What does bsa mean in banking

what does bsa mean in banking

What does BSA AML mean?

The Bank Secrecy Act (BSA) is U.S. legislation aimed toward preventing criminals from using financial institutions to hide or launder money. The law requires financial institutions to provide. The Bank Secrecy Act (BSA), et seq establishes program, recordkeeping and reporting requirements for national banks, federal savings associations, federal branches and agencies of foreign banks. The OCC's implementing regulations are found at 12 CFR and 12 CFR The BSA was amended to incorporate the provisions of the USA PATRIOT Act which requires every bank to adopt a .

This definition appears very frequently and is found in the following Acronym Finder categories: Business, finance, etc. Menu Search. New search features Acronym Blog Free tools. What does BSA stand for?

Suggest new definition. Acronym Finder. Samples in periodicals archive: In the shat role, Walker will oversee the bank's efforts in the area of Bank Secrecy Act Compliance. It also must hire staff to oversee anti-money laundering and Bank Secrecy Act compliance, which requires financial institutions to maintain records of financial transactions that may be useful in criminal, tax, and regulatory investigations and proceedings. The Treasury Department's Financial Crimes Enforcement Network recently issued two Bank Secrecy Act regulations that create new responsibilities for companies that sell certain insurance products--and pose significant challenges for companies dealing with brokers and agents.

Since the Bank Secrecy Act of requires how to clear cloudy pond water bank to microfilm all of your checks and hold these records for six years, the state can get maen details of your life from a study of your checking account.

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Nov 11,  · The Bank Secrecy Act (BSA), also known as the Currency and Foreign Transactions Reporting Act, is legislation passed by the United States Congress in that requires U.S. financial institutions to collaborate with the U.S. government in cases of suspected money laundering and fraud. The purpose of the BSA, aside from making money laundering more difficult to propagate, is to . BSA stands for Bank Secrecy Act. Suggest new definition. This definition appears very frequently and is found in the following Acronym Finder categories: Business, finance, etc. See other definitions of BSA. Other Resources: We have other meanings of BSA in our Acronym Attic. Link/Page Citation. BSA - Bank Secrecy Act. Abbreviation» Term. Term» Abbreviation. Word in Term. # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z NEW RANDOM. Abbr.» Term. Term» Abbr. Word in Term.

This section expands the core review of the statutory and regulatory requirements of funds transfers to provide a broader assessment of AML risks associated with this activity. Payment systems in the United States consist of numerous financial intermediaries, financial services firms, and nonbank businesses that create, process, and distribute payments.

The domestic and international expansion of the banking industry and nonbank financial services has increased the importance of electronic funds transfers, including funds transfers made through the wholesale payment systems. The vast majority of the value of U. Banks conduct these transfers on their own behalf as well as for the benefit of other financial service providers and bank customers, both corporate and consumer. Related retail transfer systems facilitate transactions such as automated clearing houses ACH ; automated teller machines ATM ; point-of-sale POS ; telephone bill paying; home banking systems; and credit, debit, and prepaid cards.

Most of these retail transactions are initiated by customers rather than by banks or corporate users. These individual transactions may then be batched in order to form larger wholesale transfers, which are the focus of this section.

The bulk of the dollar value of these payments is originated electronically to make large value, time-critical payments, such as the settlement of interbank purchases and sales of federal funds, settlement of foreign exchange transactions, disbursement or repayment of loans; settlement of real estate transactions or other financial market transactions; and purchasing, selling, or financing securities transactions.

Fedwire and CHIPS participants facilitate these transactions on their behalf and on behalf of their customers, including nonbank financial institutions, commercial businesses, and correspondent banks that do not have direct access. Structurally, there are two components to funds transfers: the instructions, which contain information on the sender and receiver of the funds, and the actual movement or transfer of funds.

The instructions may be sent in a variety of ways, including by electronic access to networks operated by the Fedwire or CHIPS payment systems; by access to financial telecommunications systems, such as Society for Worldwide Interbank Financial Telecommunication SWIFT ; or e-mail, facsimile, telephone, or telex.

SWIFT is an international messaging service that is used to transmit payment instructions for the vast majority of international interbank transactions, which can be denominated in numerous currencies. Fedwire is operated by the Federal Reserve Banks and allows a participant to transfer funds from its master account at the Federal Reserve Banks to the master account of any other bank.

These participants include: - Depository institutions. Treasury and any entity specifically authorized by federal statute to use the Federal Reserve Banks as fiscal agents or depositories. Payment over Fedwire is final and irrevocable when the Federal Reserve Bank either credits the amount of the payment order to the receiving bank's Federal Reserve Bank master account or sends notice to the receiving bank, whichever is earlier.

Although there is no settlement risk to Fedwire participants, they may be exposed to other risks, such as errors, omissions, and fraud. Participants may access Fedwire by three methods: Direct mainframe-to-mainframe Fedline Direct. Internet access over a virtual private network to Web-based applications FedLine Advantage. Off-line or telephone-based access to a Federal Reserve Bank operations site. Banks use CHIPS for the settlement of both interbank and customer transactions, including, for example, payments associated with commercial transactions, bank loans, and securities transactions.

CHIPS also plays a large role in the settlement of USD payments related to international transactions, such as foreign exchange, international commercial transactions, and offshore investments.

CLS Bank is a private-sector, special-purpose bank that settles simultaneously both payment obligations that arise from a single foreign exchange transaction. The CLS payment-versus-payment settlement model ensures that one payment segment of a foreign exchange transaction is settled if and only if the corresponding payment segment is also settled, eliminating the foreign exchange settlement risk that arises when each segment of the foreign exchange transaction is settled separately.

CLS Bank currently settles payment instructions for foreign exchange transactions in 17 currencies and is expected to add more currencies over time. The SWIFT network is a messaging infrastructure, not a payments system, which provides users with a private international communications link among themselves. Movement of payments denominated in different currencies occurs through correspondent bank relationships or over funds transfer systems in the relevant country.

In addition to customer and bank funds transfers, SWIFT is used to transmit foreign exchange confirmations, debit and credit entry confirmations, statements, collections, and documentary credits.

A typical funds transfer involves an originator instructing its bank the originator's bank to make payment to the account of a payee the beneficiary with the beneficiary's bank. A cover payment occurs when the originator's bank and the beneficiary's bank do not have a relationship that allows them to settle the payment directly.

In that case, the originator's bank instructs the beneficiary's bank to effect the payment and advises that transmission of funds to "cover" the obligation created by the payment order has been arranged through correspondent accounts at one or more intermediary banks.

Cross-border cover payments usually involve multiple banks in multiple jurisdictions. For U. In the past, SWIFT message protocols allowed cross-border cover payments to be effected by the use of separate, simultaneous message formats:. The MT COV provides intermediary banks with additional originator and beneficiary information to perform sanctions screening and suspicious activity monitoring.

The MT format remains available for bank-to-bank funds transfers that have no associated MT message. For additional detail about transparency in cover payments, refer to Transparency and Compliance for U.

An informal value transfer system IVTS e. In countries lacking a stable financial sector or with large areas not served by formal banks, IVTS may be the only method for conducting financial transactions. IVTS may legally operate in the United States as a Money Services Business, and specifically as a type of money transmitter, so long as they abide by applicable state and federal laws. A more sophisticated form of IVTS operating in the United States often interacts with other financial institutions in storing currency, clearing checks, remitting and receiving funds, and obtaining other routine financial services, rather than acting independently of the formal financial system.

One type of funds transfer transaction that carries particular risk is the payable upon proper identification PUPID service. PUPID transactions are funds transfers for which there is no specific account to deposit the funds into and the beneficiary of the funds is not a bank customer. For example, an individual may transfer funds to a relative or an individual who does not have an account relationship with the bank that receives the funds transfer. In this case, the beneficiary bank may place the incoming funds into a suspense account and ultimately release the funds when the individual provides proof of identity.

These transactions are considered extremely high risk and require strong controls. Funds transfers may present a heightened degree of risk, depending on such factors as the number and dollar volume of transactions, geographic location of originators and beneficiaries, and whether the originator or beneficiary is a bank customer. The vast majority of funds transfer instructions are conducted electronically; however, examiners need to be mindful that physical instructions may be transmitted by other informal methods, as described earlier.

Cover payments effected through SWIFT pose additional risks for an intermediary bank that does not receive either a MT or an adequately completed MT COV that identifies the originator and beneficiary of the funds transfer. Without this data, the intermediary bank is unable to monitor or filter payment information.

This lack of transparency limits the U. IVTS pose a heightened concern because they are able to circumvent the formal system. The lack of recordkeeping requirements coupled with the lack of identification of the IVTS participants may attract money launderers and terrorists.

Principals that operate IVTS frequently use banks to settle accounts. The risks of PUPID transactions to the beneficiary bank are similar to other activities in which the bank does business with noncustomers. However, the risks are heightened in PUPID transactions if the bank allows a noncustomer to access the funds transfer system by providing minimal or no identifying information.

Banks that allow noncustomers to transfer funds using the PUPID service pose significant risk to both the originating and beneficiary banks. In these situations, both banks have minimal or no identifying information on the originator or the beneficiary. Funds transfers can be used in the placement, layering, and integration stages of money laundering. Funds transfers purchased with currency are an example of the placement stage. Detecting unusual activity in the layering and integration stages is more difficult for a bank because transactions may appear legitimate.

In many cases, a bank may not be involved in the placement of the funds or in the final integration, only the layering of transactions.

Banks should consider all three stages of money laundering when evaluating or assessing funds transfer risks. Such policies may encompass more than regulatory recordkeeping minimums and be expanded to cover OFAC obligations. Funds transfer policies, procedures, and processes should address all foreign correspondent banking activities, including transactions in which U.

Obtaining CDD information is an important risk mitigation step in providing funds transfer services. Because of the nature of funds transfers, adequate and effective CDD policies, procedures, and processes are critical in detecting unusual and suspicious activities. An effective risk-based suspicious activity monitoring and reporting system is equally important.

Whether this monitoring and reporting system is automated or manual, it should be sufficient to detect suspicious trends and patterns typically associated with money laundering. In addition, during August , the committee, along with the Clearinghouse Payments Co. The BIS Cover Payments Paper supported increased transparency and encouraged all banks involved in international payments transactions to adhere to the message standards developed by The Clearing House Payments Co. These are:. Originating and beneficiary banks should establish effective and appropriate policies, procedures, and processes for PUPID activity including:.

Funds Transfer Services The vast majority of the value of U. SWIFT is an international messaging service that is used to transmit payment instructions for the vast majority of international interbank transactions, which can be denominated in numerous currencies Fedwire Fedwire is operated by the Federal Reserve Banks and allows a participant to transfer funds from its master account at the Federal Reserve Banks to the master account of any other bank.

Continuous Linked Settlement CLS Bank CLS Bank is a private-sector, special-purpose bank that settles simultaneously both payment obligations that arise from a single foreign exchange transaction. Cover Payments A typical funds transfer involves an originator instructing its bank the originator's bank to make payment to the account of a payee the beneficiary with the beneficiary's bank.

In the past, SWIFT message protocols allowed cross-border cover payments to be effected by the use of separate, simultaneous message formats: The MT - payment order from the originator's bank to the beneficiary's bank with information identifying the originator and the beneficiary; and The MT - bank-to-bank payment orders directing the intermediary banks to "cover" the originator's bank's obligation to pay the beneficiary's bank.

Risk Factors Funds transfers may present a heightened degree of risk, depending on such factors as the number and dollar volume of transactions, geographic location of originators and beneficiaries, and whether the originator or beneficiary is a bank customer.

Risk Mitigation Funds transfers can be used in the placement, layering, and integration stages of money laundering. These are: Financial institutions should not omit, delete, or alter information in payment messages or orders for the purpose of avoiding detection of that information by any other financial institution in the payment process; Financial institutions should not use any particular payment message for the purpose of avoiding detection of information by any other financial institution in the payment process; Subject to all applicable laws, financial institutions should cooperate as fully as practicable with other financial institutions in the payment process when requested to provide information about the parties involved; and Financial institutions should strongly encourage their correspondent banks to observe these principles.

In addition, effective monitoring processes for cover payments include: Monitoring funds transfers processed through automated systems in order to identify suspicious activity.

This monitoring may be conducted after the transfers are processed, on an automated basis, and may use a risk-based approach. The MT COV provides intermediary banks with useful information, which can be filtered using risk factors developed by the intermediary bank. The monitoring process may be similar to that for MT payments. Given the volume of messages and data for large U.

However, intermediary banks should have, as part of their monitoring processes, a risk-based method to identify incomplete fields or fields with meaningless data. Originating and beneficiary banks should establish effective and appropriate policies, procedures, and processes for PUPID activity including: Specifying the type of identification that is acceptable. Establishing limits on the amount of funds that may be transferred to or from the bank for noncustomers including type of funds accepted i.

Monitoring and reporting suspicious activities. Providing enhanced scrutiny for transfers to or from certain jurisdictions.

Identifying disbursement method i.

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