In recent years, enforcement of anti-money laundering (AML) laws has intensified at both the federal and state levels. The Bank Secrecy Act (BSA), which serves as the foundation of the U.S. AML regulatory framework, requires financial institutions to implement AML controls, file Currency Transaction Reports (CTRs) and Suspicious Activity Reports (SARs), and adhere to other regulatory obligations. Non-compliance with these requirements can lead to severe consequences, including civil enforcement actions and criminal prosecutions. Recent expansion of the BSA’s scope now includes certain investment advisers and participants in real estate transactions, highlighting the government’s commitment to closing gaps in AML coverage.
Key Agencies in AML Enforcement
The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) is the primary agency overseeing federal AML enforcement. FinCEN is responsible for managing the federal government’s anti-money laundering program. It enforces compliance with the BSA through investigations and civil enforcement actions, targeting financial institutions and individuals that fail to meet their regulatory obligations. Criminal enforcement of the BSA is spearheaded by the Department of Justice (DOJ) through the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS), often in coordination with local U.S. Attorney’s Offices. Industry regulators, such as federal and state banking agencies and the SEC, also enforce BSA/AML obligations against the business organizations they oversee.
The BSA and Investment Advisers
In September 2024, FinCEN finalized a rule that imposes AML requirements under the BSA on registered investment advisers and exempt reporting advisers. The rule goes into effect on January 5, 2026. This extension of the BSA marks a significant development in the government’s anti-money laundering program. Covered advisers are now obligated to establish AML programs tailored to their operations, assess client risk profiles, and report suspicious transactions.
Trends in AML and Sanctions Enforcement
- Oversight of Investment Advisers: The extension of BSA/AML compliance requirements to certain investment advisers brings a range of financial industry participants under federal regulation that previously had no regulatory AML obligations.
- Beneficial Owner Reporting Requirements: The Corporate Transparency Act mandates that certain companies disclose their beneficial owners to a confidential government registry managed by FinCEN for purposes of enhancing transparency and assisting law enforcement in combatting financial crimes.
- Focus on Crypto Exchanges: Federal enforcement agencies have focused extensively on money laundering risk in crypto exchanges, requiring them to implement robust compliance measures to prevent money laundering and illicit financial activities.
- Cross-Border Coordination: AML enforcement has increasingly involved cooperation with law enforcement counterparts overseas to combat global money laundering networks and terrorist financing schemes.
The Importance of Skilled Legal Counsel
Navigating the complexities of AML investigations and enforcement actions requires the assistance of counsel with deep experience and strategic insight. Financial institutions and related individuals who face investigative scrutiny risk significant consequences, including substantial fines, reputational damage, and potential criminal liability. Proactive compliance measures and effective legal advocacy are necessary given the increasingly aggressive posture of law enforcement agencies.
Tim Treanor is a seasoned leader in BSA/AML enforcement matters. He has represented numerous global and regional financial institutions and investment advisers before enforcement agencies in the U.S. and abroad. His understanding of enforcement priorities, coupled with his strategic approach to resolving complex regulatory and criminal matters, has earned him a reputation as a trusted advisor to clients navigating the intricate landscape of BSA/AML enforcement.