The Bank Secrecy Act (BSA) was enacted by Congress in 1970 to fight money laundering and other financial crimes. Since the 2001 terrorist attacks, the U.S. government has amended the original Act, imposing many legislative and regulatory standards to help deter money laundering as one way to fight international terrorism.
The BSA requires many financial institutions to create “paper trails” by keeping records and filing reports on certain transactions. Its reporting and recordkeeping provisions apply to banks, savings and loans and credit unions as well as other financial institutions, including money services businesses (MSBs).
Under the Bank Secrecy Act, all financial institutions are required to implement a Customer Identification Program, which must include procedures for verifying the identity of each customer. Certain kinds of businesses and banking clients may require closer scrutiny at account opening as well as ongoing review of their transactions.
Bank regulatory agencies have identified a number of “high-risk” client categories and Money Services Businesses, which include: accountants, convenience stores, lawyers, pawn shops, Executive Banking clients, restaurants and travel agencies, to name just a few. Additional information that may be required of clients in these “high-risk” categories includes, but is not limited to, the following:
- Account signer(s)
- Is owner a senior foreign official or relative of a senior foreign official?
- Estimated net worth
- Expected average monthly balance
- Anticipated international transactions
- Anticipated monthly wires, both foreign and domestic
- Anticipated monthly deposits
- Anticipated monthly withdrawals
If your business falls into any of the wide-ranging categories identified as “high-risk,” your bank may be legally required to further evaluate your documentation or ask you to provide the supplemental information described above.
To learn more about this regulation and its requirements, you may visit the Department of the Treasury’s Financial Crimes Enforcement Network website at www.FinCEN.gov.
The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of ZB, N.A. Member FDIC