AML Disclosures

Question 1

What are the main sources?

Answer 1

BSA (1970)

USA PATRIOT Act (2001)

Fundamental goal of the AML laws is to follow the money. Thorough record keeping to deter criminal activity.

Question 2

BSA

Answer 2

Bank Secrecy Act of 1970, AKA Currency and Foreign Transaction Reporting Act of 1970.

Authorizes the U.S. treasury secretary to issue regulations that impose extensive record keeping and reporting requirements on financial institutions.

Specifically, financial institutions must keep records and file reports on certain financial transactions, including currency transactions in excess of $10,000, which may be relevant to criminal, tax or regulatory proceedings.

Question 3

BSA (Ratione personae)

Answer 3

Applies broadly to its own definition of financial institutions, which uses different language than GLBA and so may differ in some cases.

The BSA applies to banks, securities brokers and dealers, money services businesses, telegraph companies, casinos, card clubs, and other entities subject to supervision by any state or federal bank supervisory authority.

The scope of covered institutions has expanded because the criminals tend to use any businesses available.

Question 4

BSA (Ratione materiae)

Answer 4

BSA contains regulations relating to currency transactions, transportation of monetary instruments and the purchase of currency-like instruments.

BSA generally requires currency transactions of $10,000 or more to be reported to the IRS per the regulations, using a Currency Transaction Report, Form 4789.

Similarly, the BSA regulations cover purchases of bank checks, drafts, cashier’s checks, money orders, or traveler’s checks for $3,000 or more in currency.

The entity should collect and report information, including the name, address, SSN of the purchaser; the date of purchase; type of instrument; and serial numbers and dollar amounts of the instruments.

Question 5

Record Retention Requirements

Answer 5

Financial institutions must maintain all extensions of credit in excess of $10,000, but this does not include credit secured by real property.

Not all records should be maintained- only those with the “high degree of usefulness”

Records should include:

-borrower’s name and address,

• credit amount,
• purpose of credit,
• date of credit.

Records should be maintained for 5 years

For deposit account records, a financial institution must keep the depositor’s taxpayer ID number, signature cards, and checks exceeding $100 drawn or issued or payable by the bank.

With regard to certificates of deposit, the financial institution must obtain the customer name and address, a description of the CD, and the date of the transaction.

For wire transfers or direct deposits, a financial institution must maintain all deposit slips or credit tickets for transactions exceeding $100.

There are also rules regarding information that the banks must retain in connection with the payment orders.