What is the Money Laundering Control Act?
The Money Laundering Control Act is a federal law that makes it illegal to intentionally hide or disguise the source of money that has been illegally obtained. This act, passed in 1986, is meant to prevent individuals or entities from obtaining proceeds from illegal activities such as drug trafficking or terrorist activities and laundering them through the financial system. The act applies to people who transact in or manage financial institutions, such as banks, that are subject to government regulations. The Money Laundering Control Act of 1986 requires financial institutions to take substantial measures to prevent money laundering. This includes instituting a rigorous internal monitoring system, filing suspicious activity reports with the Financial Crimes Enforcement Network (FinCEN) and keeping records to ensure that transactions are properly reported. Financial institutions must also adhere to a strict “know your customer” rule, which requires that when conducting transactions, financial institutions must verify the identity of their customers. This is done through an extensive screening process that requires customers to provide identifying information such as their name, address and other personal information. By instituting these measures, the Money Laundering Control Act of 1986 helps ensure that proceeds from illegal activities are not laundered through financial institutions in Kansas and throughout the United States.
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