Strategic Federal And State Criminal Defense

Cash businesses and so-called ‘structuring’: a Q & A on the Bank Secrecy Act

On Behalf of | Jul 14, 2016 | White Collar Crimes |

You’re an ordinary business person who happens to handle quite a bit of cash. The business could be a restaurant, a jewelry store, a pawn shop or some other venture that involves the need to put considerable cash into your bank account.

You’d think the IRS would know that you’re not some sort of organized crime figure, terrorist supporter or drug dealer. But in recent years the IRS has often used forfeiture laws to grab the bank accounts of people or businesses that run afoul of reporting requirements under the Bank Secrecy Act (BSA).

In this post, we will use a Q & A format to discuss how federal authorities may use the BSA to charge you with money laundering or some other offense.

What exactly is the Bank Secrecy Act (BSA)?

The BSA is a federal law originally passed in 1970 and amended several times since then that was intended to identify and stop money laundering. It imposes various requirements on banks and other financial institutions to file reports with the U.S. Treasury Department.

Under the BSA, businesses are also required to file reports of cash transaction that are greater than $10,000. This is done on Form 8300.

What is “structuring” of transactions?

The $10,000 seems straightforward enough on its face. The problem comes when federal authorities alleged that someone has broken up big transactions into several smaller ones in order to avoid the reporting requirement.

This type of activity – breaking a large deposit up into small ones – is known as “structuring” or, more colloquially, “smurfing.” It can result in criminal charges and possible bank account forfeiture.

Structuring allegations also often involve tax evasion charges.

Can the IRS really try to go after your bank account even if you weren’t charged with structuring?

In recent years, the IRS has often used forfeiture laws to seize bank accounts on the mere suspicion of structuring. The IRS has sometimes done this even if the account holder was never charged with a crime.

A respected nonprofit group, the Institute of Justice, issued a report last year that put the amount of money seized by the IRS for alleged structuring violations at more than $43 million.

The forfeitures have included some glaringly unfair cases, such the seizing of the bank account of a family-run grocery store in Michigan and a dairy farmer in Maryland.

It is possible to push back against account seizures and structuring charges?

Yes, For example, the dairy farmer in Maryland successful fought the IRS to get at least some of his seized money back. He also testified before Congress about the need to reform the forfeiture laws.

Those laws may or may not be reformed anytime soon. In the meantime, it is important to get a strong attorney on your side when facing structuring charges or forfeiture of your bank account.