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This blog post examines the requirements for business transparency and the fight against money laundering in the context of private banking regulation in the United States.

As the EU countries, the United States has taken active steps to ensure transparency in business for decades. The norms that establish and clarify property rights, ensure the protection of investors' rights are being intensively developed and implemented; norms that ensure predictability of business transactions, and trust of partners, protection from abuse. Great attention is paid to steps to combat money laundering (AML) and the financing of criminal activities.

Primary requirements

The Banking Secrecy Act (BSA) states that all US registered financial institutions must comply with the AML policy. This includes the following requirements:

  1. AML measures to be approved by the board of directors;
  2. annual risk assessment;
  3. external testing for compliance with AML and BSA.

Know who you are dealing with

The United States is actively trying to improve the mechanism for identifying risky customers, as well as potential risks in this area. Requirements for customer identification programs (CIP) and customer due diligence (CDD) have been developed and actively implemented.

It is important for entrepreneurs who plan to start financial activities in the USA that meeting the requirements of both programs entails obtaining:

  • data on beneficial owners of corporate clients;
  • information about how the account or account will be used.

This information is used to assess risk and identify suspicious activity.

The conduct of financial activities in the United States requires that private banking companies are also required to register foreign exchange transactions that exceed USD 10,000, as well as regularly report suspicious transactions.

Before opening an account

For American financial institutions, understanding who is behind the company and what the people running the business are capable of is of paramount importance.

Any US registered bank is required to accumulate and verify customer and ultimate owner data before opening an account. Such data usually includes:

  1. name;
  2. date of birth;
  3. address;
  4. personal identification number.

If you intend to establish a banking company in the US, then you should be aware that such institutions must develop and use procedures to determine whether clients appear on government lists of suspected lawbreakers. As a rule, these procedures are automated, that is, a computer program detects coincidences of the names of potential customers with government lists.

Private banking offenses are:

  • Fraud
    1.  when selling securities;
    2.  in bank records;
    3. with electronic payments.
  • Bribery and corruption.

Crime and punishment

In the case of money laundering, financing criminal activities and BSA violations, clients can be prosecuted.

Institutions can be banned from conducting financial activities in the United States, which can be followed by asset forfeiture and even criminal penalties.

Final word

Before you register a company in America, you should familiarize yourself with the basic regulatory requirements in the chosen area. Our legal professionals can advise you on the US banking regulation and provide accompanying legal services in the process of establishing a business in any state. Please reach out to us by filling a feedback form on the website or in any other way convenient to you.