Bank Secrecy Act

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overview
The Bank Secrecy Act is also know as the Financial Recordkeeping and Reporting of Currency and Foreign Transactions Act of 1970 (31 U.S.C. 1051 et seq.).

The bank Secrecy Act (BSA) was initially used to crack the rings of individuals involved in illegal drug activities and drug trafficking. After September 11, 2001 terrorist attack, Bank Secrecy Act, has been used in identifying the terrorists and their funding. Using the tools from BSA, Law enforcement agencies were able to find currency transaction made by the drug trafficker to banks out side the US in the past and recently they were able to shut down and crack the terrorist network and their funding around the glob. The BSA requires financial institutions to keep records of cash purchases and file reports of cash purchases of $10,000 or more into, out of, and within the United States that might signify money laundering, tax evasion, or other criminal activities. The Bank Secrecy Act" (BSA) consists of two parts; I) Financial Recordkeeping. It is demanding financial institutions to maintain records of all the transactions for five years. Financial Institutions must also keep record of all the extension of credit for $10,000 or more to private individuals with their name, address, social Security number. II) Reports of Currency and Foreign Transactions in excess of $10,000 for criminal, tax, or regulatory investigations. Financial institution within the United States must file a Currency Transaction Report (CTR) to the Internal Revenue Services (IRS) for each $10,000 transaction during one business day or $10,000 transactions spread over a number of days. All the financial institution in the US must also file Suspicious Activity Report (SAR) for suspicious transaction to the Financial Crimes Enforcement Network (FinCEN) with 30 calendar days of the transaction. The BSA requires all banks to designate a senior bank official to be responsible for all the reporting. A simple overview of the Bank Secrecy Act (BSA) 31 USC 1051 et seq comes from Privacilla.org:

"Though most people do not know it, financial institutions are required by the federal government to spy on their customers. Congress authorized the Treasury Department/Department of the Treasury to require them to do so in the Bank Secrecy Act.

"The Bank Secrecy Act authorizes the Treasury Department to require financial institutions to maintain records of personal financial transactions that 'have a high degree of usefulness in criminal, tax and regulatory investigations and proceedings.' It also authorizes the Treasury Department to require any financial institution to report any 'suspicious transaction relevant to a possible violation of law or regulation.' These reports, called Suspicious Activity Reports are filed with the Treasury Department's Financial Crimes Enforcement Network (FinCEN).

"This is done secretly, without the consent or knowledge of bank customers, any time a financial institution decides that a transaction is 'suspicious.' The reports are made available electronically to every U.S. Attorney's Office and to 59 law enforcement agencies, including the FBI, Secret Service, and Customs Service. A law enforcement agency does not have to be suspicious of an actual crime before it accesses a report, and no court order, warrant, subpoena, or even written request is needed. Law enforcement agencies can, and allegedly do, download the entire harvest of new information from FinCEN whenever they want it."

"The Bank Secrecy Act, commonly referred to as Title 31, has been evolving since the original legislation was enacted in October 1970. The overall purpose of the act was to fight money laundering and other financial crimes by requiring financial institutions to report cash transactions in excess of $10,000. Initially, this legislation focused on banking institutions. However, the law has been modified several times over the past three decades to expand the number and type of industries and transactions covered. The Department of the Treasury recognized the importance of extending the counter-money laundering controls to 'non-traditional' financial institutions, not simply to banks, both to insure fair competition in the marketplace and to recognize that non-banks as well as depository institutions are an attractive mechanism for, and are threatened by, money launderers. For example, the definition of financial institutions has been expanded to include casinos (1985), Indian casinos (1996), and card rooms (1998). Other businesses which fall under the definition of financial institutions are money transmitters and money order and traveler's check issuers, sellers, and redeemers.... The inclusion of Suspicious transactions is one of a number of additional amendments made to the Bank Secrecy Act which went into effect on July 1, 1997."

From "Suspicious Transactions: A Continuation of the Bank Secrecy Act" by John R. Mills, Ph.D., and Janet M. Vreeland, Ph.D. See rest of article for expansion on the topic, as well as that on suspicious transactions.

As demonstrated above, the Bank Secrecy Act applies to many financial entities other than banks/Banking institutions. For example, the Act also applies to


 * U.S. Postal Service: it is a money services business.


 * Precious metals dealers: financial institutions under the Act.


 * Futures Commission Merchants, Introducing Brokers in Commodities, Commodity Trading Advisors and Investment Advisers.

According to MoneyLaundering.com, the "Bank Secrecy Act has been turned on its head. The USA Patriot Act/Patriot Act I amended it 52 times! Including some contradictory amendments! ... No financial institution or business is untouched.... Not U.S. banks, not foreign banks, not securities dealers, not insurance companies, not money transmitters, not check cashers, not car, boat or airplane dealers, not jewelers, not travel agencies, not real estate brokers, not lawyers, not even Hawala brokers."

The portion of Patriot Act I that applies to the Banking Secrecy Act is called USA Patriot Act Section 314(a).

The Relationship between Banking Secrecy Act, Terrorism, and Patriot Act I: Neal Boortz, in his November 20, 2001NewsMax.com article "The 'Patriot' Act???" wrote:

"Take the Bank Secrecy Act, for instance. The true purpose of this bill was to make sure that the federal government could keep an eye on your financial relationship with your bank. A more proper title would have been the 'Bank Anti-Secrecy Act.'...

"Let's go back to that Bank Secrecy Act for a minute. Under that law your bank must file a report with the Imperial Federal Government every time you engage in a transaction with the bank involving more than $10,000 in cash.

"If you deposit $10,000 in cash the bank files a report. If you withdraw 10 grand, the bank files a report.

"Are you told the bank is filing a report? No. Are you given a copy of the report? No. (I guess this is where the 'secrecy' comes in.)

"Well ... Section 365 of the USA Patriot Bill has just expanded this reporting requirement. Now it applies to most businesses, in addition to banks. Now, if you go to a business and spend more than $10,000 in cash, that business has to report your name, address, Social Security number and other pertinent information to the feds.

"It doesn't matter whether you spend the money on one item or a whole shopping cart full ... the federal government must be notified.

"This has absolutely NOTHING to do with international terrorism. The terrorists who attacked the World Trade Towers and the Pentagon did not deal in large amounts of cash. They carried picture ID cards and used credit cards. They NEVER spent $10,000 in cash with any business.

"In short, they never engaged in any activity that would have to be reported under Section 365."

Related SourceWatch Resources

 * Intelligence Authorization Agreement of 2004
 * Money Services Businesses
 * National Credit Union Administration
 * Patriot Act industry
 * War on terrorism