bank secrecy act

The Bank Secrecy Act (BSA) was passed by the Congress of the United States in 1970. The term bank secrecy act is somewhat of a misnomer. The law, and subsequent regulation, requires banks and other financial institutions to actually reveal certain transactions, and not keep them secret. These transactions include deposits or withdrawals of more than $10,000 in cash in a day, or purchase of monetary instruments (money orders, cashiers checks, travelers checks) with more than $3,000 of cash. For such transactions, the bank must report certain information about the person doing the transaction, such as address and occupation in a "currency transaction report" (or CTR). If it appears the person is in any way attempting to circumvent the report, the Bank must file a "suspicious activity report" (or SAR) with FINCEN, the FINancial Crimes Enforcement Network. An entire industry has grown up around software to analyze transactions in an attempt to identify transactions or patterns of transactions (called structuring, which requires an SAR report) that qualify for reporting. Financial institutions face heavy penalties for failing to properly file CTR and SAR reports, including heavy fines and regulatory restrictions (even to the point of loosing their charter). Many regular people will have a CTR filed under the BSA on a financial transaction at some point. For example, if you withdraw cash to purchase a car that exceed $10,000 or purchase many traveler's checks with cash for a long European vacation. CTRs include your bank account number, name, address, and SSN. SAR reports, required when transactions indicate behaviour designed to elude CTRs (as noted above), include somewhat more detailed information and usually include investigation efforts on the part of the financial institution to assess the validity of transactions, or explaining why they believe you might possibly be structuring the transaction.. A single CTR filed for your account is usually of no concern to the authorities, while multiple CTRs from varying institutions or a SAR indicates that activity may be suspicious (as a bank customer though they are meaningless unless you are actually doing something illegal). A financial institution is under not allowed to inform a business or consumer that a CTR or SAR is being filed. Bob Dole was famous for doing many large cash withdrawals (though this would normally be completely secret even with a CTR except for the fact that the bank in question failed to file CTR's and was closed down because of it). Businesses that primarily deal in cash, such as bars and restaurants can be exempted from having their deposits and withdrawals reported as CTRs, although this exemption is rarely granted. Instead, most banks have computer systems which retains the CTR information and allows duplicate CTR's to be created seamlessly. These efforts are in part an attempt to minimize and detect money laundering efforts by terrorists, senior foreign political embezelers, drug dealers and organized crime rings.

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