Anti-MoneyLaundering

Who instructs us to be so careful about Anti-Money Laundering procedures?

The Financial Crimes Enforcement Network (FinCEN) is the administrator of Banking Secrecy Act (BSA). Over the years, BSA has been strengthened through subsequent anti-money laundering (AML) laws. This includes parts of USA PATRIOT Act compliance, which focus on money laundering in the form of terrorist financing.

USA PATRIOT Act Compliance

On Oct. 26, 2001, Congress passed the USA PATRIOT Act to respond to the terrorist acts of 9/11. Its name literally means “Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism,” and it applies to the U.S. Treasury's very broad definition of financial institutions.

Customer Identification Program (CIP Compliance)

Section 326 of the act strengthens the Bank Secrecy Act (BSA) by requiring that all financial institutions implement a Customer Identification Program (CIP) to reasonably and practicably verify the identity of customers who are opening accounts. 

Section 326 compliance requires that CIP programs should:

  • Verify the identity of any person seeking to open an account using documentary and non-documentary verification
  • Maintain records of that CIP verification process for five years after the account is closed
  • Compare the customer’s name against the government’s list of known or suspected terrorists
  • Provide customers with adequate notice of the requirements for customer identification

The U.S. Treasury Department considers Section 326’s customer identification and record-keeping requirements as vital tools in its fight against such criminal enterprises as terrorism and the growing threat from identity theft. Financial institutions play a significant role in that fight through CIP compliance.