Money Laundering

The following is a transcript of the video above.

Let’s try a Practice Question

Which two of the statements regarding the AML programs are correct?

1. The Bank Secrecy Act Requires filing of CTR’s
2. The USA PATRIOT Act requires filing of CTR’s
3. The Bank Secrecy Act requires the establishment of anti-money laundering programs in financial firms
4. The USA PATRIOT Act requires the establishment of anti-money laundering programs in financial firms

A.) 2 & 3

B.) 1 & 3

C.) 2 & 4

D.) 1 & 4

The answer here is D.

This is how to remember the BSA, The Bank Secrecy Act. This act forces banks to make it illegal to keep records they have made. It established the basic framework for anti-money laundering (AML) regulations. In short, the BSA said, “Do not keep secrets, specifically no secrets about cash deposits greater than 10K. The Patriot Act enhanced the AML programming to a degree much stronger than The Secrecy Act. The Bank Secrecy Act was passed in the 1970s. The US PATRIOT Act was passed after 9/11.

What Did the US Patriot Act Do?

It required customers to be verified after account opening. The customer’s ID had to be verified, promptly after the account was opened. You know what the bank said? “We cannot prevent you from opening an account without an ID. So as soon as we make it, send it in afterwards.” If you are making a cold call and say, “Let us sign you up for the new account,” you cannot verify their ID on the phone. Yet, we are allowed to make cold calls and open accounts on the phone. When should we verify the ID? Promptly after. You would say something along these lines, “Before you start trading, we need you to send a copy of your photo ID.” Yet, you already have the account opened.