The international of guidelines can look like a bowl of alphabet soup at times. US money laundering rules aren’t any exception. We have compiled a list of the top ten cash laundering acronyms and their definitions.
AML – Anti cash laundering is the term for activities aimed at curbing the practice of money laundering. Money laundering is a place of focus for regulators, and a main device within the fight against drug trafficking and terrorist financing.
BSA – The Bank Secrecy Act turned into the original US law concentrated on cash laundering. In the beginning the law was frequently focused on tax evasion and prepared crime. BSA centered on organising a paper trail for coins transactions over $10,000. Many people confer with the complete series of anti cash laundering rules as the BSA.
KYC – Know your patron is the concept of know-how who your purchaser is. Various factors of the regulation require economic establishments to verify the identity of customers. Banks have to also recognize what normal hobby is for given customers. Without understanding what behavior to assume it’s far difficult to perceive what pastime is suspicious.
CIP – Part of KYC, the Customer Identification Program become brought in the USA PATRIOT Act. CIP calls for financial institutions to acquire 5 portions of facts on new clients. They need to accumulate name, date of birth, a bodily cope with, social protection number (or tax identification number), and evidence of identification. CIP packages make it more tough for criminals to open bills without attracting attention.
CTR – A Currency Transaction Report is filed for any cash transaction more than $10,000. CTRs can also be filed for a couple of transactions with the aid of the same person that overall $10,000 in a given period. People who damage transactions as much as keep away from the reporting threshold enhance suspicion. So long because the source of budget is valid, there are no negative consequences to a CTR filing. For example a coins in depth business together with a bar that deposits enterprise receipts will now not be suspicious.
SAR – When a financial organization (very widely defined) suspects that a transaction can be the proceeds of unlawful activity, they’re required to record a Suspicious Activity Report. An man or woman will no longer be notified if a SAR is filed towards them, so that it will avoid tipping off capacity criminals. SAR filings are sent to the Financial Crimes Enforcement Network, who decide if further investigation is warranted.
FinCEN – The Financial Crimes Enforcement Network is the United States Government entity tasked with combating financial crimes inclusive of money laundering. SAR reports are filed with FinCEN. Periodically FinCEN offers analysis based on the facts provided in SAR reports.
USA PATRIOT Act – The Uniting and Strengthening America by way of Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act changed into enacted rapidly after Sep 11/2001. As the name implies, the law supplied extensive equipment for law enforcement in the fight against terrorism. The regulation also made widespread improvements to cash laundering legal guidelines. Notably it required the creation of CIP illicit financial flows.
PEP – Politically Exposed Persons are very excessive-ranking foreign authorities officers and their buddies. Because of their excessive-rating the common sense follows that they’re a better danger for corruption. There isn’t any standard list of PEPs like there is for OFAC specific certain nationals. Financial establishments ought to take a chance based totally approach to handling PEPs and are not expressly forbidden from having them as clients. At a minimal, economic establishments ought to carry out superior due diligence on PEPs.
OFAC – The Office of Foreign Asset Control isn’t always without delay associated with money laundering. OFAC enforces financial sanctions against foreign international locations. Under OFAC policies, banks are prohibited from engaging in economic transactions with sure foreign countries. Assets of precise people and agencies may also be frozen. As OFAC guidelines address the transmission of cash on the subject of terrorist financing, many institutions combine those purposeful departments. OFAC also maintains a list of specific distinct nationals which monetary institutions are prohibited from doing commercial enterprise with.