Bank Secrecy Act (BSA) Violations Defense: Criminal AML Exposure Explained

By Elizabeth Franklin-Best, Esq., and Christopher Zoukis, JD, MBA

The Bank Secrecy Act is the backbone of the federal anti-money-laundering system — and when the government decides a violation was willful, it becomes a criminal case that can reach bank executives, compliance officers, and money services business operators personally. If a BSA inquiry has turned toward you, retain a Bank Secrecy Act lawyer while the question is still whether anything criminal happened at all — willfulness is a demanding standard, and the framing of those first interviews often decides whether the government thinks it can meet it. At Elizabeth Franklin-Best, P.C., we defend individuals and businesses against BSA allegations nationwide.

The Bank Secrecy Act, codified at 31 U.S.C. § 5311 and following, imposes recordkeeping, reporting, and anti-money-laundering program requirements on financial institutions and money services businesses. Criminal penalties under § 5322 are reserved for willful violations — and they reach up to 10 years. The BSA is one pillar of the statutory cluster our firm handles in federal money laundering defense, and BSA theories regularly surface in the same indictments as laundering and reporting charges.

Regulatory-overlay prosecutions like these demand counsel fluent in both the criminal courtroom and the compliance rulebook, and willing to litigate the willfulness question all the way to a court of appeals if that is where it is decided. Our principal attorney, Elizabeth Franklin-Best, has appeared in more than 330 federal matters, including over 100 appeals in all twelve federal circuits and at the United States Supreme Court, which is the appellate depth that matters in a field where, as the 2025 decision discussed below shows, BSA convictions routinely rise or fall on what the government can prove about a single defendant’s knowledge. Her national recognition runs alongside that record: Best Lawyers in America honored her for 2026 in Appellate Practice, Chambers USA ranks her for 2026 in Litigation: White-Collar Crime & Government Investigations, and she is the author of Reversing Your Criminal Conviction. Our defense of a BSA matter begins by separating what was truly willful from what was a compliance shortfall or good-faith error — because only the first is a crime. When BSA exposure becomes personal, the next step is a paid, one-hour initial consultation with our team.

Bank Secrecy Act Violations: Quick Answer

Question	Answer
What is the Bank Secrecy Act?	The federal anti-money-laundering law, 31 U.S.C. § 5311 et seq., that imposes recordkeeping, reporting, and compliance-program requirements on financial institutions.
When is a BSA violation a crime?	Only when it is willful. Criminal penalties under 31 U.S.C. § 5322 apply to willful violations of the BSA and its regulations.
What must the government prove?	That the defendant knew of the reporting or compliance requirement and acted with a purpose to disobey the law.
What penalties can apply?	Up to 5 years in prison — up to 10 years where the violation is part of a pattern of illegal activity or another offense.
Who can help me respond?	Elizabeth Franklin-Best, P.C. defends BSA targets — executives, employees, compliance officers, and MSB owners — nationwide. Begin with a paid, one-hour initial consultation.

Key Takeaways

• The Bank Secrecy Act, 31 U.S.C. § 5311 et seq., is the foundation of the federal anti-money-laundering regime.
• It requires financial institutions and money services businesses to keep records, file reports, and maintain AML compliance programs.
• Criminal BSA liability under 31 U.S.C. § 5322 attaches only to willful violations.
• “Willful” requires knowledge of the requirement and a purpose to disobey the law — not a mere compliance failure.
• BSA criminal exposure can reach institutions, their officers and employees, and compliance personnel personally.
• Penalties run up to 5 years — up to 10 years where the violation is part of a pattern or another offense.
• Most BSA problems are handled through civil and regulatory enforcement, not criminal prosecution.
• Since the Anti-Money Laundering Act of 2020 — and the 2024 TD Bank guilty plea — BSA enforcement has shifted sharply toward whistleblower-driven cases and individual accountability.
• The willfulness requirement is the central line between a regulatory shortfall and a federal crime.
• Cross-border cash cases (CMIR under § 5316 and bulk cash smuggling under § 5332) carry broad currency forfeiture, but the Eighth Amendment limit from United States v. Bajakajian can cut it back where the funds are lawful.

What Is the Bank Secrecy Act?

The Bank Secrecy Act, codified at 31 U.S.C. § 5311 and the sections that follow, is the central federal anti-money-laundering law. It does not, by itself, prohibit money laundering — that is the work of other statutes. Instead, the BSA builds a system of recordkeeping, reporting, and compliance designed to create a paper trail that helps the government detect money laundering and other financial crime.

The BSA’s obligations fall on financial institutions and on money services businesses. They include filing Currency Transaction Reports for cash transactions over $10,000, filing Suspicious Activity Reports when transactions raise red flags, keeping specified records, registering money services businesses, and — importantly — establishing and maintaining anti-money-laundering compliance programs.

Most BSA enforcement is civil and regulatory. Examiners identify deficiencies, and institutions face civil money penalties, consent orders, and remediation requirements. A BSA matter becomes criminal only in a narrower set of circumstances — when the government concludes a violation was willful. That civil-criminal line is the most important feature of the field for anyone facing BSA exposure.

The Core BSA Requirements

Criminal BSA cases generally arise from the willful disregard of one of the Act’s core obligations:

• Currency Transaction Reports. Financial institutions must file a CTR for cash transactions exceeding $10,000. A willful failure to file required CTRs is a recurring basis for criminal charges.
• Suspicious Activity Reports. Institutions must file SARs when they detect transactions that appear suspicious. Willfully failing to file required SARs, or willfully obstructing the SAR process, can draw criminal exposure.
• Anti-money-laundering programs. Financial institutions and money services businesses must establish and maintain AML compliance programs with internal controls, training, independent testing, and a designated compliance officer. A willful failure to maintain an adequate program is a frequent enforcement focus.
• Recordkeeping. The BSA imposes specific recordkeeping requirements, including for funds transfers and monetary instruments.
• Money services business registration. Money services businesses must register with the federal government and comply with the BSA’s requirements.

The same conduct that produces a BSA charge often appears alongside structuring, unlicensed money transmitting, and money laundering counts. A BSA matter is rarely just one statute, and a defense must see the whole picture.

The Willfulness Requirement

Criminal BSA liability flows through a single provision — 31 U.S.C. § 5322 — and it applies only to a person “willfully violating” the BSA or its regulations. That word “willfully” is the gatekeeper, and it is demanding.

Courts have construed the BSA’s willfulness requirement to demand both knowledge of the reporting or compliance requirement and a specific intent to commit the crime — a purpose to disobey or disregard the law. The Supreme Court endorsed exactly that reading of § 5322 in Ratzlaf v. United States, 510 U.S. 135 (1994), describing the willful actor as one who violates a known legal duty. A BSA violation that resulted from negligence, from an under-resourced compliance department, from a good-faith misjudgment about whether a transaction was reportable, or from a genuine misunderstanding of an intricate regulation is not a willful violation. It may be a civil or regulatory problem; it is not a federal crime.

The courts continue to police this line strictly. In United States v. O’Steen, 133 F.4th 1200 (11th Cir. 2025), the Eleventh Circuit reversed an attorney’s § 5322 conviction for willfully failing to file a cash report because the government never proved he knew the specific requirement he was charged with violating — and the court refused to presume that even a practicing lawyer carries that knowledge. The lesson for anyone facing a criminal BSA theory is direct: willfulness must be proven requirement by requirement, person by person, and the government cannot paper over that element with titles, training logs, or professional background alone.

This distinction is the heart of a BSA defense. The anti-money-laundering rules are dense and constantly evolving, and even well-run institutions have compliance gaps. The government’s burden is not to show that a program was imperfect or that a report was missed — it is to show that a specific person knew of a requirement and deliberately chose to disregard it.

Applied Insight: The gap between a compliance failure and a willful crime is wide, and the government often blurs it. A deficient AML program, a backlog of unfiled reports, or an examiner’s criticism describes a regulatory problem. Criminal liability requires proof that an individual knew the duty and chose to flout it — and that proof is frequently thin.

Who Faces BSA Criminal Exposure

BSA criminal exposure is not limited to institutions. It can reach individuals, and that is what makes these cases personal and serious.

Bank executives and officers can be charged where they willfully disregarded BSA obligations. Employees who willfully failed to file required reports, or who helped customers evade them, face exposure. Owners and operators of money services businesses — check cashers, currency exchangers, money transmitters, and similar businesses — are frequent targets, particularly where registration or program requirements were ignored. And compliance officers themselves can, in some circumstances, face individual exposure where the government alleges they willfully failed in their responsibilities.

For any individual caught in a BSA investigation of an institution, separate counsel is often essential. The institution’s interests and the individual’s are not the same — an institution seeking to resolve a matter may be willing to attribute fault to individuals, and a compliance officer or employee needs an advocate focused solely on protecting them.

Penalties for BSA Violations

Criminal penalties under § 5322 are tiered. A willful violation of the BSA or its regulations carries up to 5 years in federal prison and a fine of up to $250,000. The penalty rises to up to 10 years and a fine of up to $500,000 where the willful violation is committed while violating another law of the United States, or as part of a pattern of any illegal activity involving more than $100,000 in a twelve-month period.

Alongside criminal exposure, the BSA carries substantial civil money penalties, and institutions face regulatory consequences — consent orders, remediation requirements, and reputational harm. Forfeiture can also be in play where the conduct is tied to laundering or structuring. A BSA case is therefore often fought on criminal, civil, and regulatory fronts at once.

Most criminal BSA reporting and program offenses are sentenced under U.S.S.G. § 2S1.3. A conviction under § 5318 or § 5318A — the compliance-program and special-measures provisions — starts at a base offense level of 8; reporting offenses start at level 6 and then borrow the § 2B1.1 table, keyed to the value of the funds involved in the reporting failure. Levels are added where the defendant knew or believed the funds were criminal proceeds, or where the violation accompanied another federal offense or a pattern of unlawful activity above $100,000 in a year. That arithmetic leaves real room for advocacy — over the value figure, over each enhancement, and over the role the individual defendant actually played in an institutional failure.

Bulk Cash Smuggling and Currency-Reporting Forfeiture (§§ 5316 and 5332)

Two of the BSA reporting offenses that most often turn into criminal cases involve the physical movement of cash, and they ride into many of the same indictments. The first is the Currency or Monetary Instrument Report, or CMIR: under 31 U.S.C. § 5316, any person who knowingly transports more than $10,000 in cash or monetary instruments across a U.S. border must file a report, and a willful failure to do so is a crime. The second is bulk cash smuggling under 31 U.S.C. § 5332, which Congress added in 2001 to reach a narrower and graver act: knowingly concealing more than $10,000 and physically smuggling it into or out of the country with the intent to evade the CMIR requirement. Bulk cash smuggling is the more serious charge because it demands proof of concealment plus an intent to evade — a dual mental state the government does not always have, and a recurring point of attack for the defense.

What makes these charges so consequential is forfeiture. Both § 5316 and § 5332 let the government seek forfeiture of the entire sum carried — not merely the amount over the $10,000 line — and in a smuggling case it routinely does. The constitutional ceiling on that power comes from United States v. Bajakajian, 524 U.S. 321 (1998), the only case in which the Supreme Court has struck down a federal forfeiture as an unconstitutional “excessive fine.” There, a traveler failed to report $357,144 he was lawfully carrying out of the country; the Court held that forfeiting all of it was grossly disproportionate to the gravity of a mere reporting offense, where the money was clean and the only harm was the lost report. Bajakajian remains the anchor for every Eighth Amendment challenge to a currency forfeiture, and the proportionality factors it identified — the seriousness of the offense, whether the funds were lawfully sourced, and the harm actually caused — are where a forfeiture defense is built. That analysis cuts both ways: in United States v. Jose, 499 F.3d 105 (1st Cir. 2007), the First Circuit upheld the forfeiture of roughly $114,000 in a § 5332 smuggling case, distinguishing Bajakajian on the ground that Congress made bulk cash smuggling a serious offense, the traveler’s account of the money’s lawful origin was not believed, and the forfeiture was modest next to the Guidelines maximum — a reminder that the lawful-source and proportionality showing must be made on the facts, not assumed.

The practical lesson is that a currency case and the fight over the money are two different battles. Where the funds are demonstrably lawful in origin and the only violation is a failure to report, the government’s demand for complete forfeiture is vulnerable under Bajakajian even if a reporting violation is conceded. We litigate the offense and the forfeiture in parallel — contesting willfulness and intent on the criminal side, and pressing proportionality and lawful-source arguments to cut back what the government may keep.

What Changed in BSA Enforcement (2020–2026)

The Anti-Money Laundering Act of 2020 rebuilt much of the BSA’s enforcement machinery. Its most consequential piece for individuals is the whistleblower program at 31 U.S.C. § 5323: after 2022 amendments, Treasury must pay a whistleblower between 10 and 30 percent of collected monetary sanctions when original information leads to a successful BSA action imposing more than $1 million in sanctions, paid from a dedicated Financial Integrity Fund, with anti-retaliation protections enforceable by a jury trial in federal court. The practical effect inside institutions is profound — an internal compliance complaint that once died in a manager’s inbox now carries a multimillion-dollar incentive to become a federal referral. The same Act sharpened the personal price of conviction: under § 5322(e), a person convicted of a Bank Secrecy Act offense faces an additional fine equal to the profit gained from the violation, and a convicted partner, director, officer, or employee of a financial institution must repay any bonus paid for the year the violation occurred.

Institutional enforcement has escalated in parallel. In October 2024, TD Bank became the first bank in U.S. history to plead guilty to conspiracy to commit money laundering, in a Bank Secrecy Act resolution built on a decade of frozen compliance budgets that left roughly 92 percent of transaction volume unmonitored. For individuals, the case’s most important feature is what came with the corporate plea: more than two dozen people were charged, the bank committed to continued cooperation against its own personnel, and the Department of Justice publicly warned that no individual involved was off limits. The corporate resolution itself is covered in our money laundering defense overview; the message for executives and compliance staff belongs here.

The template for personal exposure predates TD Bank. In 2017, FinCEN and the U.S. Attorney for the Southern District of New York resolved BSA claims against Thomas Haider, MoneyGram’s former chief compliance officer, with a $250,000 penalty paid personally and a three-year bar from compliance work for any money transmitter — based on program and SAR failures, not on any allegation that he profited. One countervailing development deserves mention: in Bittner v. United States, 598 U.S. 85 (2023), the Supreme Court held that non-willful penalties for unfiled foreign-account reports accrue per report rather than per account, a rare brake on the government’s habit of multiplying BSA penalties. The composite picture for 2026 is an enforcement regime that is better funded, better incentivized, and more focused on individuals than at any point in the statute’s history.

Defenses to BSA Charges

No two BSA cases are alike, and no lawyer can promise a result. But several defense themes recur, and matching them to the evidence is the core of building a strategy:

• No willful violation. The conduct reflected negligence, an under-resourced program, or a good-faith misjudgment — not a knowing, purposeful disregard of the law.
• No knowledge of the requirement. The defendant did not know of the specific reporting or compliance obligation at issue.
• Compliance failure, not crime. The matter is properly a civil or regulatory deficiency, not a criminal case.
• Good-faith reliance. The defendant relied in good faith on compliance staff, counsel, auditors, or regulators.
• No individual responsibility. The defendant did not have the role or authority to be responsible for the obligation the government says was violated.
• Reasonable interpretation. A genuinely intricate or ambiguous regulation was interpreted in good faith.
• Sentencing and penalty challenges. The amounts attributed and the Guidelines enhancements can be contested.

The right combination depends entirely on the facts. Our role is to test the government’s proof element by element, develop the favorable record, and press every legitimate defense — during the investigation, in pretrial motions, at trial, and on appeal.

How BSA Investigations Begin

BSA matters typically begin on the regulatory side. Bank examiners and regulators identify compliance deficiencies during examinations, and a matter can escalate from a civil enforcement action to a criminal referral where the government believes the conduct was willful. BSA cases also grow out of money laundering and structuring investigations, from whistleblowers, and from cooperating witnesses.

The early steps matter. Preserve all records, including compliance program documentation, examination correspondence, and internal communications. For an individual, obtain separate counsel rather than relying on the institution’s lawyers. Decline to give an unprepared interview, and consult an experienced bank secrecy act lawyer before saying anything substantive — because the willfulness question turns on what individuals knew and intended.

Why Work With Elizabeth Franklin-Best, P.C.

BSA cases reward defense lawyers who understand the civil-criminal divide, who can hold the government to the demanding willfulness standard, and who can defend an individual whose interests may diverge from an institution’s.

Our principal attorney wrote Reversing Your Criminal Conviction and maintains admissions before the United States Supreme Court and every one of the twelve federal circuits — credentials that count in a field where the willfulness standard is so often resolved on appeal. Managing Director Christopher Zoukis contributes a working command of the federal sentencing system and Bureau of Prisons policy. Wherever your BSA case is venued, we can be there: standing admissions supplemented by pro hac vice practice in district courts nationwide, for executives, employees, compliance officers, and business owners alike.

Promising a particular result in a federal criminal matter would be false comfort, and we offer none. We offer disciplined preparation instead: the regulations read line by line, the examination record mastered, the willfulness evidence pulled apart, and your options laid out candidly at each decision point. A paid, one-hour initial consultation is where that preparation starts.

Talk With a Bank Secrecy Act Defense Lawyer

When the government recasts a compliance history as a willful crime, your career, your professional licenses, and up to a decade of liberty can all be on the line at once. The window for shaping the willfulness narrative opens early and closes fast — bringing in a Bank Secrecy Act defense lawyer before your first interview is how you keep it open. Reach our team in confidence by booking a paid, one-hour initial consultation.