The Currency and Foreign Transactions Reporting Act of 1970 -- usually just called the Bank Secrecy Act -- sets the guidelines for banks to report large currency transactions. The goal of the act is to prevent tax evasion and money laundering by criminals using cash deposits to disguise the illegal source of their funds.
Banks must notify the government any time they receive more than $10,000 in a single deposit. They must also report withdrawals of that size, or anyone using that much cash to buy a negotiable instrument such as a cashier's check or a bank draft. This rule applies to American dollars and to foreign currency worth more than $10,000. It also kicks in if the bank receives multiple payments from the same agent or individual over the course of a year adding up to more than $10,000. Banks don't have to report personal checks, regardless of the amount.
Suspicious Activity Reporting
The federal government requires banks to report smaller transactions that may be a sign of suspicious activity. Federal guidelines say suspicious activity could include a deposit or withdrawal of $5,000 or more by a customer who doesn't normally make transactions that big. Banks may also report transaction that fall just under the BSA's $10,000 limit or that have no "apparent lawful purpose," just to be on the safe side of the law. Critics of the law say the standards for suspicious activity are far too vague to be effective.
The Bank Secrecy Act affects any business that deal with a transaction or series of transactions for more than $10,000. If a customer buys an item such as a $12,000 boat or a $15,000 antique with cash, the dealer has to report the sale. Businesses do not have to report the transaction if the customer uses a negotiable instrument -- a cashier's check or traveler's check for example -- with a face value greater than $10,000. If a buyer pays with a $2,000 traveler's check and $8,000 in cash, they need to report the sale to the government.
Banks and businesses must file a form 8300 within 15 days after receiving the $10,000-plus payment. If the customer makes multiple smaller payments, the 15 days countdown starts as soon as the total paid exceeds $10,000. The bank or its parent must notify the person who made the transaction that he's been identified in the report, provide a contact number for follow-up questions and state the total amount of cash involved. Notification doesn't have to go out until Jan. 31 of the year after the company filed the 8300.
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