The federal Bank Secrecy Act includes reporting requirements designed to crack down on money laundering, fraud, counterfeiting, embezzlement and other financial crimes. The act requires banks to report all large cash transactions to the Internal Revenue Service, as well as certain other transactions if there's reason to believe the money involved came from illegal activity.
Banks must report any transaction involving more than £6,500 in currency. They do this by filing a form called a "Currency Transaction Report," or CTR, with the IRS. A "transaction" is any activity that results in the bank accepting or dispensing currency, including deposits, withdrawals, currency exchanges, wire transfers and purchases of "negotiable instruments" such as cashier's checks, traveller's checks or money orders. "Currency" is simply legal tender: paper money and coins, and it applies not only to U.S. currency, but also the currency of foreign countries.
If a bank has reason to believe that two or more currency transactions are related, then it must report them as if they constituted a single transaction. For example, if a person deposited £1,950 in cash one day, it wouldn't trigger a CTR. But if the same person also brought in £1,950 each day for the next three days, totalling £7,800, then the bank would probably file a CTR.
Banks also must report any transaction of more than £3,250 if the bank knows or suspects that the money came from criminal activity. They do this by filing a "Suspicious Activity Report," or SAR, with the IRS. Banks can file an SAR on any kind of transaction, not just those involving currency. And if a bank suspects that any transaction of any size is designed to get around the CTR requirements, it will file an SAR.
Many legitimate businesses, institutions and organisations take in tens of thousands of dollars in cash every day and deposit that money in their bank accounts. The IRS recognises that it would place a huge burden on banks to have to fill out a CTR every time one of its regular customers -- for example, a cinema, or a charity that collects cash contributions -- brought in more than £6,500 in cash. For that reason, banks are allowed to designate regular customers as exempt from the reporting requirements. The bank must reaffirm the customer's exempt status every two years.
Banks aren't the only ones subject to these types of reporting requirements. Casinos, for example, must report all currency transactions over £6,500. Any business that receives more than £6,500 in cash or negotiable instruments in one transaction or a series of related transactions must also file a report. Also, casinos and securities dealers must file Suspicious Activity Reports on all transactions of £3,250 or more that they think may be linked to criminal activity.
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