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.
1 31 USC § 5312(a)(2).