Definition
Bank Secrecy Act (BSA)
The 1970 federal statute that is the foundation of American anti-money-laundering rules and requires financial institutions to keep records and file reports on certain currency and suspicious transactions. The BSA is administered by FinCEN and is the source of the Currency Transaction Report (CTR) for cash over $10,000 and the Suspicious Activity Report (SAR) for suspected illegal activity. The USA PATRIOT Act of 2001 expanded the BSA to require every broker-dealer to have a written anti-money-laundering compliance program and a Customer Identification Program (CIP).
A broker-dealer's AML compliance officer traces every reporting duty back to the Bank Secrecy Act: the CTR for the $12,000 cash deposit last week, the SAR filed after detecting structuring, the OFAC screening at account opening, and the five-year retention of AML records. Each requirement sits under the BSA, as extended by the USA PATRIOT Act.
Students sometimes point to the USA PATRIOT Act as the source of AML rules. The USA PATRIOT Act (2001) amended and expanded the BSA; the Bank Secrecy Act (1970) is the underlying statute. A related mix-up is with GLBA, which governs customer-information privacy under Regulation S-P and is a separate framework from BSA-driven AML.
How is Bank Secrecy Act (BSA) tested on the exam?
- Recognizing the BSA as the statutory foundation of AML compliance
- Distinguishing the BSA (1970) from the USA PATRIOT Act (2001)
- Identifying FinCEN as the BSA administrator
- Distinguishing BSA/AML requirements from GLBA privacy requirements
- Recognizing that CTRs, SARs, and CIP obligations all trace to the BSA framework
Regulatory limits
Regulatory Limits
| Description | Limit | Notes |
|---|---|---|
| Year enacted | 1970 | - |
| Administering agency | FinCEN (Treasury) | - |
| Key expansion | USA PATRIOT Act (2001) | Added the written AML program and Customer Identification Program requirements for broker-dealers. |
| Core reports | CTR and SAR | - |
BSA = Base Statute for AML. 1970 law, run by FinCEN. Everything else (CTR, SAR, CIP, AML program) traces back to the BSA, and the USA PATRIOT Act (2001) is the big expansion.
Practice questions
Test your understanding with the questions below. Pick an answer to reveal the explanation.
Which federal statute is the foundation of anti-money-laundering compliance rules for broker-dealers?
B is correct. The Bank Secrecy Act of 1970, administered by FinCEN, is the underlying statute for AML compliance. The USA PATRIOT Act (2001) later expanded the BSA to require written AML programs and CIP for broker-dealers. A is the primary market registration statute. C is the privacy statute behind Regulation S-P. D governs investment advisers.
Exams often ask for the legal source of a rule. BSA is the AML source; GLBA is the privacy source.
The USA PATRIOT Act of 2001 relates to the Bank Secrecy Act in which of the following ways?
C is correct. The USA PATRIOT Act expanded the BSA. It did not repeal or replace it, and it did not move enforcement to the SEC. FinCEN, a Treasury bureau, continues to administer the BSA.
The exam expects you to know that the BSA is the base statute and that the USA PATRIOT Act added the modern CIP and program requirements.
What concepts relate to Bank Secrecy Act (BSA)?
This term is part of this cluster :
Where does Bank Secrecy Act (BSA) appear on the Series 6 exam?
This term is tested in the following FINRA Series 6 topic areas: