The Trouble with Cash

The New Requirements

Congress enacted the Bank Secrecy Act (BSA) in 1970 to help fight money laundering by drug traffickers and organized crime. But after September 11, 2001, Congress enacted the USA Patriot Act, which was the first governmental regulation to specifically address money laundering that supports terrorism. The Patriot Act amended some of the BSA requirements and stipulated that financial institutions should develop customer identification programs with which banks gather detailed information about a customer’s business.

The Money Laundering Suppression Act of 1994 also places requirements on both an MSB and its financial institution. MSBs must register with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network and develop an anti–money-laundering policy.

“Can you imagine when we tell our biker bar, ‘You have to register with [the network]’? That’s the last thing they want to do,” Novitzki says. “As banks, we have to do it, and we’re accustomed to regulations and used to reporting. The local bars and corner grocery stores are not.” Premier tries to work with these unlikely MSBs to educate them on the requirements, often referring customers to www.msb.gov, a user-friendly web site created by the Treasury Department to assist MSBs.

Among other obligations, banks must confirm their MSB customers’ enforcement network registration when opening an account. As part of a customer identification program, a bank is expected to find out what types of products and services its customer offers, what market it serves, how many transactions the customer anticipates (between itself and its own customers), and what the bank account will be used for. Banks must also file currency transaction reports on bank deposits or withdrawals of more than $10,000 in cash, and report any suspicious activity. The transaction reports must include information about the person interacting with the bank’s client, including name, address, Social Security number, and a copy of a driver’s license or other identification. MSBs can deal in tens of thousands of dollars, and it’s conceivable that a bank could have to write reports on every transaction between itself and a customer.