BSA (Bank Secrecy Act)

The Bank Secrecy Act is the key U.S. anti-money laundering law codified at 31 U.S.C. §5318 that FinCEN applies to crypto businesses, requiring comprehensive AML programs, customer identification, transaction monitoring, and regulatory reporting to prevent money laundering and terrorist financing.

The BSA requires Money Services Businesses including crypto exchangers to maintain AML programs incorporating written policies and procedures, designated compliance officers, ongoing employee training, and independent testing. Covered institutions must verify customer identities through KYC and Customer Due Diligence procedures, retain transactional records for at least five years, and file Suspicious Activity Reports and Currency Transaction Reports for suspicious or large transactions.

Crypto firms must monitor wallet addresses and transaction behavior consistent with FATF guidance on AML compliance for digital assets. The BSA authorizes FinCEN to impose special measures against jurisdictions, financial institutions, or transaction types of primary money laundering concern, including restrictions on correspondent banking relationships and enhanced due diligence requirements. Criminal violations of the BSA can result in fines up to $250,000 and imprisonment up to five years for individuals, with enhanced penalties for repeat offenses or violations committed in connection with other crimes. Civil penalties can reach the greater of twice the transaction value or statutory maximums per violation.