Bank Secrecy Act (BSA)

The Bank Secrecy Act (BSA) is the body of federal law that requires financial institutions to keep certain records and file certain reports with the Treasury Department to help detect money laundering, tax evasion and other financial crime. It is administered by the Financial Crimes Enforcement Network (FinCEN). The name is a collective one: Treasury's own regulation explains that "the Currency and Foreign Transactions Reporting Act, its amendments, and the other statutes relating to the subject matter of that Act, have come to be referred to as the Bank Secrecy Act" (31 CFR 1010.100(e)). There is no single section a reader can turn to with that title.

The cash report. Every financial institution other than a casino must file a report of "each deposit, withdrawal, exchange of currency or other payment or transfer ... which involves a transaction in currency of more than $10,000" (31 CFR 1010.311). Multiple cash transactions by or for the same person on the same business day are added together when the institution knows about them (31 CFR 1010.313(b)), which is why two $6,000 deposits on one day produce a report. FinCEN's notice to bank customers is direct about what this is and is not: "There is no general prohibition against handling large amounts of currency and the filing of a CTR is required regardless of the reasons for the currency transaction." The bank also has to collect identifying information about the person doing the transaction, account holder or not.

Structuring is the crime, not the cash. 31 U.S.C. 5324(a)(3) makes it a crime to "structure or assist in structuring" transactions "for the purpose of evading the reporting requirements". Nothing in that offense requires the money to be illegal, and FinCEN's own examples of structuring include a man splitting the proceeds of selling his truck. The penalty under 5324(d) is a fine, up to five years in prison, or both, rising to up to ten years where the structuring happens while breaking another federal law or as part of a pattern of illegal activity involving more than $100,000 in twelve months.

Suspicious activity reports are different, and confidential. A bank must also report a transaction of at least $5,000 that it knows or suspects involves illegal funds, is designed to evade the BSA, or has "no business or apparent lawful purpose" (31 CFR 1020.320(a)(2)). Unlike the cash report, a suspicious activity report is secret by law: the bank may not disclose it "or any information that would reveal the existence" of one (1020.320(e)), so a customer will not be told whether one was filed.

What else sits under the same umbrella. A business that receives more than $10,000 in cash in one transaction or related transactions has its own report to file (31 U.S.C. 5331). The FBAR, the annual report of foreign financial accounts, is a Bank Secrecy Act filing made to FinCEN rather than with a tax return, and the identity verification a bank runs when you open an account is part of the same anti-money-laundering framework.

A teller who takes a cash transaction over $10,000, or several on one business day that together exceed it, records the customer's identifying information and the bank files a currency transaction report with FinCEN. Nothing further is asked of the customer, and the report is filed regardless of where the money came from.

Consider an example. Rosa sells her car to a private buyer for $14,000 in cash. If she deposits all of it at once, the bank files a report because $14,000 is more than $10,000, and that is the end of the matter for a lawful sale. Now suppose she has heard that big deposits "get flagged" and instead deposits $9,000 on Monday and $5,000 on Tuesday so that neither day's total exceeds $10,000. Each deposit is below the line, but the purpose of splitting them was to keep the bank from filing a report, and that is the conduct 31 U.S.C. 5324 makes a crime. The lawful source of the $14,000 is no defense to structuring.

Pros

• Cash reports and suspicious activity reports give law enforcement a trail through money that would otherwise move without records.
• The rules are mechanical for an ordinary customer: a large lawful cash deposit is reported and nothing more happens.
• The reports are the raw material for FinCEN's published analyses, such as its analysis of mail-theft check fraud built on reports financial institutions filed in 2023.

Cons

• Structuring is a crime even when the money is lawful, which catches people who split deposits out of a mistaken fear of the report itself.
• A customer cannot learn whether a suspicious activity report was filed about them, because the law makes those reports confidential.
• The record-keeping and identity requirements add paperwork and questions to ordinary cash transactions.