The global fight against financial crime relies heavily on statutory frameworks established by the United States. These frameworks have broad extraterritorial reach through the global banking system. The two foundational pillars of this architecture are the Bank Secrecy Act (BSA) of 1970 and the USA PATRIOT Act of 2001.
The Bank Secrecy Act (BSA)
The BSA established the baseline framework for modern anti-money laundering (AML) obligations. It moved financial institutions from passive observers to active participants in law enforcement reporting. The statute mandates that financial systems maintain records and file reports that have high utility in criminal, tax, or regulatory investigations.
The USA PATRIOT Act
Following the security failures exposed on September 11, 2001, the USA PATRIOT Act expanded the BSA. It integrated counter-terrorist financing (CTF) protocols directly into corporate risk programs. Title III of the Act expanded the regulatory perimeter to include non-bank financial institutions. It also strengthened international cooperation mechanisms and targeted cross-border vulnerabilities:
- Section 311 Measures: Grants the Secretary of the Treasury authority to designate a foreign jurisdiction, institution, or class of transactions as a “primary money laundering concern,” cutting them off from the US financial system.
- Section 312 Mandates: Requires financial firms to establish enhanced due diligence (EDD) programs for foreign correspondent banking accounts and private banking accounts held by non-US persons.
- Section 313 Prohibitions: Bans US banks from maintaining correspondent accounts for foreign shell banks—institutions with no physical presence or employee operations in any country.