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The Bank Secrecy Act (BSA) is a piece of legislation that was passed in the United States in 1970 as part of an effort to fight money laundering. It was one among several acts of law used to make money laundering more difficult while facilitating investigation of suspected money laundering activities. Banks are subject to this and several other laws that require them to report on certain matters whether or not bank customers are aware that reports are being filed.
Under the Bank Secrecy Act, banks are required to keep logs of currency transactions and transactions involving monetary instruments, such as cashier's checks or traveler's checks. If a single person is involved in transactions over $10,000 (USD) in a single day, this is deemed suspicious activity, and the bank will be required to file a Suspicious Activity Report (SAR). Suspicions Activity Reports provide information about the nature of the transactions in question and who is involved. They are made available to law enforcement agencies by the bank.
Also known as the Currency and Foreign Transactions Reporting Act, the Bank Secrecy Act was intended to break down some of the secrecy in the banking industry, making it harder for money launderers to hide. Knowing that large transactions are logged and reported, people who are trying to process cash from illicit activities cannot use banks to do so. Banks have also evolved some of their policies to make it harder for them to be used as tools for money laundering. For example, some banks do not allow people to pay cash for a large cashier's check. Instead, the money must be taken from an account that already exists at the bank.
Acts of legislation, such as the Bank Secrecy Act, establish standards for reporting and logging suspicious activity, but do not require active measures on the part of a bank. If someone brings in sacks of cash for deposit, for example, the bank is not required to take any action to apprehend the customer. It only notes the suspicious transaction and reports it along with other information, such as comments made by the customer during interactions with bank personnel, leaving it to law enforcement to move forward if the situation warrants it.
Money laundering can be used by gangs, organized crime, terrorist organizations, and other criminal groups to move and hide assets. The government reasons that attacking criminal organizations in the pocketbook with legislation like the Bank Secrecy Act can be a highly effective way to put a stop to criminal activities. Organizations that have no money cannot finance operations and may be forced to suspend activities or disband.
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