Currency Transaction Report: Rules

Instructor: Ian Lord

Ian is a real estate investor, MBA, former health professions educator, and Air Force veteran.

In this lesson we will review the requirements surrounding Currency Transaction Reports. We will also examine the exceptions to the rule and show how to avoid accidentally committing a crime involving these reports.

Currency Transaction Report

Tom recently sold his car for $11,000 and was amazed that the buyer insisted on paying in cash. After signing over the title, Tom immediately took the money to his local bank branch to deposit it into his bank account. The bank teller congratulated him on his sale but joked that it was bad for her since she had to do more paperwork. What is she talking about? In this case, Tom's transaction requires the bank to complete a Currency Transaction Report. Let's take a look at what this is and the rules surrounding it, as well as the danger in intentionally avoiding this reporting requirement.

Rules

A currency transaction report is a form that US banks use to report financial transactions which exceed $10,000. The report is a form completed by the bank and submitted to the Department of the Treasury's Financial Crimes Enforcement Network. These forms are used to prevent money laundering by tracking large transactions. Money laundering is used by criminals to make illicitly gained money appear that it was obtained legally.

Three exceptions exist for generating a currency transaction report. Banks are not required to report their own transactions. Federal, state, and local government agencies are also exempt from currency transaction reports. Finally, publicly traded corporations which are listed on the New York Stock Exchange, NASDAQ, or American Stock Exchange are exempt from the reporting requirement.

Structuring

After hearing about these rules and paperwork, Tom thought maybe he could just avoid it by making one deposit of $9,000 and a separate deposit of $2,000. The teller informed him that would be a bad idea since it is actually a crime. What crime is that? Purposely attempting to do multiple smaller transactions to avoid triggering a Currency Transaction Report is known as structuring. Structuring can result in a felony conviction, possible jail time, and even seizure of the money by the government.

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