Money Laundering

For more than 20 years, the Bank Secrecy Act, which requires the reporting of cash transactions exceeding $10,000, has been a major weapon in the government's fight against money laundering. Focusing on the use of the financial transaction reports required by the act, this testimony assesses where the federal effort against money laundering now stands. Although the act has forced money launderers to find other ways of converting currency, such as smuggling cash out of the country or using businesses and nonbank institutions, law enforcement agencies are not taking full advantage of the currency transaction reports required for each deposit, withdrawal, or transfer in excess of $10,000. The large volume of reports has made meaningful analysis difficult. Moreover, access to the data--particularly at the state level--is limited and cumbersome. Federal resources to enforce currency transaction report provisions at nonbank institutions may be insufficient to ensure compliance. Increased involvement by state authorities in enforcing reporting requirements could be a way to supplement federal efforts.