3.3.3.1 Anti–Money Laundering (AML) Compliance Program
Money laundering in its original sense is the concealment of the origins of illegally obtained money, typically by means of transfers involving foreign banks or legitimate businesses. Criminals might acquire “dirty” money through such activities as extortion, insider trading, drug trafficking, illegal gambling, and tax evasion. If the “dirty” money can be “laundered” by sending it abroad or using it to finance local businesses, commingling it with “clean” money, the authorities would have a hard time linking it to crime.
There are three stages of money laundering as traditionally defined:
- 1. Placement is the state of moving criminal (“dirty”) money into the financial system.
- 2. Layering is the shifting of funds among various accounts to confuse the origin of the assets.
- 3. Integration is the movement of the layered funds back into authentic investments (yielding “clean” money).
Since September 11, 2001, the definition of money laundering has been broadened to focus on using “clean” money for “dirty” purposes, such as funding terrorism.
The Bank Secrecy Act of 1970 (BSA; also known as the Currency and Foreign Transactions Reporting Act) requires financial institutions in the United States to assist U.S. government agencies in detecting and preventing money laundering. The BSA is sometimes referred to as an anti–money laundering (AML) law, or more specifically as BSA/AML. The USA PATRIOT Act broadened the scope of the BSA to focus on terrorist financing as well as money laundering.
The documents filed by businesses under the BSA requirements are used by domestic and international law enforcement agencies to identify, detect, and deter money laundering, which might be used to further a criminal enterprise, terrorism, tax evasion, or other unlawful activity. The Bank Secrecy Act establi