Conducting Thorough Research on Customer Transactions: A Crucial Step in Combating Financial Crimes

In today’s increasingly complex financial landscape, it is essential for financial institutions to conduct thorough research on customer transactions to ensure compliance with anti-money laundering regulations and prevent financial crimes.

Reporting Foreign Bank Accounts

According to recent reports, individuals who have a financial interest in or signature authority over foreign bank accounts must report those relationships to the Internal Revenue Service (IRS) annually if the aggregate value of the accounts exceeds $10,000 at any point during the calendar year. The report must be filed by June 30 of the succeeding calendar year using Form TD F 90-22.1 available on the FinCEN website.

The Treasury’s Office of Foreign Assets Control has also outlined specific requirements for reporting foreign bank accounts, excluding U.S. military banking facilities and certain types of international transactions.

Maintaining Detailed Records

Financial institutions are required to maintain detailed records of customer transactions, including:

• Sales of monetary instruments for cash in amounts between $3,000 and $10,000
• Identifying information from the purchaser, such as:
  • Name
  • Date of purchase
  • Type of instrument purchased
  • Serial number

Additionally, financial institutions must implement procedures for aggregating multiple purchases during one business day and maintaining records of these transactions for a period of five years.

The Importance of Due Diligence

The Treasury has emphasized the importance of thorough recordkeeping and due diligence in preventing money laundering and terrorist financing. Financial institutions are urged to conduct regular reviews of customer transactions and file Suspicious Activity Reports (SARs) with FinCEN as necessary to ensure compliance with anti-money laundering regulations.

Conclusion

Conducting thorough research on customer transactions is a critical step in combating financial crimes and ensuring compliance with anti-money laundering regulations. Financial institutions must maintain detailed records, implement due diligence procedures, and file SARs as necessary to prevent money laundering and terrorist financing. For more information on Customer Due Diligence and Suspicious Activity Reporting, please refer to the discussion within this chapter.