The hard part of money laundering

Factual Questions
282

$27k in cash lying about anywhere, be it your mother’s house or whatever is likely to raise eyebrows. Maybe she just didn’t trust banks. Maybe she was running an illegal racket on the side that you never knew about. You know, she did take a lot of expensive holidays and always dressed really well That Patak Phillipe watch might not be a fake after all.

In the end the government just wants you to make life easier for them to limit money laundering. So as a good citizen you report. It goes into to some huge database somewhere, that gets mined by all manner of amusing algorithms looking for patterns. The likelihood of a human being ever having notice of your $27k again is close to nil. Unless perhaps they were tracking your mother’s finances but had just not yet managed to close the net on her operation.

283

Let’s be clear - there are two types of reports, if I understand this thread correctly:

CTR:

A currency transaction report (CTR) is a bank form used in the United States to help prevent money laundering. This form must be filled out by a bank representative whenever a customer attempts a currency transaction of more than $10,000. It is part of the banking industry’s [anti-money laundering] (AML) responsibilities.
In order to prevent financial crimes, CTRs require institutions to verify the identity and Social Security Numbers of anyone attempting a large transaction, whether or not that person has an account with the institution.

SAR:

A financial institution is required to file a suspicious activity report no later than 30 calendar days after the date of initial detection of facts that may constitute a basis for filing a suspicious activity report. If no suspect was identified on the date of detection of the incident requiring the filing, a financial institution may delay filing a suspicious activity report for an additional 30 calendar days to identify a suspect. In no case shall reporting be delayed more than 60 calendar days after the date of initial detection of a reportable transaction.

Presumably a CTR is not “hidden”. The tellers in the linked articles were just lazy - if the amount topped $10,000 they had to fill out a form; below that, no. No reason to hide the fact from the customer.
Presumably then, a SAR is not something the customer is told about. Telling them could become obstruction of justice? It may happen a while after the customer has left the building.

CTR - no big deal if the cash is legitimate. Probably happens a lot.
SAR - the bank wonders if the cash is legitimate, so notifies the IRS. Being under $10K does not avoid a SAR, it may in fact be more likely to trigger one - $9,999 certainly will, and $9,000 once may - several regular $9,000 transactions certainly will, unless the bank is familiar with your business. Even if they are, better safe than sorry if you deposit, say, two under-$10K transactions back to back that total more than $10K. Why did you do that?? File a SAR, let the feds figure it out.

To clarify - if you break up a transaction to avoid a CTR, that is a crime. The bank is obliged to file a SAR about that. A bank employee for whatever reason advising you to break the law is also no excuse. In the cash of mama’s $27K, if you buy $9,000 three times - looks like structuring. Even if you only did one $9K transaction and kept the rest in pocket - that too could look like structuring.

There’s a chance your accounts will be frozen, money seized, while the feds investigate. The article adds a new wrinkle - the feds can perform a “Civil Asset Forfeiture”, a peculiar feature of the US “Justice” system where they take the money and keep it, no charges, no court case, and you have to jump through legal hoops to get it back - just like the state troopers helping themselves (rather, their department) to travelers’ cash.

And to repeat - the feds do NOT need you to tell them you avoided the CTR process. They can infer it from the transaction pattern. (Although, if you only did one transaction, how would they know unless you told them you had another $18K?) Civil asset forfeiture is civil (by one definition of “civil”) so the criteria if you go to court to get your money back is “preponderance of evidence”. They say what they saw you do, you explain how you had no knowledge of or intent to avoid a CTR and $9K was a random coincidence, and the judge decides who is more credible, you or the government.

Also - telling them you just didn’t want your name on a form is telling them you committed structuring. The reason is irrelevant. The act matters. If you don’t tell them why, see “infer” above.

284

It seems like a good policy for the bank is to give all customers with frequent cash deposits a pamphlet on the CTR/SAR requirements. It could even be an automated email like “As a customer with cash deposits, please make sure you are aware of the IRS regulations surrounding cash deposit reporting requirements…” I could see normal people having no clue about all of this and getting into trouble because they unknowingly make legitimate deposits in a pattern which looks like criminal activity.

285

There are plenty of businesses that deposit large amounts of cash. The key here is “suspicious”.

This has been beaten to death upthread. A legitimate ongoing business will not trigger “suspicious” and the bank is likely familiar with this customer and their business. A customer out of the blue suddenly depositing thousands of dollars cash, and doing so repeatedly, likely will - depending on the reason. Most legitimate reasons will have verifiable facts to back them up.

“My pussy-hat business just went viral” will pass muster, let’s say, but there would be a web site, testimony of huge volumes of mail by the USPS, long lists of customers shipped to, and likely a commensurate amount of credit and paypal transactions - should the feds get around to investigating. I hope your tax filings are up to date too.

Even the story “I found mama’s cash stash” will have a verifiable dead mama, and the dollar bills will likely be aged years or decades. (What, mama decided in the last few years to start hoarding cash in excess of her annual Social Security payments?)

Ultimately, if there’s a dispute, “tell it to the judge”. You story better be good and backed up with proof.

286

Indeed, it was precisely this conduct that got former Speaker of the House Dennis Hastert convicted and sent to prison in 2015. He was trying to break up repeated withdrawals – which he was using to pay hush money to a student he had molested decades earlier while he was a high school wrestling coach – to avoid scrutiny. Didn’t work.

287

Yes, he explicitly told the feds that was why he broke up the transactions. That made their job easier.

There’s a reason lawyers tell their clients not to volunteer information to the police.

288

In the example I mentioned above involving the October 1997 Loomis Fargo robbery in North Carolina that inspired the film Masterminds–one of the suspects directly asked the teller at the bank how much they have had to deposit that would trigger a report and then proceeded to deposit less than that. Which, of course, the bank then reported as suspicious activity. Pretty stupid on their part.

So if you are planning on trying to avoid a report don’t ask an employee at the bank(or car dealership or casino) about the requirements because that alone is suspicious activity.

289

Think of it this way: The speed limit is 70 mph which means that if you drive at over 70 mph, an officer can stop and give you a ticket. But you’re also obligated to drive safely. If you’re driving 65 mph in a snowstorm, an officer can pull you over and give you a ticket. The ticket isn’t for exceeding the speed limit, it’s for unsafe driving.

The bank/casino cashier is required to file a Cash Transaction Report (CTR) if you make a cash deposit of $10,000 or more. That’s the “penalty” for going over the limit. You’re still required to deposit money safely - which in this case means not creating conditions where it’s not apparent that you’re depositing over $10,000. If you’re intentionally avoiding that $10,000 reporting threshold, you’re being “unsafe”. You’re avoiding a key means of detecting other crimes. That avoidance, as already noted it’s called structuring, is illegal on it’s own. You may wish to not have your large cash deposits recorded in some federal database. However, the US government has mandated that it will happen and forbidden you from avoiding it.
https://www.fincen.gov/sites/default/files/shared/CTRPamphlet.pdf

290

Yeah, it is very difficult.

Let us say you tell them not to make deposits of 9500 and so they switch to 9000 then they say “well the bank told us to!”. Like that case reported above.

291

For the Nth time- NO LIMIT IS SET! You can freely deposit all $27k and be fully within the law.

Yes, right, but informing them of the SAR is against a special law just for that.

Yes, correct, millions of times.

The SAR is filed with FINcen who sends it out to the FBI, IRS, etc The bank also files the SAR to protect itself as failure to do so causes fines, sanctions, even jail time and the bank being closed down.

Good post overall.

292

I understand that you are frustrated with me, but I have prefaced my comments with the hypo (I don’t really think this way) that I want my cash transactions to be free from government observation.

293

I don’t think this is the right analogy. Where is the snowstorm? It’s a regular Tuesday. I don’t want to report, so I abide by the 70mph limit by driving 65. Why does driving 65 mean a snowstorm?

294

Don’t put your money in a bank.

SOLVED!

295

This too, over and over and over again. Huge cash transactions are NOT illegal. However, they can be sufficiently rare that the police may investigate. What may or may not be illegal is how you obtained the money.

Normally, someone might say "none of their business. Prove it’s illegal or F### O## ". Wrong answer. The feds can seize the money under suspicion its a crime - with no evidence there is a crime and no need to charge the person with anything. Then, the owner can go to court to try to get it back. At that point, they either show how they legally acquired that much cash, or the feds may win the case with “usually this much is from crime and person was evasive when we asked, and no logical explanation.” Plus - any tax records that prove it? If you got tens of thousands, cash or not, there should be a tax record too.

It’s not every day someone buys a new Mercedes with a wad of bills. I’m guessing it doesn’t happen once a year in most dealerships. That’s what makes it suspicious. The fact the cops will investigate, and the ensuing hassle, discourages even legitimate transactions so that such a transaction is extra suspicious.

296

Also, don’t buy anything approaching $10,000 or more for cash. Because the person you bought it from may deposit it in a bank, and when asked, will give your name so the money does not get seized - see my previous post.

So new cars, expensive property rental or ownership, nice vacations, etc. - risky if you want to avoid being noted. You live a boring lower middle class existence.

Which takes us back to the point repeated over and over in this thread - don’t do anything to draw attention to yourself - spending large sums in cash does exactly that.

297

A better analogy might be that the speed limit is 70 mph - but if you repeatedly accelerate from 60 to 70, then slam on the brakes to avoid crossing the limit, you’ll get some attention from the police. Still not a perfect analogy, though.

298

I’ve bought/sold boats, most in the 6-10 k range and cash is king.

I tried depositing $8,500 from a pontoon sale but couldn’t find my personal checkbook for deposit slips. My workaround was to deposit the cash into my business checking (had a stack of slips) then I transferred the $$ via online banking into personal checking.

Because I’d also deposited my normal cash into business account the next day, the teller (my friend’s wife) told me to watch cash deposits like that, as it reeked of structuring. I’d never heard of any of this.

299

I acknowledge it’s not a perfect analogy. But just because you’re driving the speed limit doesn’t mean you’re driving safely. You still have to drive in a manner that suits the outside conditions. If you don’t, you won’t get a ticket for speeding but you will get a ticket for unsafe driving. The US federal government has made it law that evading a CTR is the analogical equivalent of unsafe driving. It’s black and white law. If you’re structuring your cash deposits to avoid the bank filing a CTR, then you’re behaving in an unsafe financial manner. You can say that that is none of the government’s business, and that your avoidance of the CTR isn’t nefarious. But you can also say that you can drive safely in a snowstorm at 70 mph. If you’re caught, it doesn’t matter if you were under the limit. You’re being blamed for a different crime.

300

I understand that, and I think I said several posts ago that now I’m just in complaining mode. My complaint is that the “different crime” I’m being charged with is following the other law too perfectly.

It’s like they realized that the effect of law #1 will cause the effect that we know needs law #2 to protect against. You created the very problem you now “need” to fight.

And the reporting requirements to “fight crime” seem far too much like let us search your house as you wouldn’t object if you have nothing to hide. This isn’t North Korea. I shouldn’t have to “report” to the government when I spend my own money, and it is doubly absurd that when I specifically follow their rules so I don’t have to report, they’ll nail me for that.

301

So you believe that the law mandating Cash Transaction Reports is proper, but the law forbidding the evasion of Cash Transaction Reports is improper? That doesn’t really make sense. If I have $30,000 in cash I want to deposit, and I’ve never deposited $30,000 in cash before, then arguably the authorities have an interest in being notified about my deposit and investigating whether the cash was from a legitimate source or ill-gotten. We could argue against that idea by claiming that the CTR notification is government overreach, invasion of privacy, or a warrantless search. Even so, legally that argument has been settled as CTR’s are part of established law. Since CTR’s are established law, then the impropriety of evasion of CTR’s also needs to be established by law. The authorities want to know about my $30,000 in cash that I’m depositing. The idea that they should want to know about it if I make 3 deposits of $10,000, but not care if I make 4 deposits of $7500 is absurd. It’s pointless to have a law that’s so easily evaded.

What’s more, if you have a legitimate reason for depositing the money in segments, then all you have to do is explain that reason to the bank. (That presumes that the Suspicious Activity Reports aren’t fully automated, which may not be a legitimate assumption depending on the bank.) A Suspicious Activity Report is just what the label says. If the bank decides your activity isn’t suspicious, they don’t have to file a report. But the reason has to be one that will stand of to scrutiny. “I don’t want a CTR filed” obviously won’t. Neither will “That’s what Grandma wanted when she gave me the money.”