Homeland Security Rule re cash payment

We recently bought several new appliances from Sears, using our Sears credit card. Today, we decided to simply pay the thing off rather than make the scheduled monthly payments and for whatever reason, Marcie wanted to pay them in cash. We were informed by Sears that they could accept a maximum of $2500.00 per dayin cash, due to some Homeland Security rule; we could, however, pay $2500.00 per day for as long as we liked. On the other hand, we could use a check to pay off the entire amount; which we did.

Does this rule make any sense at all? Is one likely to launder cash through Sears? WTF use is a rule like this?

I’ve always heard that money walked and BS talked; I guess that is no longer true.

Huh. I always thought that you could pay as much cash as you wanted provided that you didn’t mind the transaction being tracked. (Bank: “$15000 from chequing account of LouisB to cash.” Sears: “$15000 cash to account of LouisB. Paid in full.” Auditor: “It matches up. Nothing being laundered here. Move along.”) Furthermore, don’t they track large-value cheques as well?

Sounds like Sears has an internal administrative rule, for reasons of their own, that they like to blame on DHS.

Yep, lots of store charge cards and AmEx cards and the like have been used by money launders over the years. The amount seems low, though; banks are required to file Currency Transaction Reports for cash amounts greater than $10,000. Since your Sears card is probably issued by a bank, I’m guessing that would apply. However, that rule doesn’t stop them from handling transactions above $10,000, they just have to do the paperwork.

My real question is why on earth you’d want to make such a large payment in cash to begin with. Why not make payments directly from your bank on the intertubes? Or write a check.

Off the top of my head, it sounds like an over-zealous interpretation of the Bank Secrecy Act or the USA PATRIOT Act. There are a variety of activities and dollar amount thresholds that must be reported, and there are a few things that happen at $3,000 - I’m guessing Sears wants to keep a wide berth from them as the paperwork is a bit tedious.

As for the chances that someone would try to do money laundering through Sears - you answered your own question, actually. Who’d expect someone would try to pass fraud through a department store’s credit card and appliance department when there are all those banks out there?

My Darling Marcie wanted to pay the balance RFN instead of waiting for a check to clear; reason being that the payment was due in a couple of days and she didn’t want to incur the additional finance charge. She is sometimes just a wee bit impetuous. We ended up paying via the innerwebbs.

Nope. The Patriot Act has produced some weird side-effects.

At our business, we buy/sell coins and jewelry. Recently, we were told, by our bank, and then confirmed in a phone call from the IRS, that we can no longer cash a check which we just wrote to a customer, unless we’re registered as a “check-cashing institution.”

Example: You come into our store and sell us Uncle Ed’s coin collection, mostly duplicate silver coins for which you have no need, for $1400. You then go over to the coin department and use the check as payment for $450 worth of coins which you need for your collection. We give you back $950 cash.

Alert! Alert! We just cashed a check for someone. We’re on a watch list!

We’ve done this kind of thing for 40 years. But, since 9/11, it’s just one more thing you can’t do.

Yeah, I wonder now what would have happened if we had whipped out a pocket full of $100.00 bills to pay for the stuff on the day we bought it. “Sorry sir, we cannot accept that amount of cash due to some boneheaded rule from the Department of Homeland Security.” On the other hand, a check would have been perfectly acceptable.

If you paid cash when you bought it, that would have been a purchase, and that’s still okay. Because you charged it, it became a transaction through a financial institution instead of just a store.

So, your customer is going to use that $950.00 cash to overthrow the government? But if you register as a check-cashing institution, it’s all good? I guess the government gains; they’ve now got one more check-cashing institution they can monitor and hassle as required.

Back when my uncle and I owned a gas station, we would write our employees pay checks and then cash them; I suppose that would now be illegal?

The $10,000. cash reporting rule has been in effect since around 1968. It was mainly to confound drug traffickers, IIRC. Checks, since they are photocopied by the bank, leave a paper trail and are perfectly fine. Banks, especially in the years since 9/11, have developed their own levels of comfort. The Federal law for cash transactions is $10,000. But many banks/institutions have their own lower levels of comfort.

Our understanding from the IRS is “yes.”

No there’s no such rule. There is a $10000 CTR requirment, and Sear’s can certainly put in whatever rule they want to keep themslves from filing a lot of CTR’s or perhaps SARs or perhaps having to pay an armored car service to pick up the cash, or perhaps pay more in hold-up insurance. But there’s no such Homeland Security rule.

Note that after my name I have the initials CAMS. I am certified as a expert in Money Laundering.

Samclem- you can cash checks for up to $1000 or for your own employees cashing your own payroll checks (in any amount) without having to register as a MSB (Money Service Business). *One *check over $1000 for a customer and you have to register. (Some states have different rules)

http://www.msb.gov/pdf/31CFR10311.pdf
http://www.fincen.gov/financial_institutions/msb/

There are rules for businesses that makes them file a report on customers that pay with $10000+ of cash. You can do so legally but they have to report it.

What you do NOT want to do is split up an otherwise over $10000 cash transactions into several smaller transactions in order to not have a CTR (etc) filed. That will generate a SAR. CTR’s are nothing, no big deal (well, unless you have a lot of them and not enough income to generate that kind of cash) - SAR’s can get you in trouble. Not only will it generate a SAR but it is illegal, it’s called Structuring.