Bank Secrecy Act (BSA) Regulations - 01

Gregory J. Cook, EA, CPA    The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, administers and issues regulations pursuant to the Bank Secrecy Act (BSA). Through certain BSA reporting and recordkeeping requirements, paper trails of transactions are created that law enforcement and others can use in criminal tax and regulatory investigations.

Cook and Company, Enrolled Agents

The reporting and recordkeeping provisions of the BSA apply to banks, savings and loans, credit unions and other depository institutions (collectively referred to as “banks”) and to other businesses defined as financial institutions, including casinos, brokers and dealers in securities, and money services businesses (collectively referred to as “non-banks”).

BSA regulations require certain Money Services Businesses (MSBs) to register with FinCEN and prepare and maintain a list of agents, if any. In addition, BSA regulations require certain MSBs to report suspicious activity to FinCEN.

Summary of Certain BSA Regulations

1. Registration – each business that meets the definition of an MSB must register, except for the following:

*A business that is an MSB solely because it serves as an agent of another MSB;

*A business that is an MSB solely as an issuer, seller, or redeemer of stored value;

*The U.S. Postal Service and agencies of the U.S., of any State, or of any political subdivision of any State.

*A branch office of an MSB is not required to file its own registration form.


2. Agent List –

*MSBs that are required to register must prepare and maintain a list of their agents, if any, each January 1 for the preceding 12-month period.

*Upon request, MSBs must make their list of agents available to FinCEN and any other appropriate law enforcement or supervisory agencies (including the IRS in its capacity as BSA examination authority).

3. Suspicious Activity Report (SAR) – MSBs required to file SARs are:

*MSBs serving as money transmitters;

*Currency dealers or exchangers;

*Issuers, sellers, or redeemers of money orders;

*Issuers, sellers, or redeemers of traveler’s checks; and

*U.S. Postal Service.

MSBs must maintain a copy of all SARs filed as well as the original or business record equivalent of any supporting documentation for a period of five years from the date of the report. Supporting documentation must be identified as such, and, although it is not to be filed with the report, supporting documentation is deemed to have been filed with the report. Upon request, MSBs must make all supporting documentation available to FinCEN and any other appropriate law enforcement or supervisory agencies (including the IRS in its capacity as BSA examination authority).

4. Anti-Money Laundering (AML) Compliance Program – all MSBs, including issuers, sellers, or redeemers of stored value, are required to develop and implement an AML compliance program as required by section 352 of the USA PATRIOT Act and implemented by regulation at 31 CFR 103.125.

5. Currency Transaction Report (CTR) – MSBs must file CTRs on transactions in currency involving more than $10,000, in either cash-in or cash-out, conducted by, through, or to the MSB on any one day by or on behalf of the same person.

6. Monetary Instrument “Log” – MSBs must maintain certain information on the cash sale of monetary instruments – such as money orders or traveler’s checks – from $3,000 to $10,000, inclusive.

7. Funds Transfer Rules – MSBs must maintain certain information for funds transfers, such as sending or receiving a payment order for a money transfer, of $3,000 or more, regardless of the method of payment.

8. Currency Exchange Record – MSBs must maintain certain records for each currency exchange in excess of $1,000.

9. Record Retention – All BSA records must be retained for a period of five years and must be filed or stored in such a way as to be accessible within a reasonable period of time.