The Bank Secrecy Act established all of the following EXCEPT: A) types of reporting requirements for large and suspicious transactions B) 40 recommendations for countermeasures against money laundering C) monetary and criminal penalties for violating the act D) records that must be kept on various transactions
The Correct Answer and Explanation is:
The correct answer is B) 40 recommendations for countermeasures against money laundering.
The Bank Secrecy Act (BSA), also known as the Currency and Foreign Transactions Reporting Act, was enacted in 1970 in the United States to combat money laundering and other financial crimes. It focuses on maintaining the integrity of the U.S. financial system by setting certain reporting and recordkeeping requirements for financial institutions.
Here’s why option B is the correct answer:
A) Types of reporting requirements for large and suspicious transactions: This is a key component of the BSA. The act mandates that financial institutions report large cash transactions exceeding $10,000 through a Currency Transaction Report (CTR). It also requires the reporting of suspicious transactions that could involve money laundering or fraud through a Suspicious Activity Report (SAR).
B) 40 recommendations for countermeasures against money laundering: This is not a part of the Bank Secrecy Act. The 40 recommendations refer to the Financial Action Task Force (FATF), an international body that creates global standards for anti-money laundering (AML) and combating the financing of terrorism (CFT). The FATF’s recommendations are separate from the provisions outlined by the BSA.
C) Monetary and criminal penalties for violating the act: The BSA does indeed impose both monetary fines and criminal penalties for violations. Institutions that fail to comply with BSA requirements may face hefty fines, and individuals can be subject to criminal prosecution, including jail time for severe offenses.
D) Records that must be kept on various transactions: The BSA requires financial institutions to maintain detailed records of various transactions, including records of customers’ identities, transaction amounts, and the nature of the transactions. These records help law enforcement agencies trace suspicious activity and investigate potential crimes.
In summary, while the BSA establishes reporting and recordkeeping obligations, and penalties for noncompliance, it does not provide specific recommendations for countermeasures against money laundering, which falls under the purview of the FATF.
