As part of the Bank Secrecy Act, financial institutions are required to complete reports relating to large or suspicious cash deposits. The rules are designed to help the Internal Revenue Service and other government agencies detect and prevent money laundering and other criminal activities. Individuals and businesses that fail to comply with reporting requirements are subject to fines and other penalties.
Currency Transaction Report
Employees of financial institutions must complete a Currency Transaction Report using federal tax form 8300 when processing cash deposits involving more than $10,000. The report is required if either a single deposit exceeds the dollar threshold or if a series of deposits involving one account holder cumulatively exceed $10,000 within a 24-hour period. The report is required even if the deposits involve various different tellers and a number of branch locations operated by the same bank. Banks must complete CTRs on transactions involving both consumer and commercial accounts. However, a bank can file a CTR exemption for a firm that regularly makes large cash deposits as part of its regular business activities.
On the CTR form, the account owner is described as the beneficiary while the person who makes the deposit is the conductor. The CTR must include the name, date of birth and address of both the conductor and the beneficiary. Additionally, the form also details the Social Security Number or Tax Identification Number of both parties. The person completing the CTR must ask the conductor about the origin of the cash. For example, the cash may have been received after selling goods or providing services. Questions are also asked about the purpose of the transaction such as whether the beneficiary plans to pay off a loan or buy goods with the money. The person filling out the form must complete it as fully as possible based on the answers provided. Multiple beneficiaries and conductors can be listed if necessary.
In order to avoid detection, some criminals attempt to structure cash transactions so they remain below the reporting threshold. Structuring may involve depositing $9,000 on Monday and waiting until more than 24 hours have elapsed before making another deposit of $1,100. To tackle this issue, the IRS requires financial institutions to complete Suspicious Activity Reports on unusual transactions involving $2,000 or more. Using their best judgment, employees must complete a SAR when they suspect a cash deposit is related to illegal activity, is designed to avoid CTR reporting or if it serves no apparent lawful purpose. The person completing the SAR must do so without mentioning it to the customer. The SAR contains details such as the names of the parties involved in the transaction and the behaviors or actions that aroused suspicion.
Money Service Businesses
Rules on cash reporting apply to money services businesses as well as banks. These include check cashing firms, money transmitting services and firms that sell cashiers checks and money orders. Employees of such firms must complete reports on withdrawals and purchases of money orders and cashiers checks that meet the CTR or SAR reporting requirements. People who fail to properly complete necessary CTRs and SARs may face fines of up to $100,000 per transaction.