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The Bank Secrecy Act
(BSA) has been
in place for nearly 43 years. Chances
are that, until very recently, you and
your clients had never heard of it. In
2001, the BSA was enhanced with the
passage of the USA Patriot Act, as it
was Congress's determination that
"following the money" was the most
efficient manner of pursuing terror-
ism in a post-9/11 world. As part of
its increased focus on terrorism fund-
ing, the Treasury Department has been
quietly increasing its enforcement in
this area with the IRS. This new focus
has lead to the creation of new spe-
cialized agents: Abusive Tax Avoid-
ance Transactions (ATAT) agents
, and Special Enforcement
Program (SEP) agents
The Bank Secrecy Act
The BSA is a set of laws that are de-
signed to combat money laundering
by requiring financial institutions and
certain "money businesses" to keep
records of cash purchases and pur-
chases of negotiable instruments, file
reports of cash purchases of these
negotiable instruments of more than
$10,000 (daily aggregate amount), and
report suspicious activity that might
signify money laundering, tax evasion,
or other criminal activities. It is for this
reason that most banks today will no
longer sell negotiable instruments
when they are purchased with cash,
requiring the purchase to be withdrawn
from an account at that institution.
Why do practitioners need to be
concerned about the BSA?
Most people assume the target of the
BSA are terrorists, drug runners, and
Swiss bankers. Unfortunately, more and
more business owners are finding them-
selves caught in a very wide net cast by
the government. Compounding the is-
sue, BSA enforcement has fallen to the
Financial Crimes Enforcement Network,
or FinCEN, which is part of the Treasury
Department. Exam authority has been
given to a trained government agency
that routinely examines books and re-
cords of businesses: the Internal Rev-
enue Service.
Money businesses include but are not
limited to jewelers, automobile dealers
(new and used), check-cashing busi-
nesses, dealers in gemstones and pre-
cious metals, pawn shops, etc. These
businesses are required to register with
FinCEN and file BSA forms including:
1. FinCEN Form 112 (formerly Form
104) Currency Transaction Report
(CTR): Transaction in currency of more
than $10,000.
2. FinCEN Form 105, Report of Inter-
national Transportation of Currency
or Monetary Instruments (CMIR):
Transporting an aggregate amount
exceeding $10,000 into or out of the
United States.
3. Department of the Treasury Form
90-22.1, Report of Foreign Bank and
Financial Accounts (FBAR): If the ag-
gregate value in foreign bank accounts
at any point in a calendar year exceeds
4. Treasury Department Form 90-
22.47 and OCC Form 8010-9, 8010-1,
Suspicious Activity Report (SAR):
Banks must file a SAR for any suspi-
cious transaction relevant to a possible
violation of law or regulation.
The Bank Secrecy Act and the New Trend
in IRS Criminal Enforcement
Why New IRS Enforcement Agents May Be Visiting Your Clients Very Soon
31 U.S.C. 5311, et al
I.R.M. 4.32
I.R.M. 4.26.6
I.R.M. 4.26.6
By Eric L. Green, Esq.