Financial institutions are obligated to file a currency transaction report for deposits, withdrawals, exchange of currency or other payment or transfer, by, through or to the financial institution if such transaction involves currency exceeding $10,000. Some people wish to avoid the filing, and they therefore complete currency transactions in increments of less than $10,000. Attempts to avoid currency transaction reporting are illegal and could result in civil and criminal penalties. Thus, clients, attorneys and fiduciaries should be knowledgeable about the salient provisions of the Bank Secrecy Act, 31 U.S.C. §5311 et seq. It requires the filing of certain reports or records for financial transactions that have a “high degree of usefulness in criminal, tax or regulatory investigations or proceedings, or in the conduct of intelligence or counterintelligence activities, including analysis, to protect against international terrorism.”
Anti-Structuring Statute and Regulations
The original version of the Currency Foreign Transaction Reporting Act placed a duty on financial institutions to report currency transactions in excess of $10,000. However, the duty was easy to avoid since the threshold for transactions was set at $10,000, and there was no mechanism to stop customers of financial institutions from structuring transactions to avoid the reporting requirement. To remove the loopholes to the reporting requirements, the Secretary of the Treasury amended the implementing regulations to clarify that multiple branches of one bank means the same financial institution, and multiple currency transactions in one business day will be aggregated to one transaction. 31 C.F.R. §103.22(c). However, the financial institution must have knowledge that the multiple transactions were by or on behalf of any one person, and the financial institution must have knowledge the transactions amounted to over $10,000 of cash in or cash out in a single day to create an obligation on the financial institution for the filing of the transaction report. Although the regulations were amended to address ambiguities, the statute itself did not impose an obligation on customers to meet the reporting requirements for large currency transactions. Only financial institutions were obligated to adhere to the reporting requirements.
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