- What is Anti-Money Laundering (AML)?
AML refers to a set of laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income. AML programs are enforced to detect, report, and prevent money laundering, terrorism financing, and related financial crimes.
- What is the Bank Secrecy Act (BSA)?
Enacted in 1970, the Bank Secrecy Act (BSA) is the foundational AML law in the U.S. It requires financial institutions to maintain records of cash transactions over $10,000 and report suspicious activity through Currency Transaction Reports (CTRs) and Suspicious Activity Reports (SARs).
- Who enforces AML laws in the United States?
AML laws are primarily enforced by the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury. Other regulators include the Office of the Comptroller of the Currency (OCC), Federal Reserve, FDIC, SEC, and state banking regulators.
- What is the USA PATRIOT Act’s role in AML?
The USA PATRIOT Act of 2001 significantly expanded AML enforcement after 9/11. It introduced Customer Identification Programs (CIP), enhanced due diligence, and broadened AML coverage to new entities, including brokers, casinos, and money services businesses.
- What is the Anti-Money Laundering Act of 2020 (AMLA)?
AMLA modernized U.S. AML laws by:
- Enhancing FinCEN’s authority.
- Requiring disclosure of beneficial ownership through the Corporate Transparency Act.
- Expanding AML requirements to non-bank financial institutions.
- Increasing penalties and protections for whistleblowers.
- What are “Suspicious Activity Reports” (SARs)?
A SAR is a report filed by a financial institution when it detects suspected criminal behavior or unusual transactions that may involve money laundering, fraud, or terrorist financing. SARs must be submitted to FinCEN confidentially.
- Are private lenders subject to AML laws?
Yes. While private lenders may not be subject to the full suite of bank regulations, they can still fall under AML requirements depending on their structure and activities—particularly if they are engaged in money services, real estate finance, or work with foreign nationals.
- What is “Beneficial Ownership” and why is it important?
Beneficial ownership refers to the real person who ultimately owns or controls a legal entity. Under AMLA, most U.S. corporations and LLCs must report their beneficial owners to FinCEN to combat the use of anonymous shell companies.
- What happens if an institution fails to comply with AML regulations?
Non-compliance can lead to:
- Civil and criminal penalties
- Loss of licensure or charter
- Reputational damage
- Government investigations or audits
Penalties can exceed millions of dollars in serious cases.
- How can Geraci LLP help with AML compliance?
Geraci LLP provides:
- AML program development and audits
- Risk assessments tailored to private lenders and real estate firms
- Guidance on FinCEN registration, beneficial ownership reporting, and SAR/CTR procedures
- Legal defense in enforcement actions
