There are regulations in place which require banks to report suspicious or large transactions to government officials. Let’s take a look at these rules.
Disclaimer: This article is for informational use only. Speak to your legal advisor for practical application.
SARs
A suspicious activity report, or SARs, is one of the more commonly-known regulations. Under this rule, a bank must submit a form regarding suspicious-looking transactions. The form is submitted to the Financial Crimes Enforcement Network (FinCEN), part of the US Department of Treasury.
This report is only filed when there is reason to suspect money-laundering or the like. There is no requirement to file a report in absence of suspicious activity.
SARs is typically only filed when there’s $5,000 or more in question. The report must be filed within 30 days and must be maintained for 5 years.
CTR
A currency transaction report, or CTR, is filed for cash transactions of $10,000 or more. This report is likewise sent to the Financial Crimes Enforcement Network.
Note that this report is filed irrespective of any suspicious activity involved; any cash transaction meeting the $10,000 threshold necessitate such a report.
Report to Authorities
The above forms are the official forms which must be sent to the government. There’s recently been discussion on a number of sites (link, link, link) about a new recommendation which the Justice Department is pursuing which advocates calling the cops for cash transactions of over $5,000, apparently even when there’s no suspicious activity involved.
If this is in fact becomes the new rule, it’s unclear how exactly it will play out; it seems odd that every $5,000 cash transaction will trigger police investigations. It would also render the CTR report unnecessary.
Structuring
Another related point is that it’s illegal to structure transactions so that they stay below reporting limits. For example, it’s illegal to withdraw $10,000 split up into two transactions so as to avoid having a CTR filed.
If someone initiates a $10,000 cash withdrawal and the teller informs you that they will be filing a CTR, you should not rescind your request and ask for a $9,999 withdrawal instead since that will appear like structuring and will in turn trigger a SARs.
