Anti-Money Laundering Efforts Led by the U.S. Treasury

The U.S. Treasury Department anchors the federal government's anti-money laundering (AML) framework through a network of specialized offices, statutory authorities, and interagency partnerships. This page explains how Treasury defines money laundering under federal law, how its enforcement machinery operates, the scenarios that most commonly trigger AML review, and the boundaries that separate Treasury-led AML action from parallel enforcement by other agencies. The breadth of Treasury's financial oversight responsibilities makes it the institutional center of gravity for AML policy across the U.S. financial system.

Definition and scope

Money laundering, as defined under 18 U.S.C. § 1956, encompasses financial transactions involving proceeds from specified unlawful activity when conducted with intent to conceal the source of funds, evade reporting requirements, or promote further criminal enterprise. Treasury's role in combating this conduct is rooted primarily in the Bank Secrecy Act of 1970 (BSA) (Public Law 91-508), which established the foundational recordkeeping and reporting obligations that AML enforcement depends on today.

Within Treasury, three entities carry the primary AML mandate:

1. Financial Crimes Enforcement Network (FinCEN) — administers BSA regulations, collects financial intelligence reports, and issues AML guidance to covered institutions (FinCEN)
2. Office of Foreign Assets Control (OFAC) — enforces economic sanctions that overlap substantially with AML objectives by blocking transactions tied to designated entities (OFAC)
3. Office of the Comptroller of the Currency (OCC) — examines national banks for BSA/AML compliance and can issue enforcement actions against deficient institutions (OCC)

The scope of covered institutions under BSA regulations extends beyond banks to include broker-dealers, money services businesses (MSBs), insurance companies, casinos, and — since the Anti-Money Laundering Act of 2020 (AMLA 2020), enacted as Division F of the National Defense Authorization Act for FY2021, Pub. L. 116-283) — certain antiquities dealers and investment advisers.

How it works

Treasury's AML framework operates through a layered compliance and enforcement structure. The mechanism runs in five identifiable stages:

1. Reporting obligations — Covered institutions must file Currency Transaction Reports (CTRs) for cash transactions exceeding $10,000 (31 C.F.R. § 1010.311) and Suspicious Activity Reports (SARs) when transactions suggest money laundering, structuring, or fraud (31 C.F.R. § 1010.320).
2. Financial intelligence aggregation — FinCEN maintains the BSA database, which held more than 272 million filings as of figures cited in FinCEN's FY2022 Annual Report, accessible to law enforcement through the 314(b) information-sharing program.
3. Risk-based examination — OCC and other prudential regulators conduct periodic BSA/AML examinations of financial institutions using the FFIEC BSA/AML Examination Manual as the governing standard.
4. Civil and criminal referral — FinCEN may assess civil money penalties directly. For criminal prosecution, Treasury coordinates with the Department of Justice, which prosecutes violations under 18 U.S.C. § 1956 and § 1957.
5. Beneficial ownership collection — AMLA 2020 created the Corporate Transparency Act (CTA) requirement that most U.S. companies report beneficial ownership information to FinCEN. FinCEN's Beneficial Ownership Information registry became operational in January 2024 under 31 C.F.R. Part 1010, Subpart C.

FinCEN's penalty authority is substantial. Under 31 U.S.C. § 5321, civil penalties for willful BSA violations can reach $1,000,000 per violation or twice the amount of the transaction, whichever is greater (31 U.S.C. § 5321).

Common scenarios

AML enforcement by Treasury concentrates in four recurring fact patterns:

Structuring (smurfing): Breaking large cash deposits into sub-$10,000 increments to avoid CTR filing triggers a separate federal offense under 31 U.S.C. § 5324, regardless of whether the underlying funds are criminal proceeds.

Trade-based money laundering (TBML): Manipulation of import/export invoices — over- or under-invoicing goods — to move value across borders. FinCEN and U.S. Customs and Border Protection jointly issue advisories on TBML typologies. Treasury's National Money Laundering Risk Assessment, published in 2024, identified TBML as a persistent high-risk vector.

Shell company layering: Using entities with obscured beneficial ownership to pass funds through multiple accounts before integration into the legitimate economy. The CTA directly targets this scenario by requiring disclosure of owners holding 25% or greater equity or exercising substantial control.

Virtual asset transactions: FinCEN treats convertible virtual currency exchangers as money services businesses subject to BSA obligations. The 2020 proposed rule under 31 C.F.R. Part 1010 sought to extend recordkeeping requirements to transactions involving unhosted wallets exceeding $3,000.

Decision boundaries

Understanding where Treasury's AML authority ends — and where other bodies begin — is operationally significant:

Treasury vs. DOJ: Treasury (through FinCEN and OFAC) holds administrative and civil enforcement authority. Criminal prosecution of money laundering under 18 U.S.C. § 1956 belongs exclusively to the Department of Justice, which may act on referrals from FinCEN or conduct independent investigations through the FBI and DEA.

FinCEN vs. OFAC: FinCEN addresses AML compliance obligations — whether institutions have adequate programs, filed required reports, and implemented controls. OFAC targets transactions involving specifically designated nationals (SDNs) or sanctioned jurisdictions. An institution can violate OFAC rules without a BSA/AML deficiency, and vice versa. The OFAC SDN List and BSA obligations are parallel, not redundant.

Federal vs. state AML: FinCEN's BSA framework sets a federal floor. States may impose additional AML obligations on state-chartered institutions. New York's Part 504 regulations, administered by the New York Department of Financial Services, impose enhanced transaction monitoring and filtering program requirements on covered institutions operating in that state — requirements that exceed federal minimums.

AML vs. counter-terrorist financing (CTF): AML addresses proceeds of past crime; CTF, governed partly by 31 U.S.C. § 5318A and the USA PATRIOT Act, targets funds destined for future terrorist activity regardless of their origin. Treasury addresses both through coordinated programs detailed in its terrorist financing prevention framework, but the legal predicates and risk typologies differ materially.