Every financial organization in the USA must comply with the BSA requirements. Not adhering to the requirements causes them to risk customer safety, for which they can face legal consequences. This blog explores what the BSA requirements are and how companies can comply with them with the help of HyperVerge.
What is the Bank Secrecy Act (BSA)?
The Bank Secrecy Act, also known as the Currency and Foreign Transaction Reporting Act, came into place in 1970. It aims to do the following:
- Safeguard customers from financial fraud
- Prevent money laundering
- Helps the US government with its anti-money laundering (AML) efforts
How Does the Bank Secrecy Act Work?
The act helps the government to ensure that no institutions, companies, or individuals are involved in fraudulent activities.
Administered by Financial Crimes Enforcement Network (FinCEN), the BSA requires any individual, partnership, trust, corporation, or business to file Form 8300 if they receive a payment exceeding $10,000 cash from a single buyer. This includes any cash transaction within the US borders, territories, or possessions. However, government departments and agencies listed on major North American exchanges are exempt from this.
The form must be filled out within 15 days of the transaction.
Why is the Bank Secrecy Act Compliance Important?
BSA plays a crucial role in the US financial system. Not complying with the BSA requirements could lead to legal repercussions against the defaulter. The court can ask them to pay a hefty fine or sentence them to prison for up to 20 years.
How can Businesses Comply with the Bank Secrecy Act?
Here’s how businesses can comply with the Bank Secrecy Act:
1. Customer Identity Verification
With the introduction of the Fincen or Financial Crimes Enforcement Network, customer ID verification and KYC compliance have become a part of the BSA. As a result, every financial institution must verify the identity of its clients and customers. This involves collecting basic customer details, such as name, address, date of birth, social security number, and government ID proof.
2. Internal Policies
Every financial institution must integrate stringent AML or anti-money laundering policies into its system. This is a mandatory requirement as per Section 352 of the USA Patriot Act. Here are the different components of AML compliance:
- Hiring and assigning a compliance officer
- Developing regulations for monitoring any suspicious activity
- Developing an AML training program for employees
- Auditing the AML policy via 3rd party auditors
- Implementing a risk-based approach across the organization for client due diligence
3. Monitoring and Reporting
According to the BSA, financial institutions must report any transaction suspected of money laundering, tax evasion, or criminal activity. If found to be potentially risky, the transaction must be reported to relevant authorities.
Some mandatory reports all businesses need to maintain include:
- Form 8300 with details of the cash payments made in a single day.
- The CTR report states that every transaction exceeds $10,000.
- Suspicious Activity Report for any account that fails to meet the requirements set by the financial institution.
- Financial Account and Foreign Bank Report for every individual with $10,000 or more in a foreign bank account.
Every private firm must follow these requirements to continue its operations without repercussions.
How can HyperVerge Help?
While businesses monitor transactions and set internal policies, they also tend to find the identity verification procedure tricky due to its complex nature. And that’s where HyperVerge comes into the picture!
HyperVerge’s end-to-end solutions help businesses verify customer identities accurately using proprietary AI technology. This superfast technology involves several AI checks, enables seamless onboarding, and guarantees the best customer experience.
Businesses can easily integrate HyperVerge’s Identity verification solution into their apps or websites and abide by the BSA requirements without any hassle.
Want to know more about how HyperVerge can help? Book a free demo now!