If you plan to deposit $10,000 in cash or more in your bank account, be prepared to fill out some paperwork. Businesses and individuals alike must comply with the Bank Secrecy Act deposit regulations. The US government tracks large deposits as part of its anti-money laundering and anti-terrorist monitoring. The IRS uses this information to ferret out tax evaders and tax fraud activities. It takes a few minutes to complete the document but by identifying each depositor, the government can more effectively combat crime and identify potential terrorist threats.
Thanks to the Bank Secrecy Act, if you deposit more than ten grand, you can expect the bank to notify local, federal and international government agencies of the transaction.
Bank Secrecy Act
Under the Bank Secrecy Act enacted in 1970, banks are required to keep records for each customer who deposits $10,000 or more at one time in an account. The deposit records are sent to local, federal and international law enforcement agencies that use this information to track where the money goes. Individuals and business owners who do not comply with the regulations can face civil and criminal penalties. In 2001, the USA Patriot Act expanded the Bank Secrecy Act. Government agencies could now use the information to determine if the money was funding terrorist organizations and activities.
Federal regulations are designed to cover all monetary instruments whether received by an individual or a business. Deposits of U.S. and foreign currency and coins must be reported. If you receive and deposit a cashier's check, money order, bank check or traveler's check with a face value of $10,000 or more, you do not have to report it. The bank already reported the transaction when the monetary instrument was purchased. Personal checks, however, do not fall under the definition of cash and are not reported.
Reporting the Deposit
Banks must use IRS Form 8300, Currency Transaction Report, to report all qualified deposits, whether the funds are deposited in a lump sum or in payments. A business that receives installment payments totaling $10,000 or more from the same buyer within one year of receiving the initial deposit must report the transaction. Business owners who initially fail to report a lump sum or installment payments from the same buyer meeting the $10,000 threshold amount must report the transaction on Form 8300.
Penalties for Non-Compliance
Individuals and businesses that fail to report a transaction or fail to send Form 8300 to the IRS office in Detroit may face non-compliance penalties. The civil penalty fine is the larger of $25,000 or the amount of cash you received and did not report, up to $100,000. The criminal penalties for failing to file the form or filing a fraudulent form are $250,000 for individuals and $500,000 for corporations. You can also be sentenced to up to five years in prison.
Based in St. Petersburg, Fla., Karen Rogers covers the financial markets for several online publications. She received a bachelor's degree in business administration from the University of South Florida.