Currency Transactions and Structuring
Federal law requires businesses and financial institutions to report currency transactions in excess of $10,000 (in a single or “related” transaction) within a twelve-month period. Businesses must file an IRS form 8300, and financial institutions must file a currency transaction report. These requirements helps the IRS track suspicious criminal activity, including tax evasion and other crimes, even though making a deposit or withdrawal greater than $10,000 is often legal. This information is also shared by many other government agencies.
When a person, or persons, breaks a single $10,000 (or more) transaction, within a twelve-month period, into smaller pieces in an attempt to trick a business or financial institution into not filing the required report, pursuant to U.S. Code § 5324, it is called “Structuring.” You can be convicted of the federal felony of structuring even though the money is legal and you pay your taxes. Regardless of where the money comes from or the money’s purpose, a person suspected of structuring a transaction to evade reporting requirements may be prosecuted. The illegality is solely based on the attempt to avoid the reporting requirements.
Prior to September 23,1994 the government had to prove a defendant’s knowledge of structuring, the federal law requiring the bank to report currency transactions in excess of $10,000. The government also had to prove that the defendant did not to try to trick the bank into avoiding the reporting requirement. Effective September 23, 1994, Congress changed the law, as it was decided by the United States Supreme Court in Ratlaf on January 11, 1994, 510 U. S, 135, requiring a structuring conviction to have “willfulness,” making it much easier for the government to obtain a conviction. The government now only needs to prove that the defendant had the purpose of trying to avoid having the bank file the currency transaction report or the business filing IRS form 8300.
Anyone convicted of violating anti-structuring laws is guilty of a federal felony, could serve many years in federal prison and face huge monetary penalties. Further, since structuring is its own crime, and the movement of money may allow the person to avoid taxes, a structuring case or investigation can sometimes lead to additional charges, such as tax evasion. It’s important to remember that structuring may alarm authorities to suspected tax evasion and other serious charges.
In the case of former New York Governor Eliot Spitzer, a consideration was whether he committed structuring, among other crimes, in the payment of $20,000 in four installments to a prostitution ring.
Radio show host Rush Limbaugh was considered for prosecution on structuring charges when, within twelve months, he withdrew cash exceeding $10,000, in multiple amounts from his bank; each withdrawal was less than $10,000. There were never any allegations that Rush had illegally acquired the money or that he had any tax problems, only that he may have committed the crime of structuring. Mr. Limbaugh commented on his radio show that he was being considered for prosecution for “withdrawing his own money.” How a person deposits or withdraws the money, especially when structuring, is the crime.
Most people that are prosecuted under the structuring law are not celebrities; they are normal, everyday people. For example, a police officer was found guilty of structuring when he re-deposited, in multiple deposits of less than $10,000, cash in excess of $10,000 into the very banks from which he had earlier withdrawn it (United States of America v. William MacPherson, 424 F. 3d 183, decided September 13, 2005). In another example, a newly married couple faced structuring charges when they used multiple deposits of less than $10,000 to deposit well over $10,000 into multiple financial institutions.
Businesses can file a form 8300 with the IRS for a cash transaction less than $10,000 if they believe the transaction might appear suspicious. Banks will file a Suspicious Activity Report if they think a transaction is suspicious, and almost 50% of the Suspicious Activity Reports filed to date list structuring as the suspected violation.
The government does not have to prove that a person intended to commit a crime by violating the provision; it must prove that a person intended to trick a financial institution or business into not filing a required report. So, regardless of intent to violate the law, structuring is a crime.
Moskowitz LLP understands the very complex circumstances surrounding structuring. The government, through direct or circumstantial evidence must demonstrate a string of financial transactions in order to support a structuring case. Our financial, criminal and civil expertise can help you defend against a restructuring claim.
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