As a Chicago Lawyer who has successfully defended at trial those accused of money laundering, I am often asked how to properly and legally handle large sums of cash. One of the most common problem areas in this regard arises out of the federal law that requires banks to fill out and submit to the Internal Revenue Service (IRS) a Currency Transaction Report (CTR) every time someone deposits $10,000 or more in cash.
The problem occurs when a depositor attempts to get around the reporting requirement by "structuring" their cash deposit in an amount just under $10,000 in order to prevent the bank from reporting the deposit to the IRS. So, for example, in an old Soprano's episode, Carmela Soprano finds a large amount of cash that Tony Soprano hid around the house. She goes into a bank and the following exchange occurs:
Banker: "So you want to deposit $9,900 in this account?"
Carmela Soprano: "Yes."
Banker: "You are aware that if it was $100 more I would have to report the deposit to the IRS?"
Carmela (Innocently): "Oh, is that so?"
Although Carmela thinks she is being clever, she is actually taking a foolish and unnecessary risk; while there is no law against depositing $10,000 cash, there is a federal law against structuring your deposit in such a way that it is just under $10,000 in order to avoid the bank reporting it to the IRS. For this reason, a deposit of $9,900 raises a red flag, can attract unwanted attention, and can expose the depositor to potential criminal liability. Violations of this law are punishable by fines and up to ten years in prison. See 31 USC 5324.
The other side of the structuring coin is the requirement to report cash payments exceeding $10,000 to the IRS within 15 days using Form 8300 regardless of whether the money is deposited. See 26 USC 60501. A violation of this section is a felony punishable by up to 5 years in prison. See 26 USC 7203.
How have people beaten structuring accusations in the past? Every case is unique and this is a fact sensitive question that should be discussed with your lawyer. For now, know that the law is mixed depending on what part of the country you live in. For example, in the Seventh Federal Circuit, which includes Illinois, Wisconsin, and Indiana, the case of U.S. v. Jones, combined with the Supreme Court Case of Ratzlaf v. United States, supports the defense that, in order for the government to prove guilt, it must prove that the depositor "willfully" violated the statute. In other words, the government must prove that a defendant acted with knowledge that the structuring he undertook was unlawful. This can be a substantial burden, especially when the depositor acts innocently, without intending to prevent the bank from reporting the deposit.