Structuring Payments May Lead To Criminal Allegations
Structuring Payments
There are two federal statutes which address an individual’s obligations for reporting large cash transactions and prohibitions on any attempts made to avoid fulfilling these responsibilities.
According to 26 U.S.C. § 6050I, any person who receives $10,000 or more in cash is required to report the transaction to the IRS within 15 days of receipt of the reportable cash by filing Form 8300. This statute applies to any monetary transactions that occur in trade or business that are the result of a single transaction or a series of related transactions within a 12-month period. The IRS considers cash as any U.S. or foreign currency and includes cashier or traveler’s checks, bank drafts, and money orders. A transaction is any event that results in transfer of cash or items with monetary value. As a way to ensure that all cash transactions of $10,000 or more are reported, banks and other financial institutions are also required to inform the IRS of any large monetary transactions or suspected cash structuring.
31 USC § 5324 defines structuring as a way of organizing large cash transactions into smaller deposits or payments in order to evade one’s reporting requirements; causing or attempting to cause a financial institution to fail to perform its reporting requirements; obstructing or attempting to obstruct a business in fulfilling its reporting requirements; and/or assisting or attempting to assist in structuring any transactions that violate 26 U.S.C. § 6050I. Typical structuring schemes involve taxpayers making multiple deposits below the $10,000 threshold in order to avoid having to fill out Form 8300 and report said receipts to the IRS.
Structuring is a felony offense and the punishments can be severe. Penalties include monetary fines, imprisonment of up to 10 years, or both. Additionally, because structuring is often used in connection with other crimes, such as tax evasion or money laundering, an individual accused of structuring could face lengthy jail time and/or civil penalties for the entirety of the individual’s conduct.
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If you need assistance defending yourself against claims of structuring payments or cash receipts, please contact Easter & DeVore, Attorneys at Law, for a free case evaluation. We have considerable experience handling a wide variety of criminal cases, including those involving tax law. He has the skill you need and the experience you can trust to protect your rights and do what is in your best interests.
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FAQs
In order to show that a person is guilty of structuring to avoid having a bank file a Currency Transaction Report (CTR) with the IRS, the government must prove three elements: (1) the defendant (or a claimant in a civil forfeiture case) must have engaged in acts of structuring cash desposits or withdrawals at a ...
What is the penalty for structuring? ›
A conviction for structuring carries with it a maximum of 5 years in the Federal Bureau of Prisons, a fine, and quite often the draconian process of having their assets forfeited assuming the government can show a nexus between those assets and the crime of conviction.
Is structuring against the law? ›
(3) structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more domestic financial institutions. Section 5324 further provides that a violation of this provision may be punished by a fine or up to five years in prison, or both.
How to avoid structuring? ›
Avoid saving up cash and making deposits that are of similar amounts. This is precisely what can raise red flags at a financial institution and with investigators. The IRS and the DOJ will pursue cash structuring cases.
What is an example of structuring money? ›
Examples of Structuring
Instead of depositing the entire cash at once, he decides to deposit $10,000 at a time over multiple days. By doing so, John aims to prevent getting caught by the bank and regulatory authorities who monitor such transactions.
What is an example of structuring transactions? ›
Structuring and smurfing examples
Let's say that someone has $90,000 in cash. If they want to avoid reporting requirements, they can split this into 10 transactions of $9,000. This is an example of structuring. Remember, structuring transactions in this way is illegal.
What is a red flag for structuring? ›
Common red flags include large cash transactions, structuring transactions to avoid reporting thresholds, rapid movement of funds, unusual customer activity, lack of business justification, dealing with non-resident customers or Politically Exposed Persons, offshore transactions, unregistered or unlicensed entities, ...
What is the statute of limitations on structuring? ›
The criminal statute of limitations for currency structuring is 5 years from the date of the violation.
How much money is suspicious to deposit? ›
If you plan to deposit more than $10,000 at a bank, remember that the transaction will be reported to the federal government. This enables authorities to track potentially suspicious activity that may indicate money laundering or terrorist activity.
What is smurfing? ›
Smurfing involves splitting large sums of money into smaller, more easily concealable amounts of illegally obtained funds to avoid detection by authorities, while structuring involves deliberately depositing cash in smaller amounts to avoid reporting requirements.
Designing a transaction to evade triggering a reporting or recordkeeping requirement is called “structuring.” Structuring is a federal crime, and must be reported by filing a Suspicious Activity Report (SAR).
When did structuring become illegal? ›
Congress enacted § 5324 of Title 31 on October 26, 1986, (but the law did not become effective until January 27, 1987), in response to the laundering of drug money through structured cash conversion schemes.
What is the $3000 rule? ›
Rule. The requirement that financial institutions verify and record the identity of each cash purchaser of money orders and bank, cashier's, and traveler's checks in excess of $3,000.
What is the $10000 rule? ›
Depositing a big amount of cash that is $10,000 or more means your bank or credit union will report it to the federal government. The $10,000 threshold was created as part of the Bank Secrecy Act, passed by Congress in 1970, and adjusted with the Patriot Act in 2002.
How is structuring proven? ›
Prosecutors were able to prove these charges by demonstrating that the defendant had knowledge of the reporting requirements and, structured transactions by breaking down a single sum of currency exceeding $10,000 into smaller sums, with the purpose of evading currency reporting requirements of § 5313(a).
What does the IRS consider structuring? ›
IRS Definition of Structuring
A person acting alone, in conjunction with others, or on behalf of others. Conducts or attempts to conduct. One or more transactions in currency. In any amount.
Which situation could indicate possible structuring? ›
An account holder making cash withdrawals of $9,900 every other day for a month. This consistent pattern of cash withdrawals just below the $10,000 threshold suggests an attempt to avoid triggering the reporting requirement for cash transactions of $10,000 or more, which is a common red flag for structuring.
How to detect structuring in AML? ›
Financial institutions detect and prevent these methods differently. Structuring can be identified by monitoring for repeated deposits just below the reporting threshold by the same individual.
