BSA/AML
Also known as: Bank Secrecy Act; Anti-Money Laundering
US framework requiring financial institutions to detect and report suspicious activity.
The BSA/AML regime requires US financial institutions to maintain written AML programs, file Currency Transaction Reports (CTRs) above $10,000 and Suspicious Activity Reports (SARs) for transactions indicating possible illicit activity, and conduct customer due diligence. The Bank Secrecy Act of 1970 established the original recordkeeping and reporting backbone; the USA PATRIOT Act of 2001 substantially expanded customer identification requirements, correspondent banking controls, and information sharing; the Anti-Money Laundering Act of 2020 (within NDAA 2021) added the Corporate Transparency Act beneficial ownership registry and modernized whistleblower provisions. FinCEN administers the regime, with examination delegated to functional regulators (Federal Reserve, OCC, FDIC, NCUA, SEC, IRS).
Core components
- AML program (four pillars: internal controls, designated officer, training, independent testing
- fifth pillar CDD added 2018)
- Currency Transaction Reports (CTRs)
- Suspicious Activity Reports (SARs)
- Customer Identification Program (CIP)
- Customer Due Diligence (CDD) including beneficial ownership
- sanctions screening (OFAC)
- Information sharing (314(a)/(b))
Primary use case
Detection and reporting of money laundering, terrorist financing, and other illicit finance by US financial institutions; basis for global AML expectations through FATF.
Common criticisms
- Compliance costs vastly exceed documented enforcement value
- SAR effectiveness data not public
- defensive over-filing diluting signal
- high false-positive rates in transaction monitoring
- financial inclusion harms from de-risking
- AMLA Corporate Transparency Act struck down by district court in 2024 with ongoing litigation creating implementation uncertainty.
Lineage
- Parent of
- KYC
- Siblings
- KYC, Dodd-Frank Act, Sarbanes-Oxley