The Practicability of the Bank Secrecy Act in Combating Illegal Financial Flow: A Sequential Explanatory and Non-Experimental Correlational Study
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Authors
AMPOFO, GEORGE
Issue Date
2026-02
Type
Dissertation
Language
en
Keywords
Business, Engineering, Science, & Technological Innovation , Bank Secrecy Act , Illegal Financial Flow , Compliance
Alternative Title
Abstract
The Bank Secrecy Act, passed by Congress and signed by President Nixon on October 26, 1970, was intended to help banks detect and prevent money laundering and other financial crimes. While the Act had good intentions, it has faced challenges, particularly due to high compliance costs, raising doubts about its effectiveness. This study examines how compliance with the Act relates to illegal financial flow activities and the factors that have led to noncompliance. The main problem is that the Bank Secrecy Act has struggled to curb illegal financial flows due to these compliance challenges. This study focused on 72 commercial banks in New Jersey and included participants such as Bank Secrecy Act officers, auditors, IT officers, management staff, and CEOs. The study employed a mixed-methods design using random and purposive sampling. Data was collected via an online questionnaire in Qualtrics, and selected government reports and archives were reviewed to support the findings. The analysis employed Spearman’s correlation and content analysis of archived records. The results showed a moderate association between compliance with the Bank Secrecy Act and the occurrence of illegal financial flows. However, the Act has not been very effective, mainly due to noncompliance. Noncompliance has been due to various reasons, including the costs of complying with the rules and the specific goals organizations pursue. All parties and stakeholders, especially enforcement agencies, need to work together to encourage compliance with the Act rather than relying solely on fines and penalties. If these noncompliance issues are not tackled, they could harm the integrity of financial systems. It is recommended to examine broader motivational factors to improve compliance rather than relying solely on punitive measures. A nationwide survey could also help capture a wider variety of responses and identify overall trends related to this problem.