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Regulating money laundering in the United States

Money laundering entails transferring money originating from an illegitimate source, in order to make it seem legitimate. Money obtained from bribery, corruption, drug deals, terrorist financing and other offenses are all viewed as originating from illegitimate sources. The aim is to disguise the illicit nature of the funds.

Under anti-money laundering laws, particular focus is paid to financial institutions such as banks, as they have unparalleled access to the funds of millions of people. Therefore, certain reporting requirements have been imposed on financial institutions to make sure that they do not handle any transaction or funds that have suspicious origins. Under the Bank Secrecy Act (BSA), financial institutions are obligated to report any transactions in excess of $10,000. Financial institutions are also obligated to file Suspicious Activity Reports (SAR) if they have grounds to believe that the money is illicit or whether a person is structuring his transaction in such a way as to circumvent the BSA reporting requirements.

The Money Laundering Control Act of 1986 broadly defined the term "financial transaction." A financial transaction ranges from something as simple as depositing money into a bank account to making complex equity investments using the illicit funds. Therefore, if a person obtains money from bribery, he will be guilty of money laundering if he deposits that money into a bank account. In 2001, Congress passed the USA Patriot Act and the Anti-Terrorism Financing Act. Under the Patriot Act, there is now a strict requirement on financial institutions to ensure that their client's transactions are not illicit. Any willful blindness on the part of the financial institution would lead to strong penalties and sanctions. Banks also have to make sure that they do not have any corresponding relationships with banks which are known to cater to clients involved in money laundering. Financial institutions and companies are also required to have strong anti-money laundering programs including the introduction of anti-money laundering compliance officers. It has to be noted that financial institutions do not include investment advisers or transfer agents.

A money laundering charge is a very serious issue and has a very high probability of tarnishing your reputation. Therefore, it is advisable to consult an attorney so they can advise you regarding the intricacies and complexities of financial crimes.

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