Yep, while in the Feds I worked on such a case. I really castigated the wire company for letting her do that. I actually slightly exceeded my authority by taking envelopes full of MO (they were having her wire and mail MO, all to Canada) away from her, and giving to her son. ( I got my managers Ok, afterwards) .
I called a buddy in the RCMP, who promised to get on it. They actually arrested the people (I dont know if it stuck) and got back $50K of her $150K she had sent.
Then her son, who only called once a week for 5 minutes and visited once a month. I pointed out the scammer were spending hours every day on the phone to her, chatting with her. They became (in her mind) her *friends. * He promised to call more often and longer and visit once a week instead.
I was able to check back a month later, the lady was very nice and gave me a card of thanks.
You see all these TV shows and movies about scam artists and them preying on banks and rich schmucks. They don’t. *They prey on the elderly and lonely. * Scamsters are evil.
You seem to be missing my point. Why would the reason mean anything? It’s going to be the exact same reason that a legitimate customer would use So how does it help them determine that someone is suspicious?
Maybe an example will help. Suppose there are two guys who both withdraw around $3000. They both say that the reason is to buy a car. One of them, however, is actually a money launderer. Looking at the reasons alone, how can they tell which one is suspicious and which one isn’t?
Sure, once they send it in, then maybe the police can check and see if they both actually bought cars. But, before that, how does this help the bank figure anything out?
Again, I bring up “asking someone if they are a cop.” What I mean is like this: you’re looking for a prostitute and see someone on the street. You ask her if she is a cop. If she’s not a cop, she’ll say no. If she is a cop, she’ll say no. So it does absolutely not good to ask.
Similarly, since both the nefarious guy and the legitimate customer will say the same thing, how does it do any good to ask them for a reason?
The answer on one form isn’t going to make a difference obviously. But they don’t just have one form. They have forms from all their high-cash-withdrawing customers.
And I assume the data on those forms goes into a database with the data from every other bank.
And the software will start predicting what patterns of activity are suspicious, including whether certain answers or refusals to answer imply some probability of suspicious activity.
This is the world of big data now. No human being is looking at your form and wondering whether you might be lying. They’re feeding it to software with access to massive data records of human behavior churn through it.
If the software flags it, they’ll start examining you more closely. The algorithms work regardless of whether you’re lying because they have access to so much data. The patterns of lying are accounted for.
I am not a tax lawyer (or any kind of lawyer), or an accountant, but I’m a little confused by some of this:
“…they’d ask you where all that money is going.”
How is the outgo any business of the IRS, if all the income is properly accounted for?
“They would want to know exactly where you got the $2000 daily.”
Well, you got it from your bank account, of course.
This thread started with a question about a withdrawal, and both the above posts are also still talking about withdrawals. I could see the IRS being very interested if you’re making $2,000 cash deposits into your account, but we have an income tax, not an outgo tax (although I guess there is a “gift tax”).
If you work for the Acme Corporation as Vice President of their Exploding Anvils and Portable Holes Division, and you’re making in the low seven figures, and your paycheck is direct deposited every month with all the proper withholding and so on, what business is it of the IRS if you choose to withdraw all your salary in cash and spend it on groceries and new clothes and adding to your extensive collection of garden gnomes? If you’re withdrawing more than is coming in, that obviously won’t last very long; and if you’ve got enough coming in to support your lavish and eccentrically cash-based lifestyle, then it seems to me the focus properly would be on the other side of the ledger: If the income side is just your direct-deposited and properly documented paycheck from a giant corporation, fine; if there are unaccounted-for amounts coming in to the account–whether it’s cash deposits, or mysterious wire transfers from Zurich, or regular Zelle[sup]®[/sup] transfers from your Great Aunt Sadie (has she been paying the proper gift taxes?)–that should be what the income tax people should be worrying about. And I would think the IRS would be concerned about what’s coming in to the account–the regular cash deposits or the mysterious wire transfers from Zurich–even if you never, ever withdraw any money (in cash, or by writing checks, or making online payments to cover your credit card bills) and just let it pile up in your account.
What makes you think this is about inch me tax evasion?
This is a banking regulation. It’s about monitoring suspicious banking activies to look for evidence of all bank-related crimes, particularly money laundering.
Like I said: However, the bank likely wants it as they can look at the reason and look at your account history and NOT file a SAR. It’s helping them not rate you as suspicious.
They look at the reason: I want to buy a car for cash. Well, this does happen.
They look at account history: 1. Been a customer for 10 years, has automatic paycheck deposits of $5000 per month, has a savings account, and no similar activity. Ok!
Been a customer for three months, opened the account with large cash deposit, this is the third such activity, same excuse each time. SAR!
OK, but Bob has income, which is properly declared and on which the taxes have been paid. How is Bob then spending his remaining post-tax money–in cash if he desires–“money laundering”? And if a government agent asks Bob “where all that money is going”, why would Bob have any obligation not to just say “Whoo-ee, Agent Smith, I sure wish I knew! I guess I just spend it as fast as I make it!”
First of all, there is no form for a $2000 cash withdrawal, so no questions by the bank.
But let us assume you do this daily. Then they have to file a SAR, since it looks like you are taking out $2000 a day for 5 days rather than $10000 a week, which would require a CTR.
Now, this SAR goes to the FBI and IRS. So the FBI looks at it, and they see $2000 a day, 5 days a week, 50 weeks a year, or $50000 cash.
Hmm, could that be terrorist Financing?
Or maybe it’s Layering, you deposit funds then move them to another account.
What business is that of theirs?
You committed a Federal crime by structuring your withdrawals.
But then if the bank adds some info like you have lots of Credit card charges to casinos, then perhaps you just like to gamble and the $2000 is what you allow yourself per day. Maybe they call you. Maybe they look into your activity.
That’s how Eliot Spitzer was caught for example. His banks reported suspicious transactions and law enforcement found out he was hiding thousands of dollars in spending on illegal prostitution.
I guess I’m asking: What obligations does an American citizen have to account to the government how he spends his money (absent any particular evidence that he’s giving it to terrorists or prostitutes other than “he sure does spend a lot of cash”)?
But I always love these types of statements: “It’s MY property, I have the right to do anything I want with it!”
Yes, it is your dog, but you can’t abuse it.
Yes, it is your car, but you can’t drive it on the public streets without a license, registration or insurance. Nor can you go 80MPH down a residential street nor drive drunk.
Yes, it is your house, but you can’t make too much noise (in most areas) after a certain time of nite, nor can your burn toxic waste in your backyard.
There are all sorts of regulations what you can do with your property.
At a minimum, when your bank asks you to fill out a form so that it can comply with its obligations under the Bank Secrecy Act and the Internal Revenue Code, you are obligated to fill it out truthfully.
And then if your transactions trigger further scrutiny, and law enforcement investigators come to ask you about your transactions, you are obligated to answer their questions truthfully.
And then, if the investigators obtain a subpoena or other legal instrument, you must comply with them. If you obtain legal counsel you might try to fight the subpoena, but either way, you might then face an inter partes hearing that results in a court order to fully respond to the government inquiries. I’m not an expert in banking law, so somewhere along the way you might be facing a regulatory commission or tribunal before you get to an actual court.
At that point, you might have spent more money than you preferred on legal counsel, so you might just comply. Or you might challenge the court order, and then you’re in a full-blown lawsuit.
Any more detailed information has to come from an expert in banking law and white collar crime, which I’m not.
The bank would ask, and the Feds might investigate (if the bank felt the answer was suspicious). Gates probably spend more than $10 million on a regular basis (he donates a lot to charity, has huge tax bills, etc), but it’s highly unlikely he needs to do so in untraceable cash.
The tax authorities might worry you are buying something without paying tax on it. In Canada, lots of people pay cash for home renovations (often lots of money) and they get a “discount” for paying in cash (the contractor can more easily hide this income). The money was probably obtained perfectly legitimately by the customer (through work, investing, etc) but isn’t being spent legitimately.
The contractor wants to spend their money. They can just pay for stuff in cash, of course, but it’s hard to make large legitimate purchases just in cash. You would probably have a hard time paying your mortgage in cash, buying a car in cash from a legitimate dealer, paying for your phone service in cash, etc. (You could probably do all of these things, or buy money orders, but it’s a hassle. Which is deliberate.) The contractor can deposit that cash in a bank account, but the bank asks where the money came from…
There used to be a tax scam in Canada, where people would donate (or rather claim to donate) large amounts of money to a charity, then collect a tax credit. The credit is up to 29% of what you contributed, so if you exaggerated your contribution you could literally get back more money than you spent (if you spent anything at all, that is). When people claimed these huge charitable contributions, often time a very significant portion of their income, the authorities asked for proof, and not just a receipt. (A legitimate cash contribution would result in a receipt, but an illegitimate cash contribution could result in a false receipt.) They were asked for ATM records, cancelled cheques, etc.
People came up with unbelievable stories, such as one fellow who “donated” a huge amount of money to a church he visited one time (not his regular church) in cash, from money that he had obtained bit by bit from ATMs (although he had not withdrawn nearly the amount of money that he contributed). He went to court to keep his refund, but of course lost. The government likes tracking money for a reason.
The time to ask was before, when you were depositing the money
Also keep in mind the IRS might be interested in large regular withdrawals. Are you paying your gardening contractor or illegal immigrant maid(s) in cash, thereby avoiding report, paying employer taxes, perhaps violating minimum wage laws, etc.? Certainly enough violations there to keep the feds interested, and state authorities. Or maybe you use it to pay your dealer and feed your habit. Again, not that a withdrawal is any of their business or specifically illegal, but a pattern could excite their investigative instincts. And between you and the banks, they have that information delivered to them for computers to do pattern analysis, no need for specific warrants.
But yes, the major Treasury interest is in the opposite, catching methods of getting cash into the system, converting it to legit bank balances.
But you are basically correct.