The Bank Secrecy Act (BSA) of 1970 — also called the Currency and Foreign Transactions Reporting Act — requires financial institutions to maintain records and file reports that help identify, detect, and deter money laundering and other financial crimes.
Key BSA requirements:
| Report | Trigger | Filed with | |---|---|---| | Currency Transaction Report (CTR) | Cash transaction >$10,000 | FinCEN | | Suspicious Activity Report (SAR) | Suspicious activity ≥$5,000 | FinCEN | | FBAR (FinCEN 114) | Foreign bank account >$10,000 at any point | FinCEN |
Structuring (illegal): Breaking up large cash transactions into smaller amounts to avoid CTR filing — a federal crime.
Anti-Money Laundering (AML) programs: Broker-dealers must maintain a written AML program with: 1. Internal controls. 2. Independent testing. 3. A designated compliance officer. 4. Ongoing employee training. 5. Customer identification procedures (CIP).
Customer Due Diligence (CDD): Firms must collect and verify beneficial ownership info (individuals owning ≥25% of a legal entity) and one controlling individual.
> Exam tip: On the SIE and Series 7, know the CTR threshold ($10,000 cash), the SAR threshold ($5,000 suspicious), and that structuring is illegal. SARs must NOT be disclosed to the subject of the report ("tipping off" is prohibited).