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Bank Secrecy Act and Anti-Money Laundering

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BSA Basics

What is Money Laundering?
Money Laundering involves transactions intended to disguise the true source of funds; disguise the ultimate disposition of the funds; eliminate any audit trail and make it appear as though the funds came through legitimate sources; and evade income taxes.
Money laundering erodes the integrity of a nation’s financial system by reducing tax revenues through underground economies, restricting fair competition with legitimate businesses, and disrupting economic development. Ultimately, laundered money flows into global financial systems where it could undermine national economies and currencies. Thus, money laundering is not only a law enforcement problem, but poses a serious national and international security threat as well.

Combating Money Laundering
The Bank Secrecy Act (“BSA”) was enacted by Congress in 1970 to require insured depository institutions to maintain certain records and to report certain currency transactions, in an effort to prevent banks from being used to hide money derived from criminal activity and tax evasion. These records and reports have a high degree of usefulness in criminal, tax, and regulatory investigations and proceedings. Since 1970, there have been many legislative and regulatory standards imposed to help prevent money laundering and to strengthen the government’s ability to combat money laundering and more recently, terrorist activity financing.






Last Updated 02/19/2009 supervision@fdic.gov