Money & Finance › Fraud, scams & enforcement › Money laundering: making dirty money look clean
Bank Secrecy Act and anti-money-laundering rules
1970· Law or rule
Fact, law or dataA rule, statute, definition or measured number.
The 1970 Bank Secrecy Act makes banks keep records and report large cash transactions and suspicious activity to the government.
See it on the Money & Finance map →How it works
Banks file a Currency Transaction Report for cash deposits or withdrawals over $10,000 in a day, and a Suspicious Activity Report when something looks like laundering or fraud. Splitting deposits to stay under $10,000, called structuring, has been a crime itself since 1986. The 2001 USA PATRIOT Act added customer identity checks ('know your customer'). Businesses receiving over $10,000 in cash, such as a landlord paid rent in cash, file IRS Form 8300. FinCEN collects the reports.
Why it matters
It turned banks into the government's financial-crime sensors. Its paper trail underpins most drug, fraud, tax and sanctions cases, and violations cost TD Bank about $3 billion in 2024.
Facts, rules and data
The statute (31 U.S.C. 5311 onward), upheld by the Supreme Court in 1974; FinCEN's yearly counts of millions of filed reports; and published enforcement orders against HSBC, Binance and TD Bank.
Debates and risks
The $10,000 trigger, set in 1970, would be roughly $80,000 today. Whether billions in yearly compliance costs, and accounts closed as too risky, are justified by results is debated.
Inside this (1)
Connections (8)
▸Commercial banks: taking deposits, making loans must file reports under Bank Secrecy Act and anti-money-laundering rulesFact, law or data
The connection
Because nearly all money passes through bank accounts, the law makes banks the checkpoint. They verify customers' identities, keep records, file Currency Transaction Reports on cash over $10,000 and Suspicious Activity Reports on odd patterns, and train staff. Examiners test these programs, and failures bring fines, growth limits or criminal charges.
When and why
Every US bank and credit union since 1970, with expansions in 1986, 1992, 2001 and 2020. TD Bank pleaded guilty in 2024 and accepted a cap on its US assets.
How we know
Federal regulations at 31 CFR Chapter X, bank examiner manuals, and enforcement orders such as HSBC's $1.9 billion settlement in 2012 over laundering cartel money.
Debates and risks
Banks spend heavily on compliance, yet some argue most reports go unread. 'De-risking', closing accounts deemed risky, also cuts off some legitimate customers.
▸FinCEN: Financial Crimes Enforcement Network enforces Bank Secrecy Act and anti-money-laundering rulesFact, law or data
The connection
FinCEN, a Treasury bureau, writes the Bank Secrecy Act rules, receives the reports and runs the database investigators search. It shares data with police, the IRS and the FBI, and fines violators. Routine exams are delegated to bank regulators and, for non-bank businesses, to the IRS.
When and why
FinCEN was formed in 1990 and took over Bank Secrecy Act administration in 1994; it is based in Vienna, Virginia.
How we know
Treasury delegation orders, FinCEN's published rules and penalty orders, and its reports on filing volumes.
Debates and risks
Critics question whether FinCEN, with a few hundred staff, can analyze millions of reports a year, and how much privacy its database costs.
▸Bank Secrecy Act and anti-money-laundering rules requires banks to report suspected Money laundering: making dirty money look cleanFact, law or data
The connection
Laundering has three steps: placing dirty cash in the system, layering it through transfers, and integrating it as clean-looking wealth. The act targets the first two: cash reports catch placement, and suspicious activity reports flag layering patterns such as rapid transfers or structured deposits.
When and why
Required since 1970; laundering itself became a federal crime in 1986, and suspicious activity reports began in 1996.
How we know
FinCEN and law-enforcement reviews say the filings help start or support many federal cases, and court records cite them.
Debates and risks
A UN estimate puts laundering at 2% to 5% of world GDP, a rough range; how much the reports actually stop is uncertain.
▸Bank Secrecy Act and anti-money-laundering rules was expanded by Corporate Transparency Act and LLC ownership reportingFact, law or data
The connection
Banks under the Bank Secrecy Act had to identify customers, but a shell LLC could hide who stood behind it. The Anti-Money Laundering Act of 2020 amended the Bank Secrecy Act to add a federal registry of companies' real owners, closing that gap at least on paper.
When and why
Washington, enacted January 1, 2021, inside the annual defense bill, which passed over a presidential veto unrelated to this provision.
How we know
The act is codified inside the Bank Secrecy Act at 31 U.S.C. 5336.
Debates and risks
With US companies exempted in 2025, whether the expansion achieves its goal is doubtful; banks still collect owner data under a 2016 rule.
▸Bank Secrecy Act and anti-money-laundering rules requires FBAR reports that expose Offshore tax evasion and FATCA/FBAR foreign-account reportingFact, law or data
The connection
The act's foreign-account rule requires any US person with over $10,000 abroad to file an FBAR each year. It began as an anti-laundering tool, but because penalties for willfully skipping it can reach half the balance, it became the government's strongest weapon against hidden accounts.
When and why
Since the 1970s; now FinCEN Form 114, filed online, due in April and automatically extended to October.
How we know
Courts have upheld large willful penalties; the Supreme Court's 2023 Bittner ruling capped non-willful penalties per report, not per account.
Debates and risks
Whether heavy penalties for honest mistakes, often by immigrants with home-country accounts, are fair remains debated.
▸Cash payments: Federal Reserve notes and coins over $10,000 trigger reports under Bank Secrecy Act and anti-money-laundering rulesFact, law or data
The connection
Banks must file a Currency Transaction Report for cash deposits or withdrawals over $10,000 in a day, adding up multiple transactions. Businesses, such as a landlord paid rent in cash, file IRS Form 8300 when they receive over $10,000. Splitting deposits to dodge the threshold, called structuring, is itself a crime even if the money is clean.
When and why
Set by the Bank Secrecy Act of 1970, with the structuring offense added in 1986; FinCEN collects millions of currency transaction reports from US banks each year.
How we know
31 U.S.C. 5313 and 5324, FinCEN regulations and filing statistics, IRS Form 8300 instructions, and structuring prosecutions and civil forfeitures.
Debates and risks
The $10,000 line has not been indexed for inflation since 1970; whether to raise it, or lower it in hot spots as a 2025 FinCEN order did for some border ZIP codes, is debated.
▸Correspondent banking: nostro and vostro accounts must screen foreign banks under Bank Secrecy Act and anti-money-laundering rulesFact, law or data
The connection
Under the USA PATRIOT Act's additions to the Bank Secrecy Act, US banks must run due diligence on foreign banks holding correspondent accounts, may not deal with shell banks, and can be ordered to cut off a foreign bank Treasury names a 'primary money laundering concern'. Weak screening has drawn huge penalties.
When and why
PATRIOT Act sections 311–313 (2001); Danske Bank pleaded guilty in 2022 over about $160 billion its Estonian branch moved through US banks.
How we know
FinCEN due-diligence rules (31 CFR 1010.610), section 311 actions, and Justice Department guilty pleas by Danske Bank (2022) and TD Bank (2024).
Debates and risks
How much compliance cost drives US banks to drop correspondents in poorer countries, cutting them off from legitimate dollar trade.
▸GENIUS Act (2025): the federal law for payment stablecoins brings stablecoin issuers under Bank Secrecy Act and anti-money-laundering rulesFact, law or data
The connection
The act treats stablecoin issuers as financial institutions under the Bank Secrecy Act. They must verify customers, monitor transactions, file suspicious-activity reports and obey sanctions. They must also be technically able to freeze, seize or burn tokens on lawful orders, and foreign issuers that refuse US orders can be shut out of US platforms.
When and why
Written into the 2025 act; Treasury and FinCEN are drafting the detailed anti-money-laundering rules separately.
How we know
The statute's text; the OCC's February 2026 proposal expressly left Bank Secrecy Act and sanctions rules to a separate Treasury rulemaking.
Debates and risks
How issuers can police tokens once they move into anonymous self-hosted wallets, outside any regulated firm.