AML / CFT: Cash transaction reporting under fire again
The USA's cash transaction reporting system is again coming under scrutiny after a business set about depositing its cash takings in a manner that the IRS says is structuring.
To be fair, it very much looks like it.
A family business that runs, wait for this, a maze in a cornfield, rakes in so much cash that it has been depositing almost USD20,000 per week. Tickets cost USD10 for adults and USD8 for children under 12. Payment is made by cash or VISA / MasterCard only. The farm also sells pumpkins and has a range of other simple country park-type activities charged at between USD1 and 5. But it is open for only six weeks per year, in 2010 from 18th September - 31st October.
Unfortunately, the owners of the business did not take the money to the bank daily, nor did they bank it all on one go.
Instead, they split it into deposits of round figures, often of USD9,500.
Now they are caught in in the provisions of the Bank Secrecy Act which makes it an offence to "structure" deposits, even of legally derived funds, in such a way as to seek to avoid the USA's cash reporting limit of USD10,000.
Crazed Corn Field Maze in Thornton, Colorado, is now subject to a federal investigation in which the Inland Revenue Service is trying to freeze up to USD130,000.
The IRS is seeking civil forfeiture of the money on the basis that as much as USD260,000 was deposited in round-figure deposits of USD9500, USD9000, USD8500.
However, so far the IRS has not alleged that the farm was acting to hide income or reduce its tax bill by any dubious means. The allegations relate solely to the depositing of moneys in a way designed to avoid CTRs being filed.
Some argue that the law is confusing to the layman and that because cash transaction reporting for sums exceeding USD10,000 is highly publicised - and frequently appears in TV drama - ordinary people think - mistakenly - that they will be in trouble if they bank more than USD10,000 in cash. That leads to them pay in beneath that figure, unknowing that to do so might itself be an offence.
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