Which federal regulation governs anti-money laundering (AML) practices?

The Bank Secrecy Act (BSA) is the federal regulation that primarily governs anti-money laundering (AML) practices in the United States. Enacted in 1970, the BSA requires financial institutions to assist government agencies in detecting and preventing money laundering activities. This is accomplished through various requirements, such as reporting certain transactions, maintaining records of cash purchases, and implementing a system of internal controls aimed at detecting and reporting suspicious activities.

The BSA also lays the foundation for the framework of AML compliance programs within financial institutions, guiding them on how to establish policies and procedures to detect and report potentially illicit activities. Its implementation is critical for combating financial crimes and ensuring the integrity of the financial system.

While other regulations, such as the Patriot Act and the Money Laundering Control Act, contribute to the broader landscape of AML regulations, it is the BSA that serves as the cornerstone for AML practices in the U.S. The Patriot Act, for example, expanded the scope of the BSA and included additional requirements but operates within the framework established by the BSA. Similarly, the Money Laundering Control Act, enacted earlier, laid initial groundwork for criminalizing money laundering but is not the primary regulation governing compliance practices.