Anti-Money-Laundering: The Bank Secrecy Act
The Bank Secrecy Act (1970) imposes recordkeeping and reporting on financial institutions, requiring reports of currency transactions over $10,000 to the IRS and retention of credit records over $10,000 for five years. FinCEN (Treasury) administers AML enforcement; crypto firms are often classed as money services businesses.
U.S. AML law stems from the Bank Secrecy Act (BSA) (1970), made stricter by the USA PATRIOT Act (2001). FinCEN administers the laws to "follow the money." The BSA's definition of financial institution differs from GLBA's, covering banks, securities brokers, money services businesses, casinos, card clubs and more.
- Report currency transactions of $10,000 or more to the IRS via a Currency Transaction Report (Form 4789).
- Report purchases of bank checks, money orders, traveler's checks and crypto transactions of $3,000 or more in currency.
- Retain records of credit extensions over $10,000 (not real-property-secured) for five years.
- Crypto firms (P2P exchanges, hosted wallets, mixers/tumblers) are frequently classed as money services businesses; some models like decentralized exchanges and mining pools may be exempt.
The BSA uses its own definition of financial institution, different from GLBA's. An entity covered by one may not be covered identically by the other.