Bank Secrecy Act (BSA) / Anti-Money Laundering Act

The Bank Secrecy Act (BSA), officially the Currency and Foreign Transactions Reporting Act of 1970, is the foundational US federal statute for combating money laundering and terrorist financing. The law requires financial institutions in the United States to maintain extensive records of financial transactions and to report suspicious activities to the authorities.

Key reporting obligations include Currency Transaction Reports (CTRs) for cash transactions exceeding USD 10,000 and Suspicious Activity Reports (SARs) when there is suspicion of money laundering, fraud, or other criminal activity. The act is administered by the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Department of the Treasury.

The BSA has been significantly expanded over the decades — notably by the USA PATRIOT Act (2001), which introduced comprehensive customer identification (KYC) requirements and enhanced due diligence obligations following the September 11 terrorist attacks, and by the Anti-Money Laundering Act of 2020, which modernised the BSA framework and introduced improved whistleblower protections.

A further major expansion came with the Corporate Transparency Act (CTA), enacted as part of the AML Act of 2020: since 1 January 2024 FinCEN's beneficial ownership information (BOI) registry has been accepting reports. Following extensive litigation over the CTA's constitutionality, a FinCEN interim final rule of 26 March 2025 exempted US-formed companies and US persons from BOI reporting; the reporting obligation now applies only to foreign-formed entities registered to do business in the United States.

The Bank Secrecy Act was signed into law by President Richard Nixon on 26 October 1970 and took effect immediately. The statute was a response to the increasing use of foreign bank accounts for tax evasion and money laundering. In the 1980s, the BSA was strengthened by the Money Laundering Control Act (1986), which made money laundering a federal crime for the first time.

The USA PATRIOT Act of 2001 (Title III — International Money Laundering Abatement and Anti-Terrorist Financing Act) brought the most far-reaching expansion of the BSA. It introduced the Customer Identification Program (CIP), Enhanced Due Diligence for correspondent banking and private banking, and comprehensive information-sharing requirements (Section 314). The Anti-Money Laundering Act of 2020, part of the National Defense Authorization Act for Fiscal Year 2021, fundamentally modernised the framework with new whistleblower incentives, a national AML priorities list, and expanded FinCEN authorities.

The AML Act of 2020 also included the Corporate Transparency Act (CTA), which for the first time created a federal beneficial ownership registry. On 1 January 2024 FinCEN's beneficial ownership information (BOI) registry began operating and accepting reports. Extensive litigation over the CTA's constitutionality followed. On 26 March 2025 FinCEN issued an interim final rule that fully removed BOI reporting for US-formed entities and US persons; the term reporting company is now limited to foreign-formed entities registered to do business in the United States.

The BSA applies to a broad range of financial institutions and businesses in the United States:

• Depository institutions: All US banks, savings associations, credit unions, and their branches, including US branches of foreign banks.
• Money Services Businesses (MSBs): Money transmitters, currency exchangers, cheque cashers, prepaid instrument providers, and cryptocurrency service providers.
• Broker-dealers and investment companies: SEC-registered broker-dealers and mutual funds.
• Insurance companies: Life insurance and annuity providers.
• Casinos and gaming establishments: Licensed casinos with gross annual revenue exceeding USD 1 million.
• Dealers in precious metals and stones: Dealers engaging in purchases or sales exceeding USD 50,000.
• Others: Real estate agents, vehicle dealers, and certain professions involved in cash transactions above specified thresholds.

• Currency Transaction Reports (CTRs): Reporting all cash transactions exceeding USD 10,000 (daily aggregate) to FinCEN using FinCEN Form 112 (filed electronically via the BSA E-Filing System; replaced the former Form 104 in 2013).
• Suspicious Activity Reports (SARs): Reporting suspicious transactions to FinCEN when there is suspicion of money laundering, fraud, terrorist financing, or other illegal activity (threshold varies by institution, typically USD 5,000).
• Customer Identification Program (CIP): Verification of the identity of all customers at account opening with documented procedures (since USA PATRIOT Act).
• Customer Due Diligence (CDD) Rule: Identification and verification of beneficial owners with at least 25% ownership in legal entities (since 2018).
• Beneficial Ownership Information (BOI) Reporting: Under the Corporate Transparency Act, reporting companies report their beneficial owners to FinCEN's BOI registry (since 1 January 2024); following the interim final rule of 26 March 2025, US-formed companies and US persons are exempt, so only foreign-formed entities registered to do business in the United States remain subject to the obligation.
• AML Compliance Program: Every financial institution must maintain a BSA/AML compliance programme with internal controls, a BSA Officer, ongoing training, and independent testing.
• Recordkeeping: Retention of certain transaction records for at least five years, including wire transfers from USD 3,000 (Funds Transfer Rule).
• FBAR (FinCEN 114): Annual reporting of foreign financial accounts by US persons when the aggregate maximum balance exceeds USD 10,000.

Following litigation over the CTA's constitutionality, FinCEN issued an interim final rule on 26 March 2025 fully removing BOI reporting for US-formed entities and US persons. 'Reporting company' is now limited to foreign-formed entities registered in the US.

The Corporate Transparency Act (CTA), created by the AML Act of 2020, is not mentioned despite being the most significant recent BSA expansion. The CTA requires reporting companies to report Beneficial Ownership Information (BOI) to FinCEN; reporting obligation effective 1 January 2024.

The key requirements cite 'Form FinCEN 104' for Currency Transaction Reports. This has been obsolete since 1 April 2013, replaced by FinCEN Form 112 (electronic filing via the BSA E-Filing System).

key_dates: 2022-06-30 corrected to 2021-06-30