There are two laws here: the mandatory reporting law and the law about not making yourself subject to the mandatory reporting law. The quote is a reference to the first law: if the law says “IF your bank receives a deposit of over $10,000 AND they do not report it, THEN you are breaking the law” then failure to fulfil either part of the requirement means you are not breaking the law. I.e. you are acting in compliance with the law.
I do not dispute that she is acting in violation of the second law. I dispute that the second law should be a law. It is a terrible law the same way it is a terrible law that classifies sleeping in a stationary vehicle as drunk driving, because it is a law designed to punish people for deliberately acting in compliance with another, more sensible law.
As I said, it is reasonable to investigate whether or not a series of legal but suspicious deposits lead to something more sinister. It is not reasonable to declare that legal but suspicious deposits are illegal in and of themselves.
That’s not the only criterion. Forfeiture is permitted of property involved in (among other things) a violation of s. 5324. Simply depositing less than $10k is not a violation of that section; nor is repeatedly or regularly depositing less than that sum. S. 5324 prohibits structuring your transactions for the purpose of evading a reporting requirement; there is no offence unless you make multiple transactions under the $10k limit in order to evade the reporting requirement.
In the case mentioned in the OP the woman concerned acknowledges that that was her purpose.
No, no. The first law says that if you lodge more than $10k and the bank doesn’t report it, the bank commits an offence. You commit no offence in that scenario. Lodging more than $10k is perfectly lawful, regardless of whether the bank reports it.
The result is that if you break up your lodgments with the intention of the bank not reporting them, you are not doing that to avoid committing the first offence. You have no reason to think that the bank wouldn’t report a lodgement of $10k. You are not doing this because you fear that the bank will breach its legal obligations, but rather because you fear that the bank will comply with its legal obligations and that, for some reason, would be inconvenient for you.
In the case in the OP the woman claims previous management of the bank advised her to do this(I make no claims whether this is true or not) to save them the trouble of filing the paperwork.
Anyway my point was how exactly do you prove someone intentionally did structuring? If the IRS can simply say seize the account without a court case or presenting any evidence?
To put it another way if you are accused of structuring, even if you didn’t do it, how on earth could you prove your innocence?
So what is a business to do if its regular take in cash is just a bit below $10K. I once worked in a grocery where daily cash receipts were routinely in the $8-$10K range. The owner was in the habit of making a daily deposit. Often the Monday deposit was over $10K since it included the receipts from Friday and Saturday.
But those other days… he could deposit regularly but by doing so risk an IRS seizure? Or hold onto enough to make deposits more than the $10K limit so that reporting is done and hope he isn’t robbed or burglarized in the meantime?
After all, if a seizure happens it is a civil matter and can be done before the IRS has to in any way prove the intent was to evade reporting requirements.
Actually she doesn’t say quite that. She just says that she “thought it would be helpful” to save the bank paperwork. That could be a spontaneous act of thoughtful courtesy.
But whether the bank asked her or she came up with the idea herself is, strictly speaking, irrelevant. If you intended to avoid the reporting requirement you broke the law, and it doesn’t matter whether you came up with the idea of avoiding the requirement all by yourself or someone else suggested it to you.
And that, I’m afraid, I can’t answer. Does the IRS have to get some kind of warrant before they can civilly seize bank deposits in these circumstances? Do they have to satisfy a judge that there is at least prima facie evidence that the offence has been being committed, including evidence of the intent which is an element of the offence? If they don’t need a warrant, do they need to show in the ensuing proceedings that they had a reason for believing the necessary intent to be present? Are they sanctioned in any way if it transpires that they had no reason whatsoever to think that the necessary intent was present? Perhaps a Doper lawyer can offer an opinion.
Anybody who works in financial services has seen the other side of this. Staggering amounts of training and red tape to comply with all the various reporting requirements spinning out of the “wars on stuff”, all of which are typically backed up by the threat of unlimited fines for the company+jailtime for the employee.
Normally it boils down to an ever-growing list of red flags and the correct answer to every single one of them is always “report immediately to the compliance officer and say nothing to anyone else, especially not the customer”.
The compliance officer presumably then forwards the resulting torrent of ‘reports’ directly to the authorities because again, making judgement calls is not a viable option given the stakes involved.
It seems it has now got to the point where anyone handling cash (i.e. the customers of the banks) also need to be familiar with the rules, because reading the details of this my immediate reaction was “well, duh, of course that’s a violation of the rules”. In fact I’d be surprised if the staff at the bank didn’t get subjected to an extra lot of mandatory remedial training for having allowed it up until then, just so the new management can prove to the regulators that yes siree they do take the rules seriously, by jiminy. No need for an audit, please. Oh dear god, please not an audit, we’ll do anything but please please please not an audit.
So do yourselves a favour everyone, and read up on the rules and advice for your country, you may be surprised.
e.g. you buy something expensive on your credit card that then ends up being refunded, and you then ask for the resulting credit balance returned as a check so you can use the money for something else? That could get reported as potential money laundering.
That’s the basic problem with the civil forfeiture route. If they charge you with “structuring” in criminal court, they have to show beyond a reasonable doubt that you intended to structure your payments so as to evade the reporting requirements. It’s not illegal to simply make multiple deposits below $10,000 that add up in total to above $10k any more than it is illegal to accidentally walk off with someone else’s umbrella honestly believing that it is yours. Intent makes it a crime. If you could demonstrate that you had a legitimate business purpose in making the deposits you did (e.g. your industry’s best practices say to deposit all $100, $50, and $20 bills at least three days before employee paychecks are issued, and those just happened to be the amount of applicable cash you had on hand then), then the jury should be able to see that there is at least a reasonable doubt that you intended to evade reporting requirements. So it becomes more of a “You shouldn’t make a suspicious set of deposits, but if you do, make sure that you’re doing it for, and can demonstrate, and honest purpose so they don’t put you in jail”. With the civil forfeiture route, they don’t have to show intent on your part.
I know someone who was going through a Child Development Associate (CDA) credential, which is for day-care workers. The answer is to always promptly report the incident to your supervisor and the child’s parent(s) or guardian(s). Always. Kid fell down but doesn’t have any obvious injuries and reports no pain? Report it. Kid swiped a pen from the office and doodled on the center’s tax return? Report it. Kid said that they don’t want to eat peas? Report it. Kid said that he is ‘not feeling very well today’? Report it. Kid has body odor? Report it. It’s like you aren’t supposed to be allowed to think, just pass the buck.
Nothing. This is the essence of the seizure problem, AKA highway robbery, in the southern USA. Police find person with inordinately large amount of cash, especially for a minority and especially for the type of car driven, and seize it with assumption it is proceeds of crime. You want your $3000 back? Hire a lawyer for $4000 to fight it, hundreds of miles from home over months.
The IRS could do the same if they wanted. The difference is they have to show a judge there’s a reason to think it was “structuring” I think. I’m not sure who initiates and approves the initial freeze orders. (Unlike those southern bandits who help themselves) So:
a one-time series of close-together deposits that add up to near $10,000 but separately are not? Possible structuring.
-evidence you are trickling a large stash of cash in smaller deposits? Possible structuring. (I.e. you deposit $5000 every week but have no credible source for obtaining the cash? You must have a huge stash at home, so moving it into the bank in pieces is by definition structuring. As is depositing it in pieces to multiple accounts, multiple banks)
-a pattern that the lesser level is not normal, i.e. you don’t do it regularly. If you deposit $8,000 plus or minus daily, some Mondays it’s over $10,000 - probably not. If every Monday your deposit is $9,000 then $3,000 later that day - probably structuring.
In all the above examples, there may be perfectly logical reasons why you are behaving that way, whose motive was not to break cash deposits into less-than-$10K pieces. The IRS does not care. You don’t get the benefit of the doubt. Set off their alarm bells, and absent media scrutiny, grab first and ask later.
In the NY Times article, Hinders said
This is a fact that is glossed over or outright falsified by the various reports about the process.
You do acknowledge that in this case, the woman acknowledged that her intent was to avoid the reporting laws - right?
In some other hypothetical case, in which the person did not have that intent, the IRS seizes the money and institutes a forfeiture action against the money. IRS must prove, by preponderance of the evidence, that the intent of the depositer was to avoid reporting laws.
The depositer is of course free to offer up evidence showing that he did not have such an intent, but he is certainly able to sit silently and require that the IRS show evidence that he did. If the IRS doesn’t have that evidence, then they can’t take the money.
However, the funds are seized under civil forfeiture, so the problem is that the case is not “beyond reasonable doubt”, in fact as the articles point out, the criminal cases are often skipped (perhaps because the IRS knows they would lose a jury trial, and anyway, they have your money so who cares?).
Civil cases as I recall are “preponderance of evidence” , and I assume the IRS can force them to be judge not jury, and so to win on preponderance of evidence one would have to show that the structure of the deposits - that on the surface look “arranged” to avoid the $10K limit - were really accidentally, rather than the IRS proving it was deliberate.
But yes, admitting you arranged the deposits to avoid the paperwork, even through ignorance, is not conducive to winning the case. The only question I have is why this would not be a jury case.
If you are a business that regularly makes bank deposits or payroll withdrawals of more than $10,000, the bank can designate your business as exempt from the reporting requirements (provided that the business meets the exemption requirements), but the bank has to send a notice to the IRS that it is doing so.