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AML & BSA Compliance

Last Updated: 2025-02-17 Status: Complete

Anti-Money Laundering (AML) and Bank Secrecy Act (BSA) compliance is mandatory for payment facilitators. These regulations require robust transaction monitoring, suspicious activity reporting, and comprehensive compliance programs.

Quick Reference​

RequirementThresholdDeadline
SAR (known suspect)$5,00030 days
SAR (no suspect)$25,00030-60 days
CTR> $10,000Same day
SAR for insider abuseAny amount30 days

What is AML/BSA?​

BSA (Bank Secrecy Act)​

The BSA requires financial institutions to:

  • Maintain records of cash transactions
  • Report suspicious activities
  • Implement AML compliance programs
  • Conduct customer due diligence

AML (Anti-Money Laundering)​

AML refers to the broader set of laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income.

Section Contents​

Money Laundering​

  • Three stages of money laundering
  • Common patterns and red flags
  • PayFac-specific risks

SAR Reporting​

  • SAR filing requirements and thresholds
  • CTR requirements
  • Filing procedures and deadlines

Transaction Monitoring​

  • Monitoring systems and rules
  • Alert investigation workflow
  • Documentation requirements

Quiz​

  • Self-assessment questions

PayFac AML Obligations​

Payment facilitators have specific AML responsibilities:

Five Pillars of AML Compliance​

PillarRequirement
1Written AML policies and procedures
2Designated compliance officer
3Ongoing employee training
4Independent testing/audit
5Risk-based customer due diligence

Key Reporting Thresholds​

Suspicious Activity Reports (SARs)​

SituationThresholdFiling Deadline
Known suspect identified$5,00030 days
No suspect identified$25,00030-60 days
Insider abuseAny amount30 days
Money laundering suspected$5,00030 days
MSB point of sale$2,00030 days

Currency Transaction Reports (CTRs)​

Transaction TypeThresholdFiling
Cash transactions> $10,000Same business day
Aggregate cash (same person)> $10,000Same business day
PayFac Applicability

Many PayFacs qualify for the payment processor exemption if they:

  • Facilitate payments for goods/services
  • Operate through clearance and settlement systems
  • Have agreements with merchants

Consult compliance counsel to determine your status.

Money Laundering Red Flags​

CategoryRed Flags
Transaction PatternsRound-dollar amounts, just under thresholds, rapid movement
GeographicHigh-risk countries, unusual locations
BusinessInconsistent with business type, sudden volume changes
Customer BehaviorReluctance to provide information, multiple accounts

Learn more: Money Laundering Patterns

Compliance Program Components​

Written Policies​

Policy AreaContents
AML PolicyOverall program description
CIP/KYCCustomer identification procedures
Transaction MonitoringMonitoring rules and thresholds
SAR ProceduresFiling criteria and workflow
TrainingEmployee training requirements

Compliance Officer​

ResponsibilityDescription
Program oversightManage AML program
SAR decisionsApprove SAR filings
Regulatory liaisonInterface with examiners
TrainingEnsure staff training
UpdatesKeep program current

Training Requirements​

AudienceFrequencyTopics
All employeesAnnualAML basics, red flags
Compliance staffQuarterlyDeep dive, updates
New hiresAt onboardingFull program overview
BoardAnnualProgram status, risks

Recordkeeping Requirements​

Record TypeRetention Period
SAR filings5 years
CTR filings5 years
Customer identification5 years after account closure
Transaction records5 years
AML training records5 years

Onboarding Context:

References​

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