Speaker 1: Hello, and welcome to the FinCEN informational video designed to help you detect and deter money laundering. FinCEN stands for the Financial Crimes Enforcement Network, a bureau of the U.S. Department of the Treasury. This video will tell you about federal regulations under the Bank Secrecy Act, often referred to as the BSA. These regulations may require your business to report suspicious financial activity. You will also learn how to recognize suspicious activity. We all know money is often the motive for committing a crime. Because money can also be evidence of a crime, criminals need to hide their illegally obtained money in order to use it without fear of being arrested for their crimes. The process of hiding or disguising the source of illegally obtained money in an effort to make it appear legitimate is called money laundering. Money launderers move the proceeds of crime, or dirty money, into and through the global financial system in an effort to clean the money so it appears to be obtained legitimately. Step one involves the placement of money into financial institutions such as MSBs, banks, securities brokers or dealers, casinos, and more. After criminals place the money into financial institutions, it is layered into the financial system through financial transactions, including bank withdrawals, wire transfers, and the buying of monetary instruments. The final step in laundering money is the integration of that money into the economy through purchases of items such as boats, houses, cars, and businesses. And, just like the crimes it tries to hide, money laundering is a crime. Money laundering is a process that may involve a variety of techniques and strategies. But the ultimate goal is to launder the money through a series of transactions. These transactions are designed to disguise the paper trail leading back to the original crime. So how do criminals launder money? Let's take a closer look. One very common way criminals attempt to place illegally obtained or dirty money into the financial system is by designing a transaction to evade a Bank Secrecy Act reporting or record keeping requirement. This is called structuring. Structuring is a federal crime and must be reported by filing a Suspicious Activity Report, or SAR, if the amount involved is $2,000 or more. To understand your obligation to help prevent money laundering, we'll need to review BSA reporting and record keeping requirements. If your business provides check cashing, currency dealing, or exchange, or you issue, sell, or redeem money orders, traveler's checks, or stored value, and you do business of more than $1,000 with the same person in any of these activities on the same day, your business is a money services business, or MSB. However, if your business provides money transfers, it's automatically an MSB. MSBs are financial institutions under the Bank Secrecy Act. Certain MSBs are required to register with FinCEN. Under the BSA, all MSBs are required to have anti-money laundering compliance programs. In addition, MSBs are required to maintain certain records and to report certain transactions to FinCEN. The BSA requires MSBs to report cash transactions of more than $10,000 to FinCEN using a Currency Transaction Report, or CTR. These transactions can be either cash in or cash out, by or on behalf of the same person on any one day. MSBs then must keep a copy of the CTR for five years from the date of filing the report. MSBs must also record cash purchases of money orders and traveler's checks of $3,000 to $10,000 inclusive. That means cash purchases of more than $2,999 and under $10,001. MSBs must also keep these records for five years. MSBs must record money transfers, both sent and received, of $3,000 or more, regardless of the method of payment. That means it doesn't matter if the payment is in cash, by check, credit card, or in any other form of payment for a money transfer of $3,000 or more. The MSB must keep a record of it. MSBs must keep these records for five years. MSBs must record currency exchanges of more than $1,000 and must keep these records for five years. To fight money laundering effectively, it's important for all of us to be alert. This means keeping our eyes and ears open for any activity that raises a red flag. Examples of red flags include a customer changes their story or gives conflicting information when asked for identification. A customer refuses to provide identification. A customer requests several transactions just below record-keeping or reporting thresholds. Two or more customers work together to evade the BSA reporting or record-keeping requirement. A customer tries to get you to bend the rules just this once or offers you a bribe. A customer makes several transactions on the same day at different locations or branches of your business. Other factors that should contribute to your decision about whether or not to file a SAR include the size, frequency, and nature of the transactions, your experience with the customer and other individuals associated with the transaction, if any, and the norm for such transactions within your line of business and geographic area. Remember, a SAR is not an accusation. A SAR is not made public, but a SAR is a way to alert law enforcement to possible illegal activity. It is also important to remember that a customer cannot be told if or when a SAR is filed. In fact, it is illegal to disclose a SAR or the information contained in a SAR except upon request to FinCEN or appropriate law enforcement and regulatory agencies. Remember, criminals structure transactions to evade Bank Secrecy Act reporting and record-keeping requirements. When that happens, certain MSBs are required to file a Suspicious Activity Report, or SAR. Here's what the Bank Secrecy Act requirement is for filing a SAR. A SAR must be filed when the MSB knows, suspects, or has reason to suspect that the transaction or pattern of transactions is both suspicious and involves $2,000 or more, $5,000 or more if identified by issuers reviewing clearance records. You may wonder how to identify a suspicious transaction. A transaction or pattern of transactions is suspicious if it's one or more of the following. It involves illegally obtained money, or funds derived from illegal activity, or tries to hide or disguise illegally obtained money. It is designed to evade BSA requirements through structuring or other means. It appears to have no apparent business or lawful purpose, and the MSB can determine no reasonable explanation for the transaction after examining all available facts. And finally, the transaction is suspicious if it uses the MSB to facilitate criminal activity. Please note that a SAR is not an accusation. A SAR is not made public. But a SAR is a way to alert law enforcement to possible illegal activity. Let's take a look at some examples. A customer brings $12,000 in cash into an MSB and wants to purchase a money order for $12,000. The MSB employee informs him that the Bank Secrecy Act requires the MSB to verify identification and file a Currency Transaction Report, or CTR, because the transaction involves more than $10,000 in cash by the same person on the same day. The customer says he will then buy two money orders in cash for $6,000 each. The MSB employee suspects the customer is attempting to structure his transaction to evade the CTR reporting requirement. Because the transaction involves $2,000 or more, the employee must file a Suspicious Activity Report. It is important to remember that it's against the law to tell a customer if or when a SAR is filed. Remember, there is also a BSA recordkeeping requirement for cash purchases of money orders between $3,000 and $10,000 inclusive. Even for money transfers of $3,000 or more. How would a customer try to evade any of these BSA recordkeeping requirements? Let's take a look. A customer walks into her local MSB wanting to send three money transfers of $2,900 each to the same receiver. The MSB employee doesn't know of any obvious reason for the customer to conduct her transaction in this way, because it would be less costly to send one money transfer for $8,700. Unless, of course, this customer is trying to evade the recordkeeping requirement for money transfers of $3,000 or more. When the MSB employee asks the customer why she wants to send three money transfers to the same receiver when sending one money transfer would be less expensive, the customer says it's just the way she wants to do it. The MSB must file a SAR because it suspects that the customer is structuring the transaction. The customer's answer was not a reasonable explanation for why she is conducting her transaction in this unusual way, and because the customer's transactions involve $2,000 or more. Here's another example of structuring. One morning a customer sends a money transfer for $2,000 to XYZ Manufacturing Company. An hour later, another customer sends another money transfer, also for $2,000, to XYZ Manufacturing Company. Two hours later, one more customer sends a money transfer for $2,000 to XYZ Manufacturing Company. The MSB employee can think of no lawful business reason why three seemingly unrelated customers would send money transfers for the same amount of money to the same receiver over such a short period of time, and available facts provide no reasonable explanation. The MSB employee should report her suspicions to her supervisor, and if they suspect that these customers are working together to structure their transactions to evade the $3,000 record-keeping requirement, and because $2,000 or more is involved, the MSB must file a Suspicious Activity Report. Let's look at a final example, and you decide if it's suspicious and if it must be reported. An MSB employee notices that recently, the owner of the diner across the street has been coming in three to four times every week around 3 p.m., with nearly $2,500 in cash to purchase a money order. The MSB employee believes that this is not usual or typical behavior for this customer, and she doesn't think the diner takes in that much cash in a week. She suspects that the diner owner might be structuring illegally obtained money. What should she do? She should report her suspicions to her supervisor, and they should then determine if this activity is suspicious and if a SAR must be filed. The next time the diner owner comes into the MSB, the supervisor asks him how his business has been doing. The owner explains that charter buses have recently started to stop at his diner for lunch every day, and he wants to convert the large amount of cash he's making into money orders several times during the week until he can make a deposit at the bank. Has the diner owner provided a reasonable explanation for the source of his money and for why he's conducting the transactions in amounts just below BSA recordkeeping requirements? The MSB's answer to these questions will determine whether or not it is required to file a SAR. These are just a few samples of how money could be laundered. These examples are not intended to be a comprehensive list of all the scenarios that you may encounter. Here's how to report suspicious activity. You can download the SAR MSB form online at www.msb.gov, or receive a copy by calling the IRS Forms Distribution Center at 1-800-829-3676. Be sure to complete the SAR form after the customer has left by providing as much information as possible, particularly in the narrative section. Keep a copy of the SAR and all supporting documentation, such as copies of instruments and receipts, for five years from the date of filing the report. Do not mail the supporting documentation with the SAR form. Mail the completed SAR to Detroit Computing Center, Attention, SAR-MSB, PO Box 33117, Detroit, Michigan, 48232-5980. If you have questions about reporting suspicious activity or other BSA requirements, please call the FinCEN Helpline at 1-800-949-2732. Remember, money laundering is a crime that supports other crimes, and it allows criminals to profit from their crimes. You can help fight money laundering and other financial crimes by learning about and complying with Bank Secrecy Act requirements. Before we conclude this session, let's review what we've learned today. Certain MSBs are required to register with FinCEN, report suspicious activity to FinCEN. All MSBs are required to have anti-money laundering compliance programs. You should report suspicious activity to FinCEN using a SAR-MSB form, which must be filed if a transaction or pattern of transactions is both suspicious and involves $2,000 or more, $5,000 or more if identified by issuers reviewing clearance records. Keep a copy of the SAR-MSB form for five years from the date of filing the report. Report cash transactions of more than $10,000 by the same person in one day to FinCEN using a CTR. Keep a copy of the CTR for five years from the date of filing the report. Record cash purchases of money orders and traveler's checks of $3,000 to $10,000 inclusive. Keep these records for five years. Record every money transfer of $3,000 or more. Keep these records for five years. Record currency exchanges of more than $1,000. Keep these records for five years. Be alert. Remember, we can all help make our streets and communities safer places to work and live. To order free materials such as quick reference guides that summarize the information presented in this video, please visit www.msb.gov.