Regulations promulgated by the Secretary of the Treasury (via FinCEN) implement the reporting, recordkeeping, and anti-money laundering program requirements authorized by the BSA.  The regulations apply to “financial institutions” and other specified businesses, which include banks, broker-dealers, futures commission merchants, introducing brokers in commodities, mutual funds, money services businesses, casinos, and card clubs.¹  The primary regulatory requirements include:

AML policies and procedures.  Financial institutions must establish and maintain risk-based policies and procedures designed to mitigate the risks of money laundering, including customer due diligence, risk management, internal controls, reporting, and recordkeeping.  Policies and procedures must be proportionate to the nature and size of the firm, and must be approved by senior management.

Compliance officer.  Where appropriate given the size and nature of their business, financial institutions must appoint an AML officer.

Training.  Financial institutions must take appropriate measures to ensure that relevant employees are made aware of the law relating to money laundering and terrorist financing.  Employees must receive training on how to recognize and deal with transactions that may be related to money laundering or terrorist financing.

Periodic testing.  Financial institutions must periodically perform an independent test of the AML program.

Risk assessment.  Financial institutions must take steps to identify and assess money laundering risks, which usually include keeping a written record of the risk assessment.

Customer Identification Program.  Financial institutions must obtain and record basic identification information (name, address, date of birth, and identification numbers for individuals), and verify the identity of the customer using documentary or other sources.

Customer Due Diligence.  Financial institutions must generally carry out customer due diligence when establishing a business relationship or executing certain transactions.

Reporting.  Financial institutions may be required to submit reports to different agencies, including Suspicious Activity Reports, Currency Transaction Reports, Reports of International Transportation of Currency or Monetary Instruments, and Reports of Cash Payments Over $10,000 Received in a Trade or Business.

Beneficial Ownership Reporting.  Beginning April 25, 2025, certain foreign entities registered to do business in the United States are required to disclose their beneficial owners to FinCEN.  Beneficial owners include any person who holds a greater than 25 percent interest in the reporting company or who exercises “substantial control” over the reporting company.  All entities formed under the laws of a foreign country that are registered with a state secretary of state to do business in that state (e.g., corporations, LLCs, foreign entities) must report beneficial ownership information within 30 days of receiving notice that is has been registered to do business in a state, unless they fall under the 23 exemptions provided by the Corporate Transparency Act.²