Which law in the U.S. was enacted to prevent money laundering through financial institutions?

The Bank Secrecy Act (BSA) is the correct answer because it was the first major legislation in the United States aimed explicitly at combatting money laundering within financial institutions. Enacted in 1970, the BSA requires banks and other financial institutions to report certain transactions to the government, particularly those that could indicate money laundering or other financial crimes.

One of the key aspects of the BSA is its mandate for institutions to maintain records and file reports on activities that may be suspicious. This includes the requirement to report cash transactions exceeding $10,000, which is crucial in identifying and tracking illicit funds.

The BSA has undergone several amendments and been supplemented by further legislation to enhance its effectiveness, but its foundational role in establishing the legal framework for detecting and preventing money laundering in the U.S. makes it the cornerstone law in this area.

Understanding the BSA is essential for anyone involved in compliance and financial services, as it sets the standard for effective anti-money laundering practices.