The Bank Secrecy Act (BSA), enacted in the United States in 1970, is the primary federal anti-money-laundering statute that requires financial institutions to assist US government agencies in detecting and preventing money laundering and financial crime. It mandates customer identification, suspicious activity reporting (SARs), currency transaction reporting (CTRs), and record-keeping — establishing the foundational framework for AML compliance in the US financial system.
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- Signed into law by President Nixon in 1970, the Bank Secrecy Act (also known as the Currency and Foreign Transactions Reporting Act) was a response to growing use of offshore bank accounts and cash-intensive businesses to conceal illicit proceeds. It was initially narrowly applied but was dramatically expanded by the Money Laundering Control Act of 1986, the USA PATRIOT Act of 2001 (which added customer identification programme requirements and extended BSA to a far broader set of financial service providers), and the Anti-Money Laundering Act of 2020.
- The regulatory architecture operates through a delegated enforcement model: FinCEN issues BSA regulations and receives all SAR and CTR filings; bank regulators (OCC, Federal Reserve, FDIC, NCUA) examine BSA compliance during safety-and-soundness examinations; and the Department of Justice prosecutes violations. Civil money penalties for BSA failures have reached hundreds of millions of dollars against major financial institutions — including a 3.4bn penalty against TD Bank in 2024, which also faced an asset cap.
- BSA compliance programmes consist of five pillars: a compliance officer, written policies and procedures, ongoing training, independent testing (audit), and customer due diligence. The CDD Rule, added by FinCEN in 2018, added a fifth pillar — beneficial ownership identification — requiring institutions to identify natural persons owning 25% or more of legal entity customers. Technology solutions for BSA compliance include transaction monitoring platforms, name screening against sanctions lists, and AI-driven anomaly detection.
- By 2024–2025, the BSA framework is under significant pressure from the emergence of digital assets. FinCEN has extended BSA obligations to virtual currency exchanges and proposed bringing DeFi platforms within scope. The Corporate Transparency Act (CTA), effective 2024, creates a FinCEN beneficial ownership registry that supplements BSA CDD obligations. Regulatory attention is also focused on AI-driven BSA compliance systems — both their potential to improve detection accuracy and the risk of AI-generated SAR filings that lack meaningful human review.