Financial Crime World

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Understanding the Banking Secrecy Act (BSA)

The Banking Secrecy Act (BSA) is a set of regulations aimed at preventing money laundering and terrorist financing. The Financial Crimes Enforcement Network (FinCEN) was created by Congress to implement and enforce BSA regulations.

Key Points of the BSA

  • FinCEN’s Mandate: FinCEN is responsible for implementing and enforcing BSA regulations.
  • Report of Foreign Bank and Financial Accounts (FBAR): The FBAR is a report required by FinCEN for individuals with financial interests in foreign accounts exceeding $10,000.
  • Bank Secrecy Act Compliance: Banks are required to maintain anti-money laundering (AML) programs to prevent money laundering and terrorist financing.
  • Structuring: Structuring refers to the practice of breaking down cash transactions into smaller amounts to avoid reporting requirements.
  • Money Laundering Legislation: Laws such as the Bank Secrecy Act, USA PATRIOT Act, and Anti-Money Laundering (AML) regulations aim to prevent money laundering and terrorist financing.

Notable Cases

These cases demonstrate the importance of BSA compliance and the consequences of non-compliance:

  • Wachovia Money Laundering: Wachovia Bank was fined $160 million for failing to prevent money laundering by Mexican drug cartels.
  • Bittner v. United States: The Supreme Court ruled that the Bank Secrecy Act’s reporting requirements do not apply to non-U.S. citizens.

Other Key Points

Additional information on BSA compliance and regulations includes:

  • Bank Secrecy Act Compliance Handbook: A Comptroller’s Handbook provides guidance on BSA compliance for banks and thrifts.
  • Patterns of Abuse: A Senate hearing discussed patterns of abuse in BSA compliance and enforcement.
  • FBAR Filing Requirements: The FBAR is required to be filed annually by June 30th for the previous calendar year.

FATCA (Foreign Account Tax Compliance Act)

FATCA requires foreign financial institutions to report certain information about U.S.-owned accounts:

  • Foreign financial institutions must report specified information about U.S. owners of financial accounts.
  • The report must include the name, address, and taxpayer identification number of each U.S. account holder.

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