What you need to know
- If you’re depositing over $10k physical cash all at once, it will trigger a Currency Transaction Report (CTR). On the other hand, checks/money orders/electronic transfers are not physical cash.
- If you try to evade the CTR by splitting up cash deposits, it might trigger a Suspicious Activity Report.
- U.S. law makes it illegal to change your money movements or deposits to avoid suspicion. Even if the money is legitimate, it is still a crime.
- For example, if you’re depositing 2 million dollars annually the IRS will investigate. If there’s nothing sketchy going on, let them investigate. They will ask about the source of the money and if you’re claiming that it’s a gift, they’ll want to know if taxes were paid on it (Source).
To prevent criminals from laundering money in U.S. banks, there are laws that cover how large cash transactions can be without raising suspicions.
According to the Bank Secrecy Act, financial institutions are required to report cash amounts larger than $10,000 dollars to the government.
4 things you need to know
Before you begin hauling your coin bags to CapitalOne, here are 4 things you need to know about how much cash you can deposit without raising suspicion.
1. Are Banks Required to Report Large Deposits?
Because the banks are required to report cash transactions of $10,000 or more, they have specific forms that they must fill out to report this information.
Therefore, if you deposit 2 $,5000 deposits on the exact same day, this information has to be reported by that financial institution to the government on this form.
Here are 2 examples of the type of rules and guidelines that you can expect to see.
- Deposits that have been made to the bank within a 24 hour period, 2 or more related payments must be reported
- Deposits that have been made to the bank with 12 months, 2 or more related payments must be reported
2. Business Owners Must also Comply with the Same Laws
If you are a small business owner, you will also need to pay close attention to the cash transactions that you receive from your clients and your consumers today.
As mentioned before in the earlier content in this article, you are also subject to the same guidelines, including filling out a form (8300).
The form that you fill out must be submitted to 2 separate agencies, the IRS and the FinCen (Financial Crimes Enforcement Network).
These are the governmental agencies that will be tracking and following up on these activities, particularly when they look like the transactions are related to money laundering.
3. Trades and Businesses
For those of you who are working in trades or businesses, the same guidelines apply for you that affect the banks. And, you should take great care in learning what you should do as well.
For instance, just like business owners are required to comply with the $10,000 rules, trades and businesses are also required to fill out these 8300 forms and then submit them to these same agencies.
Here is a list of the transactions that must be reported on the 8300 form.
- Custodial trust Contributions
- Escrow arrangement Contributions
- Pre-existing debt payments
- Negotiable Instrument purchases
- Exchange of cash for other cash
- Rental of real or personal property
- Reimbursement of Expenses
- Sale of intangible Property
- Making repaying a loan
- Sale of Goods and Services
The cash a business or company receives can also be received in many different forms. Therefore, it is important to note which ones that you will need to report.
Lump-Sum Installment Payments
The amounts reported apply to the timeframe of 12 months. Therefore, if you receive 2 installment payments of $10,000 within a 12-month timeframe, these amounts must be reported on the 8030 form and submitted to the IRS and the FinCen.
Also, if these amounts were sent to a joint account, each depositor must be identified on the forms that you complete. These same rules apply to both the cash in American currency and foreign currency.
4. What forms of tender does this $10,000 guideline apply to?
These laws, guidelines, and rules apply to the following tender.
- Money orders
- Bank draft
- Cashiers Checks
- Traveler’s Checks
Simply put, if an individual or business pays for anything with money or a bank draft that is $10,000 and over, these amounts will need to be reported to the appropriate agencies on form 8300.
The financial institution, business, and trades are required to report these amounts within 15 days of that transaction’s receipt. These documents can be submitted by mail or electronically to the IRS and the FinCEN.
Failure to comply can result in severe penalties.