The Monetary and Foreign Transaction Reporting Act of 1970 – whose legal framework is commonly referred to as the Bank Secrecy Act (BSA) – requires U.S. financial institutions to assist U.S. government agencies in detecting and preventing money laundering. Specifically, the law requires financial institutions to keep records of cash purchases of negotiable instruments, file reports on cash transactions over $10,000 (daily total), and report suspicious activity that may indicate money laundering, tax evasion or other criminal activity. It was passed by the United States Congress in 1970. The BSA is sometimes referred to as the Money Laundering Act (AML) or collectively the “BSA/AML”. Several laws, including the provisions of Title III of the USA PATRIOT Act of 2001 and the Anti-Money Laundering Act of 2020, have been enacted to date to amend the BSA. (See 12 U.S.C. 1829b, 12 U.S.C. 1951-19600, 31 U.S.C. 5311-5314, 5316-5336, and 31 CFR Chapter X [formerly 31 CFR Part 103].) FinCEN is the U.S.
FIU responsible for analyzing and disseminating information reported under the BSA and other sources, in addition to interpreting the BSA, promulgating BSA regulatory requirements, and exercising the civilian (administrative) bodies responsible for implementing the BSA. Its powers are established by 31 U.S.C. § 310 and were recently expanded by the Anti-Money Laundering Act. FinCEN is now responsible for setting up and maintaining a national business register in which certain legal entities reporting beneficial ownership information are required to register and report. Natural and legal persons are criminally liable. Ownership in the form of bearer shares is not permitted for corporations organized under the laws of U.S. states. It is not prohibited to provide financial services to companies whose shares are restricted or authorized to their holder; However, as an anti-money laundering practice, many financial institutions prohibit or restrict relationships with legal entities whose shares are held on bearer terms. Knowledge can be based on willful blindness or conscious indifference – the failure to investigate red flags for illegal activities. In addition, knowledge may be based on a “sting” or deception by the government, where government agents claim that funds are the proceeds of illegal activities. FinCEN has imposed significant civil penalties on virtual currency changers and their principals based on the alleged failure to maintain an anti-money laundering program, file SARs, and register with FinCEN. While interchanges are accused of facilitating illegal activities, there have been parallel criminal proceedings against the principals.
In the CTA, beneficial ownership is defined as a person who directly or indirectly owns 25% or more of the interests in the legal entity or who exercises “substantial control” over the business. There are many exceptions to what is considered a reporting company, such as publicly traded companies, U.S. financial institutions, and large U.S. operating companies (more than 20 employees, $5 million in annual revenue, and physical location in the United States). There are criminal and civil penalties for non-registration, for providing false information, and for unauthorized disclosure of information. 2.9 What other types of sanctions can be imposed on natural and legal persons in addition to fines and penalties? WASHINGTON – The U.S. Department of the Treasury today released the 2022 National Strategy to Combat the Financing of Terrorism and Other Forms of Illicit Financing (Strategy 2022), which sets out measures to increase transparency in the U.S. financial system and strengthen the United States.
Anti-Money Laundering and Anti-Terrorist Financing (AML/CFT) Framework. Strategy 2022, prepared pursuant to sections 261 and 262 of the Countering U.S. Adversaries Through Sanctions Act (CAATSA), addresses key risks arising from the 2022 National Money Laundering, Terrorist Financing and Proliferation Financing Risk Assessments and reflects the complex challenges arising from a world reshaped by the COVID-19 pandemic, the increasing digitalization of financial services, and the increase in corruption and fraud. In addition, in the future, some legal entities will have to register with FinCEN and provide information on their beneficial owners. See question 3.13. Under Section 1957, there is jurisdiction over crimes committed outside the United States by U.S. persons (citizens, residents, and corporations) and by non-U.S. citizens. persons, as long as the transaction takes place, in whole or in part, in the United States. There are three requirements of general application. As noted above, all businesses or activities in the United States, unless designated as financial institutions under the BSA, are subject to the cash flow report (Form 8300 filing).
See question 3.6. In addition, all persons (natural and legal persons) are subject to a cross-border declaration (CMIR). See question 3.9. In addition, under the BSA, all U.S. persons (individuals and entities) must annually report all foreign financial accounts totaling $10,000 or more at any time during the preceding calendar year if they hold an interest in the account or (with some exceptions) have signing authority over the account. This is called the Foreign Bank and Financial Account (FBAR) reporting requirement. 31 C.F.R. § 1010.350. As the world`s largest economy and influential political power, the United States plays an important role in the global fight against money laundering and terrorist financing.
The United States is a member of the Financial Action Task Force (FATF) and has developed a robust AML/CFT framework that reflects international regulatory standards and provides significant penalties for non-compliance. To avoid these penalties, financial institutions need to be aware of the relevant anti-money laundering regulations in the United States and understand how to comply with them. The government does not have to prove that the person carrying out the money laundering operation knew that the proceeds originated from a particular form of illegal activity. In the United States, the primary anti-money laundering legal authority is BSA, 31 U.S.C. § 5311 et seq., 12 U.S.C. §§ 1829b and 1951–1959 (the “BSA Act”) and the Regulations under the BSA, 31 C.F.R. Chapter X (the “BSA Regulations”). (The BSA Bylaws and BSA Bylaws are collectively referred to as the “BSA.”) BSA was originally enacted in 1970 and amended several times, including the USA PATRIOT Act (“PATRIOT Act”) in 2001 and more recently the AML Act. The BSA provides the Minister of Finance with the authority to implement reporting, record-keeping and anti-money laundering program requirements for financial institutions and other entities listed in the articles by regulation.
31 U.S.C. § 5312(A)(2). The BSA is administered and enforced by a Ministry of Finance, FinCEN. FinCEN is also the U.S. financial intelligence unit. See question 2.6. As FinCEN does not have audit staff, it has delegated BSA audit authority for various categories of financial institutions to its federal functional regulators (Bundesbank, securities and futures regulators).