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Money Laundering and Cash Reporting Requirements and Financial Crimes and the 8300 Form - Part I


August 14, 2014

Business in the U.S. is conducted in a highly regulated environment. Perhaps the major pitfall business owners confront is how to handle large monetary transactions over $10,000.00 in cash without violating the money laundering statutes or committing a financial crime. In this blog post I will give you a basic primer on the Cash Transaction Reporting requirements. In Part II, I will cover the specifics of the Money Laundering statutes. If you have any specific questions about money laundering or cash transaction reporting requirements, please feel free to email me or give me a phone call.

CASH TRANSACTION REPORTING REQUIREMENTS:
Failure to report cash transactions can lead to a money laundering charge.
Title 26 of the United States Code is the Internal Revenue Code. 26 USC 6050I is the Cash Transaction Reporting Requirement. Section 6050I requires "any person, 1) who is engaged in a trade or business 2) Who in the course of the trade or business receives more than $10,000.00 in U.S. Currency in 1 or 2 or more related transactions must file with the federal government a form 8300 reporting the cash transaction.

"More than $10,000.00" means that if the business transaction was for exactly $10,000.00 then the cash transaction reporting requirement does not apply and you do not need to file an 8300 form.

You must report 1) The name, address, and Taxpayer Identification Number (TIN) of the person from who the cash was received; 2) The date and nature of the transaction; 3) The amount of cash received. Form 8300 has additional requirements that require you to report the amount of cash received in hundred dollar bills or higher.

CASH AND CHECKS:
The law covers cash (U.S. or foreign currency) or cash, travelers checks, and personal or business checks (the statute calls checks "monetary instruments) totaling over $10,000.00. This rule applies even if the cash and checks are provided to the business over a period of time, so long as the cash and checks apply to one transaction. For example, a jeweler who sells a watch for $12,000.00 and is paid a $1,000.00 in cash as a down payment, and then given a check for $8,000.00 a few days later and then is given the balance in cash or by a debit or credit card must file an IRS Form 8300 reporting the transaction since the transaction was a combination of cash and monetary instruments for

If the entire transaction is by check, then there is no Cash Transaction Reporting requirement.

TIME PERIOD TO FILE: The Cash Transaction 8300 form must be filed within 15 days. Failure to timely file the form results in an automatic fine of at least $25,000.00 and may result in a money laundering charge or an investigation for financial criminal activity.

STRUCTURING: 26 USC 6050I(f)
Subsection (f) of the statute makes structuring a crime. Structuring is any attempt to structure transactions in a manner designed to avoid the reporting requirement. For instance, attempts to avoid the cash transaction reporting requirement by cashing checks for eight or nine thousand dollars repeatedly is structuring financial transactions to avoid the reporting requirement. . These types of transactions may also be money laundering and constitute a financial crime.

NOTICE TO BE GIVEN: The person/business that files the cash transaction report must file to the person named in the report (the person who gave them the case) notice that they are named in a cash transaction report. The notice must include the amount of cash reported, and the name, address and phone number of the person who filed the cash transaction report.

FOREIGN CURRENCIES: Foreign currencies are covered by the statute and cash transactions over $10,000.00 in part or wholly in a foreign currency must be reported.

EXCEPTIONS: Transactions occurring completely outside the United States do not need to be reported.

You must keep a copy of the 8300 form filed for five years.

FREE CONSULTATION: If you have any questions about the Cash Transaction reporting requirements, I am happy to schedule a free consultation with you.