Banks are required by federal law to report any currency transaction in a customer’s bank account that exceeds $10,000. The reports that the bank must file with the federal government are called Currency Transaction Reports (CTR). These reports cover not just cash transactions, but any currency transaction involving U.S. or foreign currency, U.S. certificates or notes or foreign bank notes. These reporting requirements were passed to protect banks and the financial industry from money laundering and other financial crimes. These reports are required regardless of whether the underlying transaction was legal or not.
Someone engaged in lawful activity is unlikely to be concerned about the filing of one of these reports. However, someone who is attempting to conceal illegal activity or illegal financial gain may attempt to avoid having one of these reports filed in order to avoid alerting authorities to their income. An obvious method is dividing larger transactions into smaller transactions, sometimes at multiple financial institutions. While the CTR reporting procedures have been updated to detect this kind of behavior, it may still leave the individual vulnerable to federal prosecution for structuring, meaning that the individual has not only risked federal prosecution but also failed to avoid detection.
Because attempting to evade the filing of CTRs is a crime in itself. Federal law prohibits structuring financial transactions in a method designed to evade reporting requirements. Individuals who conduct multiple smaller transactions for the purpose of preventing a financial institution from submitting a CTR may be criminally liable for their conduct. Any individual who engages in this conduct for the purpose of evading CTR reporting requirements is vulnerable to charges for structuring.
This can happen regardless of the underlying legality of the transaction. Even if the government cannot prove that the funds were obtained illegally or concealed for tax evasion purposes, a conviction for structuring is enough to carry serious criminal and civil penalties. This law provides the government with a powerful prosecutorial tool when it cannot prove the underlying crime that is being investigated.
One key element to the crime is that the defendant structures his transactions with the culpable mental state. Merely engaging in multiple currency transactions under $10,000 that later total $10,000 is not a crime. To be guilty, the defendant must have structured the financial transactions with the specific purpose of avoiding the filing of CTRs. A defendant who is totally ignorant of the financial reporting requirements of banks cannot be held criminally liable merely for the way he conducts his finances. A conviction cannot be obtained without some proof that the individual deliberately attempted to evade detection.