Certified Anti-Money Laundering Specialist Certification (CAMS) Practice Exam

What does the Bank Secrecy Act (BSA) enforce?

1. Mandatory bank account disclosure for all customers

2. Automatic approval for large transactions

3. Regulatory controls on financial institutions and record-keeping requirements

4. Comprehensive privacy legislation for banks

The correct answer is: Regulatory controls on financial institutions and record-keeping requirements

The Bank Secrecy Act (BSA) is instrumental in the detection and prevention of money laundering and other financial crimes. It enforces regulatory controls on financial institutions, requiring them to implement various measures to combat illegal activities. These measures include the establishment of internal policies and procedures, as well as the implementation of record-keeping requirements that mandate institutions to document certain transactions, maintain customer identification programs (CIPs), and report suspicious activities. This framework is essential for ensuring that financial institutions take proactive steps to monitor and report on customer activities, particularly those that could indicate money laundering or terrorism financing. By having stringent record-keeping requirements, the BSA enables law enforcement agencies to investigate and act against financial crimes more effectively. The other options, such as mandatory account disclosures, automatic approvals for large transactions, and comprehensive privacy legislation, do not accurately reflect the core objectives and provisions of the BSA. Thus, understanding the BSA's focus on enhancing regulatory controls and record-keeping is crucial for anyone studying anti-money laundering compliance.