The Bank Secrecy Act, What It Is And Why Business Owners Should Be Aware With Robin Roberts, CEO Pikes Peak National Bank
23rd August 2021 • Business Leaders Podcast • Bob Roark
00:00:00
00:07:29
Shownotes
Banks has always been a secretive establishment, heightened even more so by The Bank Secrecy Act. This makes most, if not all transactions with them a bit unclear and complicated. Bob Roark sits down with Robin Roberts, CEO of Pikes Peak National Bank, to delve into this law and how the 9/11 incident strengthened it through the Patriot Act. She explains why it is better to simply go on with your usual bank transactions instead of structuring it. Robin also talks about the penalties that come with breaking the Bank Secrecy Act both on the side of the customer as well as the banks.
Bank Secrecy Act: Most people do not understand how much the bank is reporting about you and not under penalty of law for the bank, but under penalty of law for individual employees who do not follow the Bank Secrecy Act.[/caption]
With that being said, one must not cross the Bank Secrecy Act. Our favorite discussion is the one about if I deposit X dollars at this bank and X dollars at this branch, is that a reportable thing?
Please don’t ask that. Do not go up to the teller and ask them, “I’ve got this cash. I need to bring it in but I don’t want it to be reported. What’s the threshold if I take it over here to this branch?” The fact that you are asking that, the teller has to report that you wanted to structure transactions. It’s called structuring. There are basic thresholds under the Bank Secrecy Act. $10,000 is a general fine.
$9,999 is not going to cut it?
At least $10,001 and above of cash in one business day but it’s not one business day. The bank is looking at, “Did you put $4,000 at this branch? Did you put $6,000 at this branch? Over the last 90 days, how much cash have you put in and taken out? Is it a pattern? Is it normal for your business?” The bank is looking at all kinds of cash transactions and reporting based on thresholds but also reporting under something called a Suspicious Activity Report, SAR. Suspicious Activity Reports are required. Banks report on all things, structuring as one, the types of cash transactions you are doing or another.
Now some businesses are always going to deal in cash or they deal in cash more often than other businesses. Car dealers often deal with lots of cash. Liquor stores deal with lots of cash. There are what we call high-risk businesses. They are high risk only because from the standpoint of the cash transactions that they are doing, the bank is watching the kinds of cash are coming in, and then you reach this exemption level because they are used to it. They know that you are a business that’s going to deal with a lot of cash. I would say the bank is watching how much cash is going in and out.
They are reporting if it is out of pattern or if you are trying to structure things so don’t ask a bank employee about structuring because the fact you ask them is a reportable incident. If you’ve got $20,000 in cash, just deposit $20,000. It’s going to get reported if you look at what the Bank Secrecy Act has caught and what kinds of crimes. It caught Eliot Spitzer in New York hiring prostitutes. That’s the stuff that rises to the top. In general, banks know that you are going to be bringing in cash and leaving with cash. That’s how we all do business. Don’t structure it. Do it and let it get reported if that’s what it has to happen.
[bctt tweet="Don’t structure bank transactions. Just do it and let it get reported if that’s what it has to happen." username=""]
In the regulatory environment, the employees are required to complete a certain amount of training periodically on money laundering and structuring. All of these things that they have discovered are attached to the various activities. It’s not like the employee at the institution is not going to be aware because they were required by law to be trained frequently. It’s part of the gig. It’s not something the bank dreamed up. It’s not their fault because what happens to a bank that does not take in and stay within the rules. What happens to them if they violate the rules?
[caption id="attachment_5890" align="aligncenter" width="600"]
Bank Secrecy Act: The bank is looking at all kinds of cash transactions and reporting not only based on thresholds but also under a Suspicious Activity Report.[/caption]
There will be assessed a penalty at the bank level or board level. It’s an enforcement action by the regulators. It’s not just banks. Investment houses have to follow Bank Secrecy Act. Any business that’s dealing in money is going to have to follow the Bank Secrecy Act. You can have an enforcement action against your bank, financial institution, or investment institution for not following it. US government takes it very seriously. We spend a lot of time and money on ensuring that we complied with the Bank Secrecy Act.
We don’t have a secret anymore.
No. Not about this anyways.
Robin, thank you so much for shedding some light on why it matters, the Secrecy Act, the laws and the reasons behind it. I appreciate that.
Thank you.
Community Banker with a passion for serving the banking and lending needs of small business owners. Particularly effective with businesses with gross revenues of less than $2 million annually. Can assist investors in commercial and residential real estate and businesses looking for commercial real estate. Banking executive with broad experience with management, recruitment, and the legal aspects of the business.
Volunteer counselor and instructor at the Colorado Springs Small Business Development Center, helping new and existing business owners with funding needs, explaining the SBA and small business lending process, business plan review and financial projection development, and commercial banking needs.
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Watch the episode here
The Bank Secrecy Act, What It Is And Why Business Owners Should Be Aware With Robin Roberts, CEO Pikes Peak National Bank
Have you ever wondered why banks sometimes do things that are not quite clear? In this series, I have Robin Roberts. She’s the CEO of Pikes Peak National Bank. She’s going to be talking about the Bank Secrecy Act and how that might apply to you as a business owner. Enjoy. Thank you.---
How many times you have said, “I’ve got a secret and I’m not telling.” The banks have secrets too, but it’s not because they want to have secrets. It’s because they have a Bank Secrecy Act. We thought we would take in, pull the cover off of the secrets in the Bank Secrecy Act. You talk about them and how they might affect you as the business owner and a client of a bank. Robin, thank you. This is Robin Roberts the CEO of Pikes Peak National Bank. We are in the demystifying stage of talking about lending, banking and business owners. I always felt like I need to talk about the Bank Secrecy Act because it’s a law. First of all, it was created in 1971 or 1972 to at least find racketeering, drug rings and money laundering being done through the banking system. After 9/11, with the Patriot Act, the Bank Secrecy Act was strengthened. Several things were added to the Bank Secrecy Act that banks have been doing since 2001. The Patriot Act continues to be renewed by Congress so they stay in place. I’m not telling any secrets. You can look up the Bank Secrecy Act and the regulations, it’s publicly available but I don’t think it’s public knowledge. [bctt tweet="Any business dealing in money is going to have to follow the Bank Secrecy Act." username=""] Most people do not understand how much the bank is reporting about you and not under penalty of law for the bank but under penalty of law for individual employees who do not follow the Bank Secrecy Act. This is a particular law where the employee themselves can be assessed that is called a Civil Money Penalty or assessment where they have to pay a fine because they didn’t follow the Bank Secrecy Act. There are severe penalties for not following it. That’s how seriously the Bank Secrecy Act is looked at by bank regulators and by bankers in general. [caption id="attachment_5889" align="aligncenter" width="600"] Bank Secrecy Act: Most people do not understand how much the bank is reporting about you and not under penalty of law for the bank, but under penalty of law for individual employees who do not follow the Bank Secrecy Act.[/caption]
With that being said, one must not cross the Bank Secrecy Act. Our favorite discussion is the one about if I deposit X dollars at this bank and X dollars at this branch, is that a reportable thing?
Please don’t ask that. Do not go up to the teller and ask them, “I’ve got this cash. I need to bring it in but I don’t want it to be reported. What’s the threshold if I take it over here to this branch?” The fact that you are asking that, the teller has to report that you wanted to structure transactions. It’s called structuring. There are basic thresholds under the Bank Secrecy Act. $10,000 is a general fine.
$9,999 is not going to cut it?
At least $10,001 and above of cash in one business day but it’s not one business day. The bank is looking at, “Did you put $4,000 at this branch? Did you put $6,000 at this branch? Over the last 90 days, how much cash have you put in and taken out? Is it a pattern? Is it normal for your business?” The bank is looking at all kinds of cash transactions and reporting based on thresholds but also reporting under something called a Suspicious Activity Report, SAR. Suspicious Activity Reports are required. Banks report on all things, structuring as one, the types of cash transactions you are doing or another.
Now some businesses are always going to deal in cash or they deal in cash more often than other businesses. Car dealers often deal with lots of cash. Liquor stores deal with lots of cash. There are what we call high-risk businesses. They are high risk only because from the standpoint of the cash transactions that they are doing, the bank is watching the kinds of cash are coming in, and then you reach this exemption level because they are used to it. They know that you are a business that’s going to deal with a lot of cash. I would say the bank is watching how much cash is going in and out.
They are reporting if it is out of pattern or if you are trying to structure things so don’t ask a bank employee about structuring because the fact you ask them is a reportable incident. If you’ve got $20,000 in cash, just deposit $20,000. It’s going to get reported if you look at what the Bank Secrecy Act has caught and what kinds of crimes. It caught Eliot Spitzer in New York hiring prostitutes. That’s the stuff that rises to the top. In general, banks know that you are going to be bringing in cash and leaving with cash. That’s how we all do business. Don’t structure it. Do it and let it get reported if that’s what it has to happen.
[bctt tweet="Don’t structure bank transactions. Just do it and let it get reported if that’s what it has to happen." username=""]
In the regulatory environment, the employees are required to complete a certain amount of training periodically on money laundering and structuring. All of these things that they have discovered are attached to the various activities. It’s not like the employee at the institution is not going to be aware because they were required by law to be trained frequently. It’s part of the gig. It’s not something the bank dreamed up. It’s not their fault because what happens to a bank that does not take in and stay within the rules. What happens to them if they violate the rules?
[caption id="attachment_5890" align="aligncenter" width="600"] Bank Secrecy Act: The bank is looking at all kinds of cash transactions and reporting not only based on thresholds but also under a Suspicious Activity Report.[/caption]
There will be assessed a penalty at the bank level or board level. It’s an enforcement action by the regulators. It’s not just banks. Investment houses have to follow Bank Secrecy Act. Any business that’s dealing in money is going to have to follow the Bank Secrecy Act. You can have an enforcement action against your bank, financial institution, or investment institution for not following it. US government takes it very seriously. We spend a lot of time and money on ensuring that we complied with the Bank Secrecy Act.
We don’t have a secret anymore.
No. Not about this anyways.
Robin, thank you so much for shedding some light on why it matters, the Secrecy Act, the laws and the reasons behind it. I appreciate that.
Thank you.
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About Robin Roberts
Community Banker with a passion for serving the banking and lending needs of small business owners. Particularly effective with businesses with gross revenues of less than $2 million annually. Can assist investors in commercial and residential real estate and businesses looking for commercial real estate. Banking executive with broad experience with management, recruitment, and the legal aspects of the business.
Volunteer counselor and instructor at the Colorado Springs Small Business Development Center, helping new and existing business owners with funding needs, explaining the SBA and small business lending process, business plan review and financial projection development, and commercial banking needs.