Since Bank Secrecy Act (BSA) reporting requirements were enhanced by passage of the U.S.A. PATRIOT Act following the 9/11 terrorist attacks, there has been an ongoing debate about their usefulness. In essence, are the benefits of reporting requirements to the law enforcement community outweighed by the burdens placed on financial institutions? The more important question is: are such measures effective or ineffective? The reality is, reporting requirements are here to stay. Therefore, we must continuously strive to develop, implement, improve and modify mechanisms to make reporting requirements as effective as possible.
Another reality is that terrorist and criminal organizations require funding in order to operate and succeed. Invariably, their funding sources will flow through financial institutions. This is why BSA reporting requirements are critically important to our National Security. This fact becomes more compelling in view of the actuality that finance is one of
the two most significant vulnerabilities to terrorist and criminal organizations.
Regardless of how limited, there is a level of effectiveness with respect to BSA reporting requirements in identifying terrorist financing. The bottom line is, it is possible for financial institutions to identify terrorist financing, but it is highly improbable. We must take continual actions that increase the probability factor, and thereby increasing the possibility.
The challenge confronting the government and banking community is to improve the effectiveness of the process.
by Dennis M. Lormel, Managing Director, IPSA International Expert on anti-money laundering and terrorism financing issues.
Detailed report link: click here
