Daily Deposit 2.23.2023

GM. This is the Daily Deposit. The newsletter that helps bankers get better, not worse, everyday

The newsletter that puts the F U N in FUNdamentals!

Today in Banking

Existing Home Sales Decline in January: sales fell 0.7%, that’s 12 months of declines.

Mortgage Applications Lowest Since 1995: apps have decreased 13.3% last week, and is 19% below the pandemic low.

Klarna Wins Over the US: US is now Klarna’s biggest market by revenue, passing Germany.

Digital Remittance to Hit 2 billion by 2027: mobile accounts for 73% of all digital remittance. future growth lies with mobile via digital wallets and super apps.

Carmoola Closes £8.5M Series A: “neo car finance” product that reduces car buying to minutes from days.

Banking 101

The Bank Secrecy Act (BSA)

No it's not a secret society of lizard-people bankers…This fun little federal law enacted in 1970 to combat money laundering and other illegal financial activities. Who doesn't love more regulation and paperwork?! It may not be fun, but it requires FIs to report certain transactions to the government and establish anti-money laundering (AML) programs to prevent illegal activity. I can get behind this.

Under the BSA, FIs are required to file 2 types of reports with the government for certain transactions. These reports help the government track financial activity and identify potential illegal activity, such as money laundering, terrorist financing, and tax evasion.

1) Currency Transaction Reports (CTRs) for transactions over $10,000 in cash

2) Suspicious Activity Reports (SARs) for transactions that appear suspicious or unusual

In addition to reporting requirements, the BSA requires financial institutions to establish AML programs. Banks hire Compliance Risk Officers (CROs) and BSA officers to run it. These programs identify, monitor, and report suspicious activity by customers. AML programs typically include policies and procedures for customer identification (CIP), risk assessment, and ongoing monitoring, as well as employee training and independent testing.

The BSA applies to a wide range of financial institutions, including banks, credit unions, money services businesses, and casinos. In addition to these institutions, the BSA also applies to individuals and entities that are engaged in certain financial activities, such as the sale of prepaid access devices, the operation of virtual currency exchanges, and the provision of certain financial services to foreign individuals and entities.

Who are the enforcers? Enforcement is the responsibility of several government agencies, including the Financial Crimes Enforcement Network (FinCEN), the Office of the Comptroller of the Currency (OCC), the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC). These alphabet soup agencies have the authority to impose penalties and sanctions for non-compliance with the BSA, including fines, cease and desist orders, and even criminal prosecution.

While the BSA is primarily aimed at preventing illegal financial activity, it has also had important implications for privacy and civil liberties. Some critics argue that the BSA's reporting requirements and AML programs can infringe on the privacy of individuals and businesses, as well as lead to the targeting of innocent people for investigation. However, supporters of the BSA argue that it is a necessary tool for preventing money laundering, terrorism financing, and other illegal activity. Take the bad with the good I suppose, and if you're not being shady what's the problem?

In recent years, the BSA has been updated and expanded to keep pace with changes in the financial industry and evolving threats to national security. For example, the USA PATRIOT Act, enacted in the wake of the 9/11 terrorist attacks, expanded the BSA's reporting requirements and AML program requirements, and created new penalties for non-compliance. BSA has also been used to take on a wider range of financial crimes, from tax evasion and corruption to drug trafficking and human smuggling.

Overall, the BSA is a key tool in the fight against illegal financial activity in the United States. While it has its critics, let's be real, the BSA's reporting requirements and AML programs are essential for detecting and preventing money laundering, terrorist financing, and other serious crimes.

LULZ

Tip of the Day

There are 3 absolute truths in life:

1) Everyone does exactly what they want to do.

2) You can do anything once.

3) You always have a choice.

reply with a Cold Stone bowl score… did you:

a) like it

b) love it

c) gotta have it