1. The 5 Pillars - What Must Be Enforced

Under 31 USC 5311-5336 - Bank Secrecy Act, and India PMLA 2002 + RBI KYC Master Direction 2016:

1. Internal Controls: Board-approved AML program, CISO/MLRO, independent audit
2. Customer Due Diligence - CDD / KYC: Identification, verification, beneficial owner >25% in US, >10% in India, ongoing risk rating
3. Transaction Monitoring: Automated rules for suspicious patterns, especially priority threats - FinCEN calls out Chinese Money Laundering Networks, fentanyl, human trafficking
4. Reporting: CTR - Cash Transaction Report >$10k / Rs 10L, SAR - Suspicious Activity Report / STR within 30-45 days, with no tipping-off
5. Training & Record Keeping: 5 years retention

Failure of any pillar = willful violation if reckless.

2. US Enforcement - FinCEN as Super-Regulator

FinCEN does not need criminal conviction. Civil Money Penalty under 31 USC 5321 for willful violation: up to $250k per violation or $500k for pattern, plus personal liability for officers under 31 USC 5322 - Money Laundering Control Act.

Enforcement is now coordinated: FinCEN + OCC + DOJ + OFAC in one strike.

LANDMARK CASES - 2024 to 2026

A. Bank of America N.A. - 13 Oct 2026 - $1.96 Billion Total - Largest in 2 Years

• FinCEN $1.2 billion - 3rd largest in Treasury history
• OCC $750 million - largest in OCC history
• OFAC $11.6 million for 475 sanctions violations

Facts per Treasury release: BofA admitted willfully violating BSA after failing or delaying to identify and report more than thousands of SARs, failure to mitigate priority national security risks - Chinese Money Laundering Networks, illicit finance along southwest border, Russia, Iran, narcotics and terrorism financing.

Six failures cited by FinCEN:

1. Ineffective transaction monitoring calibration - legacy system
2. Backlog of 100k+ alerts
3. Failure to investigate high-risk customers - CMLN
4. Late SAR filing
5. Failure to implement CDD for beneficial owners
6. Culture of cost-cutting compliance

Takeaway: Legacy compliance is now treated as willful. BofA penalty structure shows Treasury model: FinCEN assesses $1.2bn, gives credit for OCC $750m, so gross $1.96bn but net payable $1.21bn + OFAC.

B. TD Bank - 10 Oct 2024 - $3.1 Billion Total - Largest Ever FinCEN Penalty $1.3 Billion

FinCEN $1.3bn + OCC $450m + DOJ $1.8bn criminal plea. Facts: TD Bank failed to monitor $18.3 trillion in transaction volume over 6 years, allowed 3 money laundering networks to move $670m. Employees joked about compliance. First bank to plead guilty to BSA conspiracy. Personal charges against 2 employees.

Established: Willful = reckless disregard, not intent to launder. Bank's compliance budget flat while assets doubled = evidence.

C. Canaccord Genuity LLC - Broker-Dealer - 6 March 2026 - $80 Million - Largest Broker-Dealer BSA Action Ever

FinCEN + SEC $20m + FINRA $5m parallel.

Period March 2018-June 2024: Willful failure to implement effective AML program. Findings: Inadequate risk-based customer diligence, ineffective monitoring, failure to file SARs on penny stock manipulation and cross-border wires.

Lesson: Broker-dealers now held to same standard as banks after AML Act 2020. FinCEN noted this is largest penalty ever against broker-dealer.

D. Old Regime Cases That Still Define Law:

• HSBC 2012 - $1.92bn: Deferred prosecution for failing to monitor $200bn from Mexico. Defined correspondent banking risk.
• BitMEX 2022 - $100m: First crypto platform BSA enforcement - failure to maintain AML and SAR.
• Binance 2023 - $4.3bn: DOJ + FinCEN $3.4bn for willful BSA, failure to report 100k+ suspicious transactions.

Personal Liability Doctrine

US v. Thomas Haider - MoneyGram CCO 2014: First time FinCEN assessed $1m personal penalty against CCO for willful failure to ensure SAR filing. Affirmed by SDNY: BSA officer has personal duty.

FinCEN Guidance 2020: Officers can be liable if they participate, cause, or fail to prevent.

3. India Enforcement - PMLA + FIU-IND + ED

Principal statute: Prevention of Money Laundering Act 2002. Reporting entity obligations under Chapter IV: KYC, maintain records, file CTR/STR to FIU-IND, appoint Principal Officer.

Enforcement by: FIU-IND imposes penalty under Sec 13, ED investigates, attaches under Sec 5, arrests under Sec 19.

LANDMARK CASES

1. Vijay Madanlal Choudhary v. Union of India (2022) 3-Judge Bench, Supreme Court - Upheld PMLA

Challenge to wide powers of ED. SC upheld:

• ED powers of arrest, search, seizure under Sec 17, 18 constitutional
• Statements to ED admissible under Sec 50
• Twin bail conditions under Sec 45 valid - bail only if court satisfied not guilty and not likely to commit offence - stringent, reversed Nikesh Tarachand Shah v. Union of India (2017) which had struck it down for violating presumption of innocence
• ECIR need not be supplied as FIR

This is now foundation for all PMLA enforcement. Basis for FIU-IND making crypto exchanges reporting entities in 2023.

2. Nikesh Tarachand Shah v. Union of India (2017) - Bail

Declared original Sec 45 unconstitutional for violating Art 21. Overruled by 2018 amendment and Vijay Madanlal, but still cited for principle of proportionality.

3. P. Chidambaram v. ED (2019) - Anticipatory Bail in PMLA

SC denied anticipatory bail, held money laundering is standalone offence, not just predicate offence. ED can arrest without prior FIR.

4. FIU-IND Enforcement:

• 2024 - Binance $2.2m fine, KuCoin delisting: FIU fined Binance Rs 18.8 cr for failure to register as reporting entity, file STR, maintain KYC under PMLA. First crypto AML penalty.
• Yes Bank / Rana Kapoor case: ED attachment of Rs 2,000 cr proceeds of crime for failure to conduct due diligence, evergreening loans - classic AML failure as predicate to PMLA.
• Nirav Modi PNB scam: Failure of trade finance AML - LOUs issued without SWIFT-CBS integration. ED attached assets globally.

5. J. Sekar v. ED (2018): Highlighted difficulty of bail post Vijay Madanlal - shows enforcement teeth.

4. How Enforcement Happens - Stepwise

US:
Suspicious transaction -> Internal alert -> 30-day investigation -> SAR to FinCEN -> FinCEN exam -> If willful -> Civil penalty + OCC Consent Order + DOJ criminal referral -> Personal liability for BSA Officer.

India:
CTR/STR to FIU-IND -> FIU analysis -> Dissemination to ED/CBI/RBI -> ECIR registered -> Sec 5 Provisional Attachment (180 days) -> Adjudicating Authority confirms -> Prosecution complaint -> Twin bail test.

5. Current Trends - What Gets You Fined in 2026

1. Chinese Money Laundering Networks + Fentanyl: FinCEN 2024-2026 National Priorities
2. Crypto + Stablecoin Issuers: FinCEN + OFAC NPRM 8 April 2026 treats payment stablecoin issuers as BSA financial institutions - GENIUS Act implementation
3. AI-generated SAR narratives: FinCEN now penalizes boilerplate SARs with no investigation
4. De-risking vs Risk-based: Wholesale de-risking is violation - must risk-rate, not exit entire sector