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 of 1970, is a key piece of U.S. legislation aimed at preventing money laundering and other financial crimes. The Act primarily requires financial institutions to keep certain records and file specific reports that could help identify illegal activity, including money laundering, terrorist financing, and other suspicious financial transactions.
Explanation of the options:
- A) Types of reporting requirements for large and suspicious transactions:
The BSA mandates that financial institutions report large transactions (over $10,000 in cash) and suspicious activity to the U.S. Department of the Treasury. This is known as the Currency Transaction Report (CTR) and Suspicious Activity Report (SAR). This is one of the core provisions of the BSA. - B) 40 recommendations for countermeasures against money laundering:
While the BSA deals with the reporting and record-keeping requirements, it does not include a specific list of “40 recommendations.” This option refers to guidance that came later, such as the Financial Action Task Force (FATF), which issues recommendations on combating money laundering and terrorist financing. The BSA does not contain these recommendations. - C) Monetary and criminal penalties for violating the act:
The BSA imposes penalties for non-compliance. These penalties can be severe, including fines and imprisonment, depending on the severity of the violation. Financial institutions that fail to comply with BSA regulations can face substantial monetary penalties. - D) Records that must be kept on various transactions:
The BSA requires financial institutions to maintain detailed records on certain types of transactions, including customer identification, large transactions, and those deemed suspicious. These records are crucial for ensuring that institutions can comply with reporting requirements and assist in investigations of financial crimes.
In summary, option B is the correct answer because the 40 recommendations are associated with the FATF, not the Bank Secrecy Act.
