The Bank Secrecy Act (BSA), also known as the Currency and Foreign Transactions Reporting Act, is the primary U.S. anti-money laundering (AML) law. Enacted in 1970, it requires financial institutions to assist government agencies in detecting and preventing financial crime.
The law established obligations for record-keeping, reporting, and monitoring transactions that could be linked to money laundering, tax evasion, or terrorist financing. The Financial Crimes Enforcement Network (FinCEN) enforces the BSA, while institutions must also comply with sanctions administered by the Office of Foreign Assets Control (OFAC).
Definition Of The Bank Secrecy Act
The Bank Secrecy Act (BSA) is U.S. legislation requiring financial institutions to:
Maintain AML compliance programs.
Report suspicious transactions to FinCEN.
File currency transaction reports (CTRs) for cash transactions over $10,000.
Retain certain financial records for regulatory purposes.
Key Requirements Of The Bank Secrecy Act
The BSA outlines several core compliance requirements for regulated institutions.
Currency Transaction Reports (CTRs)
Firms must file CTRs with FinCEN for transactions over $10,000 in cash.
Suspicious Activity Reports (SARs)
Institutions must file SARs when they detect potential money laundering or other suspicious activity.
AML Compliance Programs
Financial institutions must implement programs that include internal policies, training, monitoring, and independent testing.
Record Keeping
Certain transaction records must be maintained for up to five years to support investigations.
Why The BSA Matters For AML Compliance
The BSA is the foundation of the U.S. AML framework. It supports the detection of criminal activity and requires firms to cooperate with regulators and law enforcement.
The Federal Reserve highlights BSA/AML as a core supervisory priority.
FinCEN regularly updates guidance and enforcement to strengthen compliance expectations.
Without strong BSA compliance, institutions risk regulatory penalties, reputational harm, and criminal liability.
Challenges Of Complying With The BSA
While essential, BSA compliance presents practical challenges.
High Alert Volumes
Transaction monitoring often generates excessive false positives.
Cost Of Compliance
Large institutions spend heavily on technology, training, and dedicated compliance staff.
Data Quality
Incomplete or inaccurate data undermines CTRs, SARs, and monitoring systems.
Cross-Border Risk
Global operations must balance BSA requirements with other international AML obligations.
Best Practices For BSA Compliance
Financial institutions can meet BSA obligations more effectively by:
Automating monitoring and reporting processes.
Updating sanctions and watchlists daily.
Using risk-based monitoring for high-risk customers and transactions.
Maintaining audit-ready records and governance structures.
Training staff regularly on BSA/AML obligations.
The Future Of The BSA
The BSA has been updated multiple times to reflect evolving financial crime risks, including the USA PATRIOT Act and recent AMLA reforms. Looking ahead, trends include:
Digital Transformation: Greater reliance on AI and machine learning for transaction monitoring.
Real-Time Monitoring: Integration with instant payments systems such as FedNow.
Global Alignment: Coordination between U.S. AML rules and global standards set by the FATF.
Enhanced Beneficial Ownership Transparency: Stronger requirements to identify ultimate beneficial owners of legal entities.
Ensure Strong BSA Compliance With Real-Time Screening And Monitoring
The Bank Secrecy Act sets strict requirements for financial institutions to monitor, detect, and report suspicious activity. Meeting these obligations requires robust screening and monitoring tools.
Facctum solutions; FacctShield, Payment Screening, FacctView, Customer Screening, and FacctGuard, Transaction Monitoring, help institutions comply with BSA obligations while reducing false positives and operational burden.
Contact Us Today To Strengthen Your BSA Compliance Program
