Anti-money laundering and legislation to control it

Irrespective of whether a country is advanced, developing, or a backward one; money laundering is a common phenomenon that runs through the blood of most economies. It can be described as the systematic means of suppressing, camouflaging or guising the illegitimate or criminal sources of money flow and making them appear legitimate or legal.

Ways by which money is laundered

Activities, be they global or local, involving the use of nefarious means –meaning means that are proscribed by the law –used for making money, are considered money laundering. Anything from local flesh trade to global terrorism to banking fraud to illegitimately done political funding can qualify for money laundering. Tax evasion is also a serious means of money laundering, because covering up income to avoid paying taxes certainly results in the infusion of bad funds to the economy, which is further used for activities that could also be illegal.

All this calls for serious use of state machinery in checking and controlling the flow and use of money laundering. Most governments across the world have enacted much anti-money laundering legislation. The effectiveness of these laws depends primarily on the country in which they are enacted and will of the state in implementing the anti-money laundering plans.

US anti-money laundering legislations

The US can trace its history of passing anti-money laundering laws to 1970, when the first major attempt at curbing money laundering was codified under a law in the form of the Bank Secrecy Act (BSA). Under the BSA, financial institutions are required to disclose unauthorized transactions of over $10,000 that are not accompanied by proper documentation and report the same to the US Department of the Treasury.

Another requirement of the BSA is that financial intuitions must also file a Suspicious Activity Report (SAR) for a transaction based on suspicion that funds could have come from an illegitimate source. Determination of what is suspicious is defined in this act, which the concerned authorities have to use for reporting.

The Money Laundering Control Act

The US has also legislated the Money Laundering Control Act, which it passed in 1986. This law arms the regulatory and law enforcement authorities with teeth. It equips them powers to term any suspicious financial transaction as being a case for potential prosecution if the authorities can show that the money is concealed as defined within the framework of this Act. Not only financial institutions; even individuals could come under the scanner of this Act.

Extensions for the Money Laundering Control Act

The Money Laundering Control Act has been supplemented over time by a few additions. Important among these include:

  • The Anti-Drug Abuse Act of 1988
  • The Annunzio-Wylie Anti-Money Laundering Act of 1992, and
  • The Intelligence Reform & Terrorism Prevention Act of 2004


Author: compliance4all

Compliance4All, the ultimate continuing professional education provider offers you regulatory and compliance trainings from the industry's leading experts, but with one crucial difference -the cost. Compliance4All's objective is to be a platform that provides regulatory and compliance trainings with all the class and features that come with these trainings, at a lower price. Compliance4All seeks to make regulatory and compliance trainings low-hanging fruits. Industries We Focus On: • Trade & Logistics • Aerospace Defense • Banking & Insurance • Food & Beverages • Auditing/Accounting & Tax • Energy • Environment • Education • Automotive Transport • Science and Technology • Government • Construction • Electronics & Semiconductor • Operation • Engineering/Science • Purchasing & Vendor Relation • General counsel/Accountant • Geology & Mining • Documentation/Records

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