What do you suppose the largest bank in the country, and the smallest business in the country, have in common? If you said ‘handling cash’, you would be correct. The Federal government has put all businesses, large and small, to work policing cash and catching terrorists.
How has it done this? By requiring certain businesses and individuals to file monetary transaction reports, the Federal government has made you a primary source in the fight against money laundering. To enforce compliance, the Financial Crimes Enforcement Network (FinCEN), as part of the United States Treasury, has been given extraordinary power to ensure compliance with various anti-money laundering statutes.
FinCen’s primary investigative tool is a database created from forms filed by hundreds of thousands of banks, money services businesses, and others required to report cash and monetary instrument transactions in excess of $10,000. The following are required to file transaction reports under the Bank Secrecy Act:
- Depository institutions (banks, credit unions, and thrift institutions)
- Brokers or dealers in securities and/or futures
- Money services businesses (MSBs) [e.g., money transmitters; issuers, redeemers and sellers of money orders and travelers’ checks; check cashers and currency exchangers]
- Casinos and card clubs
- Insurance companies
- Mutual funds
- Individual(s) transporting over $10,000 in currency or other monetary instruments into/out of the US
- Shippers/Receivers of over $10,000 in currency or other monetary instruments into/out of the US
- Individuals or entities that receive more than $10,000 in cash in one or more related transactions in a trade or business
- US persons who have a financial interest in, or signature or other authority over, a foreign financial account if the aggregate value exceeds $10,000 at any time during the reporting year
Among the forms required are the Currency Transaction Report (Form 104), Report of International Transportation of Currency or Monetary Instruments (Form 105), TD F 90-22.47 – Suspicious Activity Report by Depository Institutions, and Report of Foreign Bank and Financial Accounts (FBAR, Form TD F 90-22.1). Financial institutions and certain other businesses are also required to file Suspicious Activity Reports on transactions or attempted transactions of $5,000 or more involving cash suspected to come from illegal activities.
While most people might think reporting requirements are only for banks and other financial institutions, the reality is that the filing requirements are applicable to substantially all businesses and individuals. For example, assume you run an automobile dealership and you often take cash in payment for a vehicle. Anytime you deposit over $10,000 in cash, you will be required to file a Currency Transaction Report. Perhaps your business is remodeling and you often are paid in cash. When you deposit in excess of $10,000 you will be required to file the appropriate Cash Transaction Form.
Compliance with filing requirements can be quite difficult for those who regularly deposit large sums of cash. The regulations regarding filing of Cash Transaction Forms state that you cannot avoid filing by breaking up deposits into smaller amounts. For example, you cannot take a $15,000 deposit and make an $8,000 deposit one day and a $7,000 deposit the next. This can be problematic if cash deposits vary from day-to-day, sometimes exceeding the $10,000 threshold. If a bank determines that your transaction pattern is “suspicious”, it will be required to report the transactions to the Treasury Department. Your innocent deposits could turn into your worst nightmare.
When in doubt, you should always err on the side of caution and complete the appropriate paperwork. Penalties for failure to file appropriate forms can be forfeiture of the entire amount of the transaction or transactions as well as criminal penalties.
The United States Government utilizes a wide variety of tools to fight crime.
Sometimes, those tools trap innocent individuals, a trap from which extrication can be quite expensive. Anytime it appears to you may be involved in a cash transaction exceeding $10,000, or the receipt of any funds from foreign sources in excess of $10,000, err on the side of caution and consult with your banker regarding the filing of appropriate forms.