Bank Secrecy Act Reporting Requirements
- To prevent money laundering, businesses must report certain transactions.us dollars image by Valentin Mosichev from Fotolia.com
The U.S. Congress passed the Bank Secrecy Act in 1970, as a way to prevent money laundering used to hide criminal activity, from drug dealing to terrorism. The act requires businesses to keep records and file a variety reports with the Internal Revenue Service and other federal agencies under specific circumstances. According to IRS, it works with the U.S. National Money Laundering Strategy in educating businesses and enforcing the act. - Businesses receiving more than $10,000 in cash as part of a single transaction or series of related transactions must file Form 8300 with the IRS. The form, "Report of Cash Payments Over $10,000 Received in a Trade or Business," is due within 15 days of the transaction. The IRS warns that some scams try to convince business owners that they can help exempt a business from the reporting requirement; the IRS says there are no exemptions allowed.
- Anyone with at least $10,000 in one or more foreign bank or financial accounts may be required to submit a Foreign Bank and Financial Account Report to the IRS by June 30 every year. According to the IRS, the report is required because foreign countries may have different standards for monitoring bank accounts, and money launderers often use foreign accounts to bypass U.S. scrutiny. The IRS exempts certain accounts, such as those at U.S. military banking facilities in foreign countries. The report, filed separately from income tax returns, is used to trace money used for criminal purposes, or to find unreported income.
- In 2006, the IRS began requiring businesses handling precious metals, precious stones and jewels to operate under the Bank Secrecy Act. Any dealer selling at least $50,000 of these items in a calendar year is subject the act's reporting requirements. The act exempts certain types of dealers, such as pawn shops, that might handle metals, stones and jewels but do not primarily deal in them.
- Money Services Businesses are companies that sell or cash traveler's checks or money orders, transfer money or exchange currency. They are especially susceptible to money laundering, according to the IRS. MSBs must file a Suspicious Activity Report with the Treasury Department's Financial Crimes Enforcement Network if officials believe money they received came from or is related to criminal activity, or a transaction is set up to evade IRS regulations. An MSB also must complete a report when a customer is conducting or trying to conduct a suspicious transaction of at least $2,000, or when processing of records shows more than $5,000 has been issued through a money order or traveler's check.
