Banking Secrecy Act- 2021 Update

Updated: Aug 25

What is the Banking Secrecy Act?

The Bank Secrecy Act (BSA) of 1970, also known as the Currency and Foreign Transactions Reporting Act, is a law requiring financial institutions (FIs) in the United States to assist government agencies detect and prevent money laundering and fraud[1]. Specifically, the act requires financial institutions to keep records of cash purchases of ‘negotiable instruments’, file reports if the daily aggregate exceeds $10,000, and report suspicious activity that may signify money laundering, tax evasion, or other criminal activities[2].

BSA Amendments

Under the amendments proposed this November, further modifications to the BSA include the requirements of FIs to assemble and retain information on certain funds transfers and transmittals of funds.

The proposed modification would reduce this threshold from $3,000 to $250 for funds transfers and transmittals of funds that begin or end outside the United States. FinCEN is likewise proposing to reduce from $3,000 to $250 the threshold requiring FIs to transmit to other institutions in the payment chain information on funds transfers and transmittals of funds that begin or end outside the United States[3].

Further to the amendments currently proposed, the aim is to clarify the meaning of ‘money’ to ensure that the rules apply to both domestic and cross-border transactions. Such transactions will involve convertible virtual currency (‘CVC’), which is a type of exchange (such as cryptocurrency) that either has an equivalent value as fiat currency, or acts as a substitute for fiat currency, but lacks legal tender status. Moreover, the latter will also be extended to include that the rules apply to domestic and cross-border transactions involving digital assets that do in fact, have legal tender status[4].

Likewise, under the new regulations, firms that do not have a federal functional regulator (e.g. Federal Deposit Insurance Corporation (FDIC) or Securities & Exchange Commission (SEC)[5]), will now be subject to comparable rules that apply to any FDIC regulated firm. This will include, but is not exhaustive to[6]:

  • Private banks;

  • Non-federally insured credit unions; and

  • Trust companies.