1 Report on Outreach to Money Services Businesses ... - FinCEN

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Financial Crimes Enforcement Network Background on BSA and AML Programs The BSA 2 was enacted by the U.S. Congress in 1970 in response to concern over the use of financial institutions by criminals to launder the proceeds of their illicit activity. The BSA has been amended on several occasions, most significantly by the Money Laundering Control Act (MLCA) of 1986 3 and Title III of the USA PATRIOT Act of 2001. 4 The BSA authorizes the Secretary of the Treasury, inter alia, to issue regulations requiring financial institutions to keep certain records and file certain reports, 5 and to implement anti-money laundering programs and compliance procedures to guard against money laundering. 6 The authority of the Secretary to administer the BSA has been delegated to the Director of FinCEN. 7 The BSA’s overarching goal is to “require certain reports or records where they have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings, or in the conduct of intelligence or counterintelligence activities, including analysis, to protect against international terrorism.” 8 While some requirements in the BSA and its implementing regulations apply to individual persons, most of the BSA’s statutory and regulatory requirements apply to financial institutions. 9 The statute defines the term “financial institution” broadly. 10 It includes traditional financial institutions such as banks, securities broker-dealers, and insurance companies. 11 It also includes cash-intensive entities that handle significant amounts of currency such as casinos and MSBs, as well as entities not traditionally considered financial institutions but which engage in transactions that can also be vulnerable to money laundering, such as dealers in precious metals, stones, or jewels, and vehicle sellers. 12 2. See http://www.fincen.gov/statutes_regs/bsa/ and Titles I and II of Public Law 91-508, as amended, codified at 12 U.S.C. §§1829b, 12 U.S.C. §§ 1951-1959, and 31 U.S.C. §§ 5311-5314, 5316-5332. 3. See Public Law 99-57 and 18 U.S.C §§ 1956 and 1957. 4. See Title III of Public Law 107-56, available at http://www.fincen.gov/statutes_regs/patriot/ 5. See 31 U.S.C. §§ 5313 and 5318(g). 6. See 31 U.S.C. § 5318(h). 7. See Treasury Order 180-01 (Sept. 26, 2002). 8. See 31 U.S.C. § 5311. 9. See 31 U.S.C. § 5312(a)(2); 31 C.F.R. § 103.11(n). 10. See 31 U.S.C. § 5312 (a)(2). 11. See id. 12. See id. <strong>Report</strong> on Outreach to Money Services Businesses 5
Financial Crimes Enforcement Network The term MSB, as currently defined in the BSA regulations, refers to each of the following distinct categories of financial service providers: (1) Currency dealer or exchanger; (2) check casher, (3) issuer of traveler’s checks, money orders, or stored value; (4) seller or redeemer of traveler’s checks, money orders, or stored value; (5) money transmitter; and (6) the United States Postal Service. 13 Like other financial institutions under the BSA, MSBs must implement AML programs. These programs, at a minimum, must include: the development of internal policies, procedures, and controls; designation of a compliance officer; an ongoing employee training program; and an independent review function to test programs. 14 BSA regulations also require certain MSBs to register with FinCEN and prepare and maintain a list of agents, if any. 15 A MSB must file a Currency Transaction <strong>Report</strong> (CTR) (FinCEN Form 104) 16 for each transaction in currency 17 (deposit, withdrawal, exchange, or other payment or transfer) of more than $10,000 by, through, or to the MSB. A CTR must be filed for all single currency transactions of more than $10,000 by or on behalf of any one person in one business day. 18 Multiple currency transactions must be aggregated, and a CTR is required if the business has knowledge that the multiple transactions are by or on behalf of any person and result in currency in or out totaling more than $10,000 in one business day. 19 A Suspicious Activity <strong>Report</strong> by Money Services Business (SAR-MSB) (FinCEN Form 109) 20 must be filed if a transaction is conducted or attempted by, at, or through an MSB, and it involves or aggregates funds or other assets of a least $2,000, and the MSB knows, suspects, or has reason to suspect that the transaction (or pattern of transactions): 13. 14. 15. • Involves funds derived from illegal activity, or is intended to hide or disguise funds or assets derived from illegal activity, as part of a plan to violate or evade any Federal law or regulations, or to avoid any transaction reporting requirement under Federal law or regulation; See 31 CFR § 103.11(uu)(1) – (6). See 31 U.S.C. § 5318(h). See31 C.F.R. § 103.41. 16. See http://www.fincen.gov/forms/files/fin104_ctr.pdf. 17. Currency is defined as coin and paper money of the United States or of any other country that (1) is designated as legal tender, (2) circulates, and (3) is customarily used and accepted as a medium of exchange in the country of issuance. See 31 CFR § 103.11(h). 18. See 31 C.F.R. § 103.22(b)(1). 19. See 31 C.F.R. § 103.22 (c)(2) 20. See http://www.fincen.gov/forms/files/fin109_sarmsb.pdf <strong>Report</strong> on Outreach to Money Services Businesses 6
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Page 8 and 9: Introduction Financial Crimes Enfor
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