The BSA required the filing of reports designed to create a paper trail for currency transactions. The principal reports required were Currency Transaction Reports (CTRs) filed by financial institutions on their customers and reports filed by persons on their own activities such as the Report of Foreign Bank and Financial Accounts for persons having accounts abroad and the Currency and Monetary Instruments Report, for persons moving currency and monetary instruments into and out of the United States.

Initially the requirements for these reports and records was challenged as an unconstitutional infringement of privacy rights. Judicial decisions established BSA constitutionality.

An important lower court decision, US v. Deak Perera , 566 F. Supp. 1398 (DCC 1983), held that examiners could not conduct tax examinations under the guise of a BSA examination. Congress expanded civil and criminal penalties. Treasury issued regulations detailing the circumstances under which geographical "targeting orders" would be issued.

As a result of the millions of CTRs being filed, mostly by banks and mostly on legitimate business activity, Congress directed that Treasury research the uses made of BSA reports. Legislative focus then shifted from reporting all transactions to reducing, through exemptions, the number of CTRs filed and to requiring reports on suspicious transactions, known as Suspicious Activity Reports (SARs). Laws were passed to specifically address money laundering by and through nonbank financial institutions. Registration of money services businesses was required, with the regulations setting the effective date as 12/31/2001. More emphasis was placed on requiring that the financial institutions retain records.

A terrorist attack on September 11, 2001 led to intense Congressional interest in terrorist financing. On October 26, 2001, the President signed into law the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT Act) of 2001, Public Law No.107-56. Congress mandated anti-money laundering compliance programs for all financial institutions as defined in the BSA. SAR requirements were enhanced. All nonfinancial trades and businesses were required to report receipt of coins or currency greater than $10,000 under BSA as well as under IRC 6050I. This dual Form 8300 filing requirement effectively released Form 8300 information, except for Clerk of Court reports, from the disclosure protections of the IRC. Civil and criminal penalties for money laundering were increased. The Secretary of the Treasury received expanded powers respecting geographical targeting orders. FinCEN was elevated to Bureau status within Treasury. Information sharing by financial institutions was encouraged with respect to Federal law enforcement agencies and voluntary information sharing among financial institutions was encouraged and protected.

The American Jobs Creation Act of 2004 increased the amount of civil penalties that could be assessed for violation of the requirements related to the Report of Foreign Bank and Financial Accounts (FBAR). This amendment to the BSA also established a new FBAR penalty for nonwillful violations. The law is effective for violations occurring after October 22, 2004.

Treasury issued regulations requiring money services business to register. SARs, previously required from banks, were required from money services businesses, casinos, brokers or dealers in securities, and from futures commission merchants and introducing brokers in commodities. New BSA regulations mirrored existing IRC Form 8300 regulations reflecting that the Form 8300 was now required under both the BSA and the IRC.

Regulations addressing the USA PATRIOT Act detailed requirements for anti-money laundering programs for money services businesses, mutual funds, and operators of credit card systems. This is in addition to the existing requirements for anti-money laundering programs for banks, casinos and certain self-regulatory organizations. More regulations detailing appropriate anti-money laundering programs for other types of financial institutions are expected to be issued. Customer identification programs were separately required for banks, including certain non-Federally regulated banks, brokers and dealers in securities, futures commission merchants and introducing brokers, and mutual funds. Due diligence requirements were expanded for some financial institutions including credit unions. Information exchanges between all financial institutions were facilitated by providing a safe harbor from civil suit. Access to foreign bank records was enhanced by regulations requiring that U.S. financial institutions terminate correspondent banking relationships with foreign institutions that refused to acknowledge a U.S. summons.

Financial institutions as defined in 31 CFR 103.11(c) include:

Money Services Businesses under CFR 103.11(uu) include:

The definition of financial institution under 31 CFR 103.11 also includes each agent, agency, branch or office within the United States of an included financial institution. Each is separately required to follow the reporting and recordkeeping requirements of the BSA.

Where the reports to be filed or records to be kept would be duplicates, only one report is required to be filed. This means that the principal office and the branches can determine who files the report and where the records will be retained. Each is separately responsible if the requirements of the law are not met.

A nonfinancial trade or business that receives more than $10,000 in cash in a single transaction (or two or more related transactions) is now required to file a Form 8300, under both Section 5331 of the BSA, as well as under IRC 6050I . Form 8300reflects this dual statutory purpose in its heading. The purpose of Section 5331 is to free the Form 8300 information from the disclosure protections applicable to information returns required by the IRC. The BSA regulation at CFR 103.30 31 mirrors those under IRC 6050I. For a detailed discussion of Form 8300 see IRM 4.26.10.

Individual owners, officers, or employees of the financial institution act for it. The knowledge, intent, or negligence of these individuals may be attributed to the financial institution. The individuals themselves are separately liable as individuals for additional penalties for willful violations. Examples of individual responsibility include:

Individuals as well as financial institutions are also directly required to report transportation of currency or monetary instruments, under 31 CFR 103.23, and foreign financial accounts and reports of transactions with foreign financial agencies under 31 CFR 103.24. Individuals are also required to keep records related to 31 CFR 103.24 reports under 31 CFR 103.23. See IRM 4.26.16.

Most financial institutions file CTRs, FinCEN Form 104 (formerly Form 4789). (See Exhibit 4.26.5-2.)

Certain casinos file CTRCs, FinCEN Form 103 (formerly Form 8362). ( See Exhibit 4.26.5-3.)

Nevada casinos file Currency Transaction Reports by Nevada Casinos (CTRC-Ns) FinCEN Form 103-N (formerly Form 8852). (See Exhibit 4.26.5-4.)

The following chart details these Currency Transaction Reports and verification requirements.

Banks are not required to file CTRs on transactions with certain entities and are allowed, at the discretion of the bank, to exempt certain types of business transactions. Exemption law changed rapidly in the late 1990s. Some banks were not exercising their discretion to exempt customers and filed numerous CTRs, many of which related to normal business transactions. In 1994, Congress charged Treasury with the duty of reducing the number of CTRs filed. Treasury issued new regulations amending 31 CFR 103.22.

Designation of Exempt Person, Form TD F 90-22.53 , must be filed by any bank that wishes to designate a customer as an exempt person for purposes of CTR reporting. 31 CFR 103.22(d)(3)(i). See Exhibit 4.26.5-5.

The CTR exemption does not mean that a SAR need not be filed.

Banks must exempt other banks, government entities, and listed entities, that is, businesses appearing on a recognized stock exchange and their subsidiaries. In addition, banks can exempt customers having transaction accounts with the bank for a 12 month period who are either nonlisted businesses which regularly withdraw or deposit more than $10,000 or payroll customers which regularly withdraw more than $10,000 to meet payroll.

The exemption rule of 31 CFR 103.22(d) applies to banks. It generally does not apply to NBFIs.

Banks must apply special exemption rules to NBFIs.

Some persons must file reports on foreign financial accounts and transportation of currency or monetary instruments into or out of the United States. See Exhibit 4.26.5-11 for the FBAR Report, TD F 90-22-1 and See Exhibit 4.26.5-7 for the Report of International Transportation of Currency or Monetary Instruments (CMIR), FinCEN Form 105 (formerly Customs Form 4790). They must also comply with any special targeting order when issued.

The following table details these reports.

Many financial institutions are required to file SARs. See Exhibit 4.26.5-5. Such forms require information about the reporting financial institution, the person conducting the transaction, the suspicious activity, and the person to contact for assistance.

The following reports must be retained:

Under 31 CFR 103.41(d), certain MSBs must also prepare and maintain a list of agents.

The agent list must be revised each January 1st for the immediately preceding 12 month period and retained for a period of five years.

The agent list must include the information specified in 31 CFR 103.41(d)(2):

31 CFR 103.38(d) is the overall authority for record retention. Generally records must be retained for a period of five years from the date of the transaction. This five year period is reaffirmed in 103.32 and 103.29 for foreign financial account records maintained by persons and for issuers and agents of money orders, travelers’ checks, etc. Records required under a targeting order are maintained according to the terms of the order. The five year record retention for suspicious activity reports and supporting documentation is found in the regulations that establish a Suspicious Activity Reporting requirement.

Failure to retain records is considered to be a recordkeeping violation for penalty application purposes.