After nearly 50 years since its enactment, Congress is taking steps to revamp the Bank Secrecy Act (BSA) reporting thresholds. Led by Senate Banking Committee Chairman Tim Scott, a group of Republican senators has introduced a bill aimed at modernizing the BSA by increasing the reporting thresholds for currency transaction reports (CTRs) and suspicious activity reports (SARs).
The proposed legislation, titled the Streamlining Transaction Reporting and Ensuring Anti-Money Laundering Improvements for a New Era Act (STREAMLINE Act), seeks to update the outdated financial reporting thresholds to account for over five decades of inflation. The bill proposes to raise the CTR reporting threshold from $10,000 to $30,000, and increase certain SAR thresholds from $2,000 to $3,000 and from $5,000 to $10,000. Furthermore, it mandates the Treasury Department to adjust these amounts every five years to account for inflation.
The Bank Secrecy Act, established in 1970, requires financial institutions to assist government agencies in detecting and preventing financial crimes like money laundering and terrorism financing. Financial institutions are required to file CTRs for cash transactions exceeding $10,000 and SARs for transactions exceeding $2,000 or $5,000, depending on the situation. These thresholds have not been adjusted since the BSA's inception, leading to a situation where the current reporting requirements capture far more transactions than initially intended.
Proponents of the STREAMLINE Act argue that the existing reporting thresholds place unnecessary burdens on financial institutions, particularly community banks and credit unions, diverting resources from community lending. They contend that the outdated requirements result in a flood of data with minimal law enforcement utility and growing privacy concerns for bank customers.
Several key figures have voiced their support for the proposed changes. Senator Tim Scott believes that increasing the reporting thresholds will bring much-needed modernization to the BSA, enabling it to focus on rooting out financial crimes without hindering everyday Americans. Senator John Kennedy echoed this sentiment, stating that the STREAMLINE Act cuts red tape and modernizes the requirements, allowing law enforcement to focus on real criminals.
The American Bankers Association (ABA) also applauded the introduction of the STREAMLINE Act, with President and CEO Rob Nichols noting that the CTR threshold for cash transactions hasn't been adjusted since 1972. He added that the current requirement is inefficient, ineffective, and increasingly counterproductive.
The Independent Community Bankers Association (ICBA) has also expressed its support for the bill, emphasizing the need to streamline reporting processes for enhanced efficiency and effectiveness in combating financial crime.
Bank of America CEO Brian Moynihan has voiced support for raising the reporting thresholds, echoing the sentiment that the current requirements are outdated and in need of revision.
By increasing the reporting thresholds and requiring regular adjustments for inflation, the STREAMLINE Act aims to ensure that the BSA targets true financial crime instead of generating excessive paperwork. This modernization effort seeks to strike a balance between protecting financial privacy, reducing burdens on financial institutions and providing law enforcement with the tools they need to combat illicit financial activity effectively.
