USA-Flag

The USA Anti-Money
Laundering Regulations

BSA, FinCEN, OFAC, PATRIOT Act, AMLA 2020, FATCA, and FATF Travel Rule are Among the Main Dominators

  • 1

    The United States Bank Secrecy Act (BSA), established in 1970, is the core of the U.S. anti-money laundering (AML) system and serves as a cornerstone for other AML regulations. The BSA requires U.S. financial institutions to create and implement AML programs to monitor customers' transactions and cash flow. Additionally, it requires that all cash transactions exceeding 10,000 USD be reported through a Currency Transaction Report (CTR).

    Furthermore, measures such as sanctions on individuals or entities with interests conflicting with U.S. policy may be imposed by the Office of Foreign Assets Control (OFAC) in conjunction with the BSA authorities. These financial services establishments must maintain records of all financial transactions, and they may apply for exemptions if they have high daily transaction volumes. Through BSA policies, banks and institutions must maintain records to ensure transaction details are kept to facilitate retrievability for investigators when needed.

  • 2

    Established as an investigative agency in 1990 by the U.S. federal government, the Financial Crime Enforcement Network (FinCEN) is responsible for the implementation of regulations under the Bank Secrecy Act (BSA), supporting US Treasury authorities and assisting law enforcement with their investigations into money laundering and other financial crimes on a domestic and international scale.

    With its inception, FinCEN was an epiphany of strengthening Bank Secrecy Act (BSA) laws in the United States, having been amended in 1994 to include more powerful controls. FinCEN uniquely serves as the Financial Intelligence Unit (FIU) in the United States and investigates domestic and international financial crimes such as money laundering and terrorism financing. Financial institutions must report Suspicious Activity Reports (SARs) directly to FinCEN, which is charged with ensuring effective compliance with BSA regulations.

2001: USA PATRIOT Act [Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism - USA PATRIOT - Act of 2001] – In the aftermath of the September 11 terrorist attack, Congress passed the USA PATRIOT Act 2001 to strengthen mechanisms to prevent domestic and international terrorism. Sections 311 to 352 of the Act focus on enhancing correspondent banking regulations, customer identity verification, customer due diligence for non-US citizens, prohibition of shell banks, information sharing amongst regulators and authorities, compulsory AML Programs within financial institutions, and more.

In the wake of the terrorist attack on September 11, 2001, BSA authorities put the USA PATRIOT Act into force to bolster national security and investigations. This law extended to numerous aspects such as improving surveillance, curbing money laundering and hampering terrorism financing, aiding victims of terrorism, protecting law enforcement agents and infrastructure, increasing information exchange between institutions, and increasing legal measures against terrorism.

The Foreign Account Tax Compliance Act (FATCA), implemented in 2010, is an anti-tax evasion measure that requires Foreign Financial Institutions (FFIs) to provide information about accounts held by US taxpayers to the IRS.

FATCA requires Foreign Financial Institutions (FFIs) to report any foreign accounts or instruments owned by US taxpayers and requires US taxpayers to report their foreign financial assets. It also requires FFIs to report on any withheld foreign accounts or instruments. The law ensures that US taxpayers accurately report and pay taxes on overseas assets. FFIs that fail to provide this information may be subject to those taxes or severe penalties.

USA Flag

The USA PATRIOT Act was established in the early 2000s to limit money laundering and terrorist-related crimes. Still, authorities needed a way to refine and improve upon its standards. This led to the passage of the Anti-Money Laundering Act (AMLA) of 2020, which included provisions such as the ‘beneficial ownership database’ model. Under this model, companies must disclose their identities and proof of documents to FinCEN or face heavy fines and imprisonment penalties.

Art dealers and auctioneers must also file Suspicious Activity Reports (SARs) for high-value transactions. In addition, with AMLA 2020, law enforcement has greater subpoena rights for corresponding banking records within and outside the U.S.

Besides, AMLA 2020 encourages the use of data analytics and artificial intelligence technologies for digital identification and customer verification to reduce potential false positives. Finally, reporting violations directly to the authorities is rewarded with protection from threats or harassment.

The Financial Action Task Force (FATF) Travel Rule states that virtual asset service providers (VASPs), such as cryptocurrency exchanges, must record and report all crypto transactions over a certain threshold to the United States Financial Crimes Enforcement Network (FinCEN). FinCEN does not consider cryptocurrencies as legal tender but still requires crypto exchanges to comply with the same regulatory requirements as any other money transmitter. It considers cryptocurrency as ‘other value that substitutes for currency’. Thus, crypto exchanges must follow FATF's Travel Rule to do business in the U.S.

Also, under the Bank Secrecy Act (BSA), virtual currency exchanges in the United States must register with FinCEN and maintain an Anti-Money Laundering/Combating Financial Terrorism (AML/CFT) program. This program includes Know Your Customer (KYC), Customer Due Diligence (CDD), Currency Transaction Reporting (CTRs), Suspicious Transaction Reporting (STRs), Record-keeping, and appointment of a Money Laundering Compliance Officer (MLRO).

USA Flag
error: Content is protected !!