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Keeping Drug Money from Reaching the Wash Cycle: A Guide to the Bank Secrecy Act

NCJ Number
Banking Law Journal Volume: 108 Issue: 3 Dated: (May-June 1991) Pages: 230-255
P E Meltzer
Date Published
26 pages
The reporting obligations of a financial institution under the Bank Secrecy Act of 1970 are described.
The Bank Secrecy Act was enacted into law in 1970 as an effort to prevent laundering of profits resulting from drug sales. Laundering consists of three distinct stages known as placement, layering, and integration. Placement is the physical disposal of bulk cash proceeds into a financial institution. The theory behind the Act and its reporting requirements is that the money laundering process is most vulnerable at the placement stage. A cornerstone is its requirement that financial institutions file a currency transaction report for all deposits, withdrawals, exchanges, or transfers of currency in excess of $10,000 during any one business day. Early enforcement of the Bank Secrecy Act was sporadic, and compliance levels were low. The statute itself as well as a number of other statutes which relate in some way to money laundering offenses are constantly being amended, whether to close loopholes, create new fines and penalties, or stiffen existing sanctions. 64 footnotes