by Michael Lodge
The Federal government has set up a financial reporting system that can get a lot of people into trouble innocently when make deposits into or withdrawing funds from their bank accounts if it is under $10,000. Doesn’t make sense but it happens. In fact perhaps the Government has gone two far in their reporting requirements and may have set people up for a crime. Even if you are an innocent business who is making deposits into your bank every other day close to the $10,000 and not filling out the correct forms for over $10,000 you can be accused of and prosecuted for Structuring – Money Laundering. No matter how innocent you are the government sees it totally different. That is why I say – perhaps the government has just a little too much power over it’s citizens.
Those of you sending home money to mom and dad and you are sending more then $10,000 or smaller amounts over a period of time, you can also be accused of structuring. And evil word – Structuring. Here is the Governments description of Structuring.
Here is an article from Forbes Magazine that gives more insight on structuring.
Structuring Seems Like A Crime You Can Commit By Accident
Peter J Reilly
I focus on the tax issues of individuals, businesses & more
Opinions expressed by Forbes Contributors are their own.
The supporters of embattled young earth creationist Kent Hovind have been hoping that the troubles of Dennis Hastert with the crime of structuring might elicit more sympathy for Doctor Dino, as Kent Hovind is known. Hovind is nearing the end of a long sentence, that based on the number of counts was mainly about structuring. Instead the other name that I am hearing is Eliot Spitzer. Apparently Spitzer’s scandal which involved prostitutes was triggered by a bank’s suspicious activity reports, although in the end Spitzer was not prosecuted. I decided to talk to a couple of people who know about structuring. Here is the biggest takeaway. Structuring is a crime under federal law, but it is the type of crime, that you could commit kind of innocently. It is something of a cautionary tale.
From A Forensic Accountant
I spoke with two people who educated me some more on structuring. Up till now my primary education has been listening to Kent Hovind say that it is a stupid law, that Congress should repeal. Barry Sziklay is a valuation and litigation support partner at Friedman LLP, one of the largest accounting firms in the metro New York area. Barry pointed me to www.fincen.gov, which explains the Suspicious Activity Reports that are probably the source of Mr. Hastert’s most recent troubles. Barry put a bit of a damper on my emerging theory that this is long delayed payback for Hastert’s role in MonicaGate. The amount of money, nearly a million, and the number of transactions, over a hundred, were bound to generate enough suspicious reports to get some attention.
Former US Attorney
Next I spoke to Ellen Zimiles, a managing director with Navigant Consulting. She heads up Navigant’s Global Investigations and Compliance practice. Navigant bought the consulting practice that Ellen had founded after her stint at KPMG, but the really interesting job that she held was Assistant United States Attorney in the Southern District of New York. Like Barry, Ellen mentioned Eliot Spitzer as someone who was tripped up by suspicious activity reports.
She then explained to me with infinite patience the crime of structuring. Since the seventies banks and some other institutions have had to file reports on cash transactions in excess of $10,000. There is nothing illegal about having as much cash as you want. There is just going to be all these reports filed, which somebody might look at and call on you and ask you questions.
Of course even if you are not doing anything illegal, those type of inquiries could be annoying and besides whose business is it that you are dealing in cash, if what you are doing is legitimate. That was Kent Hovind’s attitude anyway. Pastor Mooneyhan who was providing an umbrella for Kent Hovind’s Creation Science Evangelism told him to try to keep his withdrawals under $10,000 to avoid the reports being filed. Which is a crime. The crime is not keeping the withdrawals under $10,000. The crime is keeping the withdrawals or the deposits under $10,000 with the intent of avoiding the reports.
Dennis Hastert, former speaker of the US House of Representatives, attends the annual meeting of the Iranian resistance, presided over by the National Council of Resistance of Iran (NCRI) in Villepinte, near Paris, on June 22, 2013. Some 500 parliamentarians from the United States, Canada, Europe, the Middle East and Arab countries were expected to join the gathering on June 22, one week after Hassan Rowhani, a moderate cleric, was declared winner of Iran’s presidential election, ending an eight-year conservative grip on the Islamic republic’s administration under Mahmoud Ahmadinejad. Maryam Rajavi, president of the NCRI, denounced the ‘sham election’ in Iran and called on the West to stand firm with respect to Hassan Rohani, ‘responsible for the machine or repression’.
Oh What A Tangled Web We Weave
So here is the ironic thing. Imagine that you go to the bank every four days and deposit $12,000. The bank will file currency transaction reports that let the Treasury Department know that. That notion annoys you, so you start going every three days and deposit $9,000. No more currency transaction reports, but before long there will be suspicious activity reports. If the reason you made the switch was to stop the currency transaction reports, you have committed the crime of structuring, even if there is nothing illegal about the source of the funds or the use of them and you are paying all your taxes. (Kent Hovind insists that he has paid all the taxes he owes, by the way, but there is some room for interpretation there.)
That intent thing is very important. If you have some other reason for keeping your deposits and withdrawals under $10,000, then you are not committing the crime of structuring. Ms. Zimiles gave me an example from her US attorney days of a fellow who owned a record store and had a penchant for deposits in the $9,000 range. He explained to her that his insurance only covered cash amounts of up to $10,000. So he never wanted to have more than $10,000 on hand. After checking out the insurance story, she moved on to fight crime elsewhere.
So structuring is a counterproductive activity. It may get you into more trouble than whatever you were trying to hide. The other charge against Dennis Hastert is lying to the FBI. That is another dumb thing to do and also a crime. As Ms. Zimiles puts it “The truth will never be worse than the coverup”.
More On Bank Secrecy
Ms. Zimiles filled me in a little more on the bank secrecy laws, which she indicates are really misnamed, since they are more about disclosure than secrecy. There is a team with members from different agencies such as the FBI and the IRS who examine the suspicious activity reports. In each district there is someone in charge who is called the SAR Czar. I thought that was pretty clever. She also said that there is a provision to allow businesses, like large grocery stores, that routinely deal in large amounts of cash to be exempt from reporting.
Interestingly, the threshold for currency reporting ($10,000) has not changed since the seventies. I asked Ms. Zimiles about that and she said that raising the number has been discussed many times, but there is never any consensus as to what the new number should be, so it remains $10,000. It’s funny because I remember in the seventies not having a credit card at all and feeling that if I had eight dollars in my wallet, I was ready for anything. On the other hand, people tended to routinely deal in cash a lot more back then. I was a hotel night auditor and I handled a lot of twenties and hardly any hundreds and nowadays I still don’t have any call for hundreds, but I am using my credit card in pizza shops.
Should Structuring Be A Crime?
It would seem that the suspicious activity reports serve the same function as the currency reporting for larger deposits and withdrawals. Somebody who thought they were being clever by keeping things a bit below $10,000 has not really gotten away with anything. Of course, it is easier to convict them of structuring than whatever their structuring was intended to obscure. Like the way Al Capone was convicted of income tax evasion, people who are evading income taxes or dealing in drugs can be convicted of structuring, since it is relatively easy to prove. Given that it is something that can be done otherwise innocently, though, it may put too much power in the hands of prosecutors.
At any rate, if you have legitimate reasons to deal with large amounts of cash, the smart thing might be to minimize the number of deposits or withdrawals that are just below $10,000.
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