As the Biden administration prioritizes the recently enacted Anti-Money Laundering Act of 2020 (2020 AMLA), the most substantial overhaul of the AML regime in decades, Sigma Ratings looks back at the most significant legislations in our fight against financial crime.
Bank Secrecy Act (BSA) of 1970: The legislation established requirements for recordkeeping and reporting by private individuals, banks and other financial institutions. Notably, the law was designed to help identify the source, volume, and movement of currency and other monetary instruments transported or transmitted into or out of the United States or deposited in financial institutions. Among the provisions, the BSA requires banks to (1) Report cash transactions over $10,000 using the Currency Transaction Report; (2) Properly identify persons conducting transactions; and (3) Maintain a paper trail by keeping appropriate records of financial transactions
Foreign Corrupt Practices Act (FCPA) of 1977: The FCPA prohibits U.S. citizens and entities from bribing foreign government officials to benefit their business interests. A major shortcomings of the FCPA is the fact that it is limited to companies located in the U.S. and cannot be used against a foreign official who demands or takes a bribe.
Money Laundering Control Act of 1986: The Act most notably first established money laundering as a federal crime. Among its other provisions, the legislation prohibited structuring transactions to evade CTR filings, introduced civil and criminal forfeiture for BSA violations; and directed banks to establish and maintain procedures to ensure and monitor compliance with the reporting and recordkeeping requirements of the BSA.
Anti-Drug Abuse Act of 1988: The legislation expanded the definition of financial institution to include businesses such as car dealers and real estate and required them to file reports on large currency transactions. Furthermore, it required the verification of identity of purchasers of monetary instruments over $3,000
Annunzio-Wylie Anti-Money Laundering Act of 1992: The legislation strengthened the sanctions for BSA violations, required verification and recordkeeping for wire transfers, and notably, established the Bank Secrecy Act Advisory Group (BSAAG). Additionally, the legislation required Suspicious Activity Reports (SARs) and eliminated previously used Criminal Referral Forms.
Money Laundering Suppression Act of 1994: The legislation required banking agencies to review and enhance training, and develop anti-money laundering examination procedures. It also required the agencies to review and enhance procedures for referring cases to appropriate law enforcement. Notably, the legislation required each Money Services Business (MSB) to be registered by an owner or controlling person of the MSB, while also making operating an unregistered MSB a federal crime.
Money Laundering and Financial Crimes Act of 1998: The legislation required banking agencies to develop anti-money laundering training for examiners, and required the Department of the Treasury and other agencies to develop a National Money Laundering Strategy. Notably, the legislation created the High Intensity Money Laundering and Related Financial Crime Area (HIFCA) Task Forces to concentrate law enforcement efforts at the federal, state and local levels in zones where money laundering is prevalent. (HIFCAs may be defined geographically or they can also be created to address money laundering in an industry sector, a financial institution, or group of financial institutions).
Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act): The PATRIOT Act’s most notable provision criminalized the financing of terrorism and augmented the existing BSA framework by strengthening customer identification procedures. Among its provisions, the legislation prohibited financial institutions from engaging in business with foreign shell banks. It also required financial institutions to have due diligence procedures (and enhanced due diligence procedures for foreign correspondent and private banking accounts). Furthermore, it also improved information sharing between financial institutions and the U.S. government by requiring government-institution information sharing and voluntary information sharing among financial institutions. Notably, the PATRIOT Act expanded the anti-money laundering program requirements to all financial institutions
Intelligence Reform & Terrorism Prevention Act of 2004: The legislation amended the BSA to require the Secretary of the Treasury to prescribe regulations requiring certain financial institutions to report cross-border electronic transmittals of funds, if the Secretary determines that such reporting is "reasonably necessary" to aid in the fight against money laundering and terrorist financing