The USA’s AML/CTF supervisors
The Financial Crime Enforcement Network (FinCEN) is the government agency in charge of policing the country's anti money laundering and counter terrorism financing laws. The goal of FinCEN, a division of the Treasury Department, is to prevent the use of the financial system for unlawful use, fight money laundering, and promote national security through the collection, analysis, and distribution of financial information and the strategic application of financial authorities.
FinCEN fulfils its objective by acquiring and maintaining information on financial activities, analysing it for law enforcement reasons, and distributing it. It also encourages international collaboration with other countries and organisations.
The Office of Foreign Assets Control (OFAC) imposes trade and economic sanctions against designated foreign governments and regimes, terrorists, international drug traffickers, others engaged in activities related to the proliferation of weapons of mass destruction, and those who pose a threat to the United States' national security, foreign policy, or economy in accordance with the nation’s foreign policy and national security objectives.
How do you comply with AML/CTF regulations in the USA?
The two primary AML/CTF regulations are the Bank Secrecy Act and the USA PATRIOT Act.
The Bank Secrecy Act (BSA)
The Bank Secrecy Act (BSA) is the country's first and toughest anti-money laundering and counter-terrorism financing (AML/CTF) law. According to the BSA, the Secretary of the Treasury has the authority to issue regulations requiring banks and other financial institutions to implement anti-money laundering (AML) programs that offer sufficient Consumer Due Diligence (CDD), monitoring, reporting, and record-keeping to prevent financial fraud.
The USA PATRIOT Act
The USA PATRIOT Act (Uniting and Strengthening America by the Provision of Appropriate Tools Required to Intercept and Obstruct Terrorism) was signed into law as a reaction to the terrorist events on September 11, 2001. The act aims to increase law enforcement investigative powers, to prevent and prosecute terrorist attacks conducted in the United States and around the world, as well as to achieve other goals. The BSA's scope is increased under this law, and law enforcement organisations now have more monitoring power.
Under the Bank Secrecy Act and associated anti-money laundering legislation, banks and other financial institutions are required to:
Include internal controls to ensure continuing compliance, allow for independent testing of compliance, name a person in charge of organising and overseeing day-to-day compliance, as well as train appropriate staff.
Create efficient monitoring and systems for Customer Due Diligence
Check your information against the OFAC and other government lists
Create a method for monitoring and reporting suspicious activity that is efficient
Create anti-money laundering initiatives based on risk
Create programs for Customer Due Diligence (CDD) and Customer Identification (CIP)
Keep track of the money spent buying negotiable instruments.
Report any cash transactions over $10,000 (daily aggregate amount)
Inform authorities of any unusual behaviour that might be a hint of crime (e.g., money laundering, tax evasion)
AML/CTF Reporting Obligations in the United States
Financial institutions are required to file a variety of reports under the BSA rules. Important reporting requirements include:
Currency Transaction Reports (CTR)
Whether there are multiple cash transactions or just one that totals $10,000 in a single workday, Currency Transaction Reports (CTR) must be filed. The Financial Crimes Enforcement Network (FinCEN) accepts reports submitted electronically in the form of FinCEN Form 112. (Formerly Form 104).
Suspicious Activity Reports (SAR)
Any cash transaction where the client appears to be attempting to circumvent BSA reporting requirements, such as by failing to submit a CTR or Monetary Instrument Log (MIL), must be reported. Additionally, a SAR must be submitted if the customer's activities imply that they are engaging in money laundering, breaking other federal criminal statutes, or engaging in wire transfer fraud, check fraud, or an unexplained absence. These reports, designated as Treasury Department Form 90-22.47 and OCC Form 8010-9, 8010-1, are submitted to FinCEN.
Cash Purchases of $3,000-$10,000, inclusive
Money Services Businesses (MSBs) that sell travellers’ checks or money orders are required to record cash purchases involving $3,000 to $10,000, inclusive. If you buy multiple monetary instruments in cash for $3,000 or more, you must treat the transaction as one purchase that must be recorded if you do so at the same time or if The MSB knows the transaction took place during a business day.
Money Transfers of $3,000 or more
Regardless of the payment method, MSBs that offer money transfer services are required to collect and maintain information for each transfer of $3,000 or more. After the transaction date, they have 5 years to keep the record.
Currency Exchanges of more than $1,000
Each trade involving more than $1,000 in either domestic or foreign currency requires the currency exchanger to retain a record, which must be kept for 5 years after the exchange.
Foreign Bank Account Reports (FBAR)
Citizens and residents must submit an FBAR by October 15 of each year to the U.S. Treasury if they have a financial interest in, or control over, foreign bank accounts or foreign financial accounts with a combined value of $10,000 or more. It has the designation FinCEN Form 114. (Formerly Treasury Department Form 90-22.1). The accounts must also be disclosed on Schedule B of the Form 1040 tax form.
