Money laundering is a serious offense. Just how law enforcement is better able to combat money laundering is through the assistance of banks and financial institutions. Keeping track of certain monetary transactions is the responsibility of these financial institutions under the current laws. Those who are required to follow these laws will need to have an Anti-Money Laundering or AML Compliance Program in place to ensure the record keeping requirements are done appropriately.
The image developed by the term money laundering is pretty straightforward. It is the process of turning "dirty money" into "clean money". Dirty money is obtained from criminal activity like drug trafficking, terrorist activities or other crimes. Furthering this criminal activity, dirty money is incorporated into the legal financial system. Three steps are needed with basic money washing. Legal banking institutions first obtain this illegal money confidentially. Placement is the term for this procedure. Shifting the money around is the second step, where difficult to trace wire transfers move the money from place to place. This step is called layering. The third and final step is moving the money through the various banks until it is what they refer to as clean. This last part is known as integration.
Although it is impossible to figure out exactly how much of the global economy is involved in money laundering, some organizations have estimated that it is somewhere between two to five percent. Likely somewhere in the billions is the amount of US money that could be a part of this laundering. With this substantial threat to legitimate monetary transactions, governments have sought to criminalize money laundering and to discover it so that those responsible can be charged.
The Bank Secrecy Act or the BSA was put into law by Congress in 1970 in order to combat this illegal activity. The BSA set up certain specifications for recording keeping of money and the reporting of certain transactions by banks, financial institutions as well as private individuals like brokers. Under the Bank Secrecy Act, those subject to the law are required to report cash transactions which are over $10,000 though a Currency Transaction Report and to keep a paper trail of such financial transactions. Anyone participating in such large transactions must also be identified by the banking institutions.
The Financial Industry Regulatory Authority or FINRA, in order to put into action such requirements has established a specific guideline that all banks and financial institutions create what is called an ALM compliance program. FINRA Rule 3310 requires that member institutions establish a compliance program that can detect and report the transactions required under the Bank Secrecy Act, that has sufficient internal procedures and controls to ensure compliance, to provide compliance testing on an annual basis by an outside third party, to designate and identify to FINRA the people who are responsible for the compliance program, and to provide the appropriate employees with ongoing training to ensure compliance.
Besides being required by law, those subject to the Bank Secrecy Act must abide by or their professional reputation would be in jeopardy. AML compliance can seem daunting at first but there are a number of resources available to help those that need to comply to implement programs that are sufficient under applicable laws and regulations. Talking to a professional who can determine whether or not your required to comply to such laws will be a great help and the expert is also able to help set up such compliance applications on your behalf.
