): Filed electronically with the Financial Crimes Enforcement Network (FinCEN), this report details cash transactions surpassing $10,000 in a single business day.
- Monetary Instrument Log (MIL): Financial institutions are obligated to retain MIL records for five years, encompassing non-cash monetary instruments with a value ranging from $3,000 to $10,000.
- Suspicious Activity Report (SAR): Required in instances of potential money laundering, tax evasion, or any actions circumventing BSA reporting requirements, the SAR plays a crucial role in aiding law enforcement agencies.
4. Electronic Filing System
Since April 1, 2013, the BSA E-Filing System facilitates the electronic submission of Suspicious Activity Reports (SAR) for banks and credit unions, streamlining the reporting process.
5. Confidentiality and Fines
Financial institutions must file a SAR when detecting or suspecting suspicious activity, maintaining utmost confidentiality. Failure to report SARs can result in heavy fines, jeopardizing the institution's charter. Advanced software solutions are available to augment surveillance and identify potential irregularities.
6. Regulatory Oversight
The Office of the Comptroller of the Currency (OCC), an independent bureau of the U.S. Department of the Treasury, plays a pivotal role in chartering, regulating, and supervising national banks and federal savings associations. The OCC ensures compliance with BSA recordkeeping and reporting requirements, enforcing actions in cases of non-compliance.
Find the Right Partner in Compliance
Ensuring transparency and upholding standards is crucial, but maintaining compliance can be challenging without the right technological assistance. With over 40 years of experience, FLEX has been a trusted partner for credit unions, providing core processors to help them stay compliant. Download your complimentary copy of our compliance eGuide by clicking the button below and find the right partner in compliance.
