US AML Framework: BSA, USA PATRIOT Act and AML Act

1. Why This Topic Matters for the CAMS Exam

The US anti-money laundering framework is the single most influential national AML regime in the world. Because the US dollar dominates global trade and correspondent banking, almost every financial institution on earth is directly or indirectly touched by US rules. The CAMS exam (Domain 2: Regulatory Regimes, Risk Assessments and Collaboration) tests your understanding of the three legislative pillars that built this framework: the Bank Secrecy Act (BSA) of 1970, the USA PATRIOT Act of 2001, and the Anti-Money Laundering Act of 2020 (AMLA). Examiners expect you to know not only what each law says, but why it was passed, who it applies to, and how the obligations operate in a compliance programme. Expect several scenario-based questions drawn from this area, especially around Section 311, 312, 314 and 326 of the PATRIOT Act, CTR and SAR thresholds, and the beneficial ownership and whistleblower reforms of AMLA.

2. What the US AML Framework Is

The framework is a layered body of statutes, regulations and guidance administered chiefly by the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Treasury Department. FinCEN is the US Financial Intelligence Unit (FIU) and the administrator of the BSA. Functional regulators – the OCC, Federal Reserve, FDIC, NCUA, SEC, CFTC and the IRS (for non-bank financial institutions) – examine institutions for BSA compliance, while the Department of Justice prosecutes criminal money laundering under Title 18 of the US Code (Sections 1956 and 1957).

2.1 The Bank Secrecy Act (1970)

Formally the Currency and Foreign Transactions Reporting Act, the BSA was the first major AML law in the world. Its core idea was that financial records have a high degree of usefulness in criminal, tax and regulatory investigations. Key original requirements:
• Currency Transaction Reports (CTRs) for cash transactions over USD 10,000 in a single business day (aggregated).
• Report of International Transportation of Currency or Monetary Instruments (CMIR) for physically moving more than USD 10,000 across the US border.
• Report of Foreign Bank and Financial Accounts (FBAR) for US persons with foreign accounts exceeding USD 10,000 in aggregate.
• Recordkeeping obligations, generally five years.

The BSA has been amended repeatedly. Important milestones you should recognise:
• Money Laundering Control Act (1986) – made money laundering a federal crime for the first time, criminalised structuring (breaking transactions below USD 10,000 to evade CTRs), and introduced civil and criminal forfeiture.
• Anti-Drug Abuse Act (1988) – expanded the definition of financial institution and required identity verification for purchases of monetary instruments over USD 3,000.
• Annunzio-Wylie Anti-Money Laundering Act (1992) – created the Suspicious Activity Report (SAR) regime, introduced the safe harbor for institutions filing SARs, prohibited disclosure of SAR filings, and established the Bank Secrecy Act Advisory Group (BSAAG).
• Money Laundering Suppression Act (1994) – required registration of Money Services Businesses (MSBs) and streamlined CTR exemptions.
• Money Laundering and Financial Crimes Strategy Act (1998) – created High Intensity Financial Crime Areas (HIFCAs).

2.2 The USA PATRIOT Act (2001)

Passed six weeks after the 11 September attacks, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act dramatically expanded the BSA. Title III, the International Money Laundering Abatement and Anti-Terrorist Financing Act, contains the sections most tested in CAMS:

• Section 311 – Special Measures: allows Treasury to designate a foreign jurisdiction, institution, class of transactions or type of account as a primary money laundering concern and impose one or more of five special measures, ranging from enhanced recordkeeping to the most severe – prohibiting US institutions from opening or maintaining correspondent or payable-through accounts for the target.
• Section 312 – Due Diligence for Correspondent and Private Banking Accounts: requires risk-based due diligence on correspondent accounts for foreign financial institutions and enhanced due diligence (EDD) for accounts of foreign banks operating under offshore licences or in jurisdictions of concern, and for private banking accounts held by non-US persons (minimum USD 1,000,000 aggregate deposits, assigned liaison), with particular attention to senior foreign political figures (PEPs).
• Section 313 – Prohibition on Shell Banks: US institutions may not maintain correspondent accounts for foreign shell banks (banks with no physical presence in any country and not affiliated with a regulated financial group) and must take reasonable steps to ensure their correspondent accounts are not used indirectly by shell banks.
• Section 314(a) – Information Sharing with Law Enforcement: FinCEN, on behalf of law enforcement, sends requests to financial institutions to search records for named subjects; institutions must respond (typically within 14 days) and keep the request confidential.
• Section 314(b) – Voluntary Information Sharing Among Institutions: financial institutions that register with FinCEN may share information with one another about suspected money laundering or terrorist financing under a safe harbor from liability.
• Section 319(a) – Forfeiture of Funds in Interbank Accounts: funds deposited in a foreign bank may be seized from that bank's US correspondent account.
• Section 319(b) – Records and Subpoenas: foreign banks with US correspondent accounts must appoint a US agent for service of process; US institutions must be able to produce correspondent account records within 120 hours of a regulator's request, and must terminate correspondent relationships when directed after the foreign bank fails to comply with a subpoena.
• Section 325 – Concentration Accounts: regulators may prohibit institutions from allowing customers to direct transactions through concentration accounts anonymously.
• Section 326 – Customer Identification Program (CIP): institutions must implement written procedures to verify the identity of each customer opening an account, obtaining at minimum name, date of birth (individuals), address and identification number; maintain records; and check names against government lists.
• Section 352 – AML Programs: all financial institutions must establish AML programmes built on what are commonly called the four pillars: (1) internal policies, procedures and controls; (2) a designated compliance officer; (3) ongoing employee training; and (4) independent audit/testing. FinCEN's 2016 Customer Due Diligence (CDD) Final Rule effectively added a fifth pillar – risk-based CDD including the identification of beneficial owners of legal entity customers.
• Section 356 – SARs for Broker-Dealers: extended suspicious activity reporting to securities broker-dealers (later to futures commission merchants, mutual funds, insurers and others).
• Section 359 – Informal Value Transfer Systems: brought hawala and similar systems within the definition of financial institution.
• Section 362 – FinCEN secure network for electronic filing of BSA reports.

The PATRIOT Act also increased civil and criminal penalties, strengthened extraterritorial reach (Section 317 long-arm jurisdiction over foreign money launderers), and made bulk cash smuggling a crime (Section 371).

2.3 The Anti-Money Laundering Act of 2020 (AMLA)

Enacted on 1 January 2021 as Division F of the National Defense Authorization Act, AMLA is the most sweeping reform since 2001. It re-orients US AML from a box-ticking posture toward effectiveness, risk-based compliance and public–private collaboration. Key features:

• Statement of purpose (Section 6002): modernise the BSA, encourage technological innovation, reinforce the risk-based approach, and require AML programmes to be effective, reasonably designed and aligned with national AML/CFT priorities, which FinCEN first published in June 2021 (corruption, cybercrime, foreign and domestic terrorist financing, fraud, transnational criminal organisations, drug trafficking, human trafficking and smuggling, proliferation financing).
• Corporate Transparency Act (CTA, Sections 6401–6403): requires reporting companies formed or registered in the US to report their beneficial owners (25 percent ownership or substantial control) to FinCEN's non-public Beneficial Ownership Information (BOI) registry, with access for law enforcement and, with customer consent, financial institutions. Designed to attack the abuse of anonymous shell companies.
• Whistleblower reforms (Section 6314): whistleblowers who provide original information leading to enforcement actions with penalties over USD 1 million may receive awards of 10 to 30 percent of collected sanctions, with enhanced anti-retaliation protections.
• Expanded definition of financial institution: dealers in antiquities are brought within the BSA; a study of the art market was mandated. The Act also confirmed that businesses dealing in virtual currency / value that substitutes for currency are covered.
• Enhanced penalties: repeat violators face additional fines up to three times the profit gained or loss avoided; individuals who violate the BSA may be required to repay bonuses and can be barred from serving on boards of US financial institutions.
• Expanded foreign bank subpoena power (Section 6308): Treasury and DOJ may subpoena records of any account at a foreign bank that maintains a US correspondent account, including records held outside the US, regardless of foreign secrecy laws.
• Information sharing and innovation: formalises the FinCEN Exchange public–private partnership, encourages pilot programmes to share SAR information with foreign branches and affiliates, creates Innovation Officers and a Bank Secrecy Act Innovation initiative, and promotes the use of new technology such as artificial intelligence and machine learning.
• SAR and CTR reform: directs FinCEN to review thresholds, streamline reporting, provide feedback to filers, and study the usefulness of reports.
• FinCEN resources and governance: expands FinCEN's budget and workforce, appoints Treasury attachés abroad and FinCEN Domestic Liaisons, and requires a review of exam procedures to emphasise effectiveness.
• Risk assessment emphasis: directs that AML programmes be informed by a documented risk assessment, laying the groundwork for FinCEN's later proposed rule requiring a formal risk assessment process as a programme component.

3. How the Framework Works in Practice

Reporting obligations
• CTR (FinCEN Form 112): cash in or out exceeding USD 10,000 by or on behalf of one person in one business day; filed within 15 calendar days. Certain customers (banks, government entities, listed companies, eligible non-listed businesses) can be exempted via Designation of Exempt Person.
• SAR (FinCEN Form 111): banks must file when a transaction of USD 5,000 or more involves possible money laundering, BSA violations or no apparent lawful purpose (USD 25,000 if no suspect can be identified; insider abuse at any amount). MSBs use a USD 2,000 threshold. Filing deadline is 30 calendar days from initial detection, extendable to 60 days if no suspect is identified. Continuing activity reviews are filed every 90 days (120 days after the initial filing). SARs and their existence must never be disclosed to the subject – tipping off is a federal offence – and filers enjoy safe harbor from civil liability.
• Form 8300: trades and businesses receiving more than USD 10,000 in cash in one or related transactions.
• Funds Transfer Rule and Travel Rule: for transfers of USD 3,000 or more, originator and beneficiary information must be collected, retained and passed along the payment chain.
• Monetary instrument log: cash purchases of cashier's cheques, money orders and traveller's cheques between USD 3,000 and USD 10,000.

Programme obligations
Every covered institution designs a written, board-approved AML programme around the five pillars, scaled to its risk profile. CIP verifies identity at onboarding; CDD establishes the purpose and nature of the relationship and identifies beneficial owners; EDD applies to higher-risk customers such as foreign correspondent banks and PEPs; ongoing monitoring detects unusual activity that feeds the SAR decision process. Independent testing and training close the loop, and regulators assess the programme using the FFIEC BSA/AML Examination Manual.

Enforcement
Civil money penalties are imposed by FinCEN and functional regulators; criminal penalties under 18 USC 1956 reach 20 years imprisonment and fines of up to USD 500,000 or twice the value laundered. The Office of Foreign Assets Control (OFAC) sanctions regime is separate from the BSA but operates in parallel, and CAMS questions sometimes test whether you can distinguish them – OFAC is about prohibited parties and jurisdictions; BSA is about reporting, recordkeeping and programme controls.

4. Exam Tips: Answering Questions on US AML Framework: BSA, USA PATRIOT Act and AML Act

Tip 1 – Anchor each law to its era and purpose. BSA (1970) = recordkeeping and reporting to create a paper trail; MLCA (1986) = criminalising laundering and structuring; PATRIOT Act (2001) = terrorist financing, correspondent banking and information sharing; AMLA (2020) = effectiveness, beneficial ownership transparency, whistleblowers and modernisation. If a question asks which law first did something, think chronologically.

Tip 2 – Memorise the PATRIOT Act section numbers that matter. The exam frequently names sections. Quick map: 311 special measures / primary money laundering concern; 312 correspondent and private banking due diligence; 313 shell banks; 314(a) government-to-institution sharing, 314(b) institution-to-institution sharing; 319(a) interbank account forfeiture, 319(b) 120-hour rule and foreign bank agent for service; 326 CIP; 352 AML programme pillars. If a scenario involves a foreign bank with no physical presence, the answer involves 313. If it involves a jurisdiction being cut off from US correspondent accounts, it is 311.

Tip 3 – Know your thresholds and timelines cold. CTR over USD 10,000 (15 days); SAR USD 5,000 bank / USD 2,000 MSB (30 days, 60 if no suspect); funds transfer rule USD 3,000; private banking EDD USD 1,000,000; 314(a) response about 14 days; 319(b) records within 120 hours; records kept 5 years; beneficial ownership at 25 percent. Distractor answers typically shift one of these numbers slightly.

Tip 4 – Count the pillars correctly. Section 352 lists four pillars; the 2016 CDD Rule made CDD and beneficial ownership the fifth. If an answer option omits independent testing or the designated compliance officer, it is wrong. AMLA now frames the programme as needing to be effective and reasonably designed, informed by national priorities and a risk assessment.

Tip 5 – Separate FinCEN from other agencies. FinCEN is the FIU and BSA administrator; it does not prosecute (DOJ does) and does not administer sanctions (OFAC does). Functional regulators (OCC, Fed, FDIC, SEC, etc.) examine for compliance. Questions that ask who receives SARs, who issues 314(a) requests, or who designates a primary money laundering concern are pointing to FinCEN or Treasury.

Tip 6 – For AMLA questions, think modernisation and transparency. Correct answers will reference the Corporate Transparency Act and BOI reporting, whistleblower awards of 10 to 30 percent, national AML/CFT priorities, antiquities dealers, expanded foreign bank subpoena power, FinCEN Exchange, innovation and the emphasis on effectiveness over technical compliance. Be careful: AMLA did not eliminate SARs or CTRs – it ordered a review of them.

Tip 7 – Apply the risk-based lens to scenarios. When a question describes a correspondent account for an offshore-licensed bank, a non-US PEP opening a private banking account, or a shell company with opaque ownership, the best answer will typically be enhanced due diligence, identification of beneficial owners, or refusal/termination – not simply filing a CTR.

Tip 8 – Watch for confidentiality traps. Any answer that suggests informing a customer that a SAR has been filed, or disclosing a 314(a) request to the subject, is wrong. Conversely, sharing under 314(b) is permitted only between registered institutions and only for AML/CFT purposes.

Tip 9 – Read for the strongest, most specific answer. CAMS questions often offer two plausible options; prefer the one that cites the precise legal mechanism (for example, invoke Section 311 special measures) over a generic statement (increase monitoring), unless the question explicitly asks for the first or most immediate step.

Tip 10 – Remember the international dimension. US rules apply extraterritorially through correspondent banking, 319(b) subpoenas and Section 317 jurisdiction, and the US framework is assessed against FATF Recommendations. A question may ask why a non-US bank must care about the BSA – the answer is access to US dollar clearing and correspondent relationships.

5. Quick Revision Summary

• BSA 1970: foundation – CTR, CMIR, FBAR, recordkeeping; administered by FinCEN.
• 1986 MLCA: money laundering and structuring become crimes.
• 1992 Annunzio-Wylie: SARs, safe harbor, BSAAG.
• 2001 PATRIOT Act Title III: 311, 312, 313, 314(a)/(b), 319, 326 CIP, 352 four pillars.
• 2016 CDD Rule: fifth pillar, beneficial ownership at 25 percent and control prong.
• 2020 AMLA: effectiveness, national priorities, Corporate Transparency Act and BOI registry, whistleblowers, antiquities, expanded subpoenas, FinCEN Exchange, innovation.

Master the chronology, the section numbers, the thresholds and the underlying policy logic, and you will be able to dissect any US AML framework question the CAMS exam presents.