Take This to the Bank
- By Ralph C. Jensen
- Dec 01, 2007
You may not know this, but
financial institutions are
required by the federal government
to spy on their customers.
It’s all part of the Bank Secrecy
Act, which requires financial institutions
to keep records of personal financial transactions
that might be useful in determining
criminal activities.
The Treasury Department also is
authorized to require financial institutions
to report suspicious transactions that
might violate laws or regulations. Called
suspicious activity reports, this data is
filed with the department’s financial
crimes enforcement network.
This isn’t a new phenomenon, nor does
it have anything to do with 9/11. Congress
passed the Bank Secrecy Act in 1970 to
fight money laundering in the United
States. Among its requirements are that
businesses comply with law enforcement
agencies, domestic and international, and
to identify, detect and deter money laundering
to further criminal enterprise, terrorism,
tax evasion or other unlawful activity.
It also means that financial institutions
must report cash payments of more than
$10,000 received in a trade or business. If
you have a foreign bank account, brokerage
account, mutual fund, unit trust or
other financial account, you also might be
required to report such payments yearly to
the IRS.
Financial institutions fight money
laundering by filing suspicious activity
reports, one of the government’s main
weapons in the fight against money laundering,
as well as other financial crimes.
The government is very serious about
its security reporting and anti-money laundering
program. In September, Union
Bank of California, N.A., a wholly-owned
subsidiary of UnionBanCal Corp., based
in San Francisco, entered into a deferred
prosecution agreement regarding charges
of failure to maintain an effective antimoney
laundering program. The bank will
forfeit $21.6 million to the government
and hand over $10 million to the Financial
Crimes Enforcement Network.
In its investigation, the government
determined that Union Bank failed to
implement an adequate anti-money laundering
program reasonably designed to
identify and report transactions that exhibited
indicia of money laundering or other
suspicious activity. The bank also failed to
monitor Mexican casa de cambio transactions
and report suspicious activity, despite
knowing of the heightened risk of money
laundering posed by bank customers.
It was an expensive mistake for Union
Bank. It was charged with one count of
failure to maintain an effective anti-money
laundering program. The bank acknowledged
its responsibility and agreed to file
the information.
According to the U.S. attorney general’s
office, banks that knowingly disregard
the legal obligation under the Bank
Secrecy Act are easily exploited by drug
cartels and other criminals. The illegal
drug market is a multi-billion-dollar market,
and the law requires that financial
institutions know their customers and
practice due diligence.
It’s all part of a well-planned and well-executed
security plan. When banks fail to
uphold their responsibilities, they turn
their legitimate business into a currency
stash house used by international drug
traffickers to line their pockets, fuel
more trafficking and corrupt government
officials and global economies. The fact
is, our economy depends on the integrity
of financial institutions and the work
these institutions do to ensure compliance
with anti-money
laundering regulations.
Excuses
for not doing so
only lead to questionable
security
practices.
About the Author
Ralph C. Jensen is the Publisher/Editor in chief of Security Today magazine.