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Keywords

Bank Secrecy Act; money laundering; whistleblower; FinCEN

Abstract

Cartels, terrorists, fraudsters, and other criminals face a problem: when they receive the proceeds from their illicit activities, how can they get this money into their bank accounts without raising regulatory eyebrows? The Bank Secrecy Act (BSA) has established a complex regulatory regime, imposing on banks the duty to assess the risks presented by their clients, to monitor the transactions they process, and to report transactions that contain indicia of money laundering and other criminal activity to the Financial Crimes Enforcement Network (FinCEN). In response, criminals utilize increasingly sophisticated means to obfuscate the origins of these transactions and disguise their illicit nature to enter the U.S. banking system. Banks thus face a difficult task standing at the front line of anti-money laundering (AML) detection. Strong financial incentives for banks to neglect their BSA compliance function compound the difficulties innate to AML detection. While banks are subject to regular examinations and face fines for failing to maintain adequate BSA compliance procedures, and while bank officials can even face imprisonment, the primary federal enforcement agency, FinCEN, faces perennial resource shortages. Agencies must also consider a variety of factors when deciding whether to bring an action against a noncompliant bank. The confluence of these issues leads some banks to ignore, neglect, or undermine their BSA compliance officials. This Note proposes a qui tam model within the BSA to provide recourse to bank BSA compliance personnel who have evidence of violations by their employers. This model allows private individuals with knowledge of a violation to bring a claim on behalf of the government, while still providing for agency oversight through the ability to intervene in or dismiss cases. This Note argues that qui tam will help increase the amount of BSA enforcement, ameliorate the resource shortages faced by FinCEN, and preserve regulatory discretion by allowing FinCEN to transition into a gatekeeper role. This Note also discusses additional controls unique to the BSA to deter abuse and maintain effective BSA compliance departments at banks.

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