Imagine if you went to the bank a few times over the course of a few days or weeks and you made a few deposits — and then found out you were under federal investigation because of it.
This scenario seems like something out of a bad movie. It could happen, though — and it’s all because of a law called the Banking Secrecy Act.
Here’s how it works, and why it could potentially lead to trouble if you deposit too much money in separate transactions over a short time period.
The Banking Secrecy Act aims to fight money-laundering by requiring reporting
The Banking Secrecy Act is a federal law aimed at fighting money laundering. Basically, it requires banks to file a report if you deposit or withdraw $10,000 or more in cash into your bank account. Banks complete the report when you make a large deposit and file it with the Financial Crimes Enforcement Network (FinCEN).
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Many people are aware of these rules — especially those who might not want the federal government getting details about their financial dealings. Since the government knows that the very people they’re trying to catch are aware of the reporting requirement, the law also prohibits you from just breaking up your deposits into smaller transactions. This is called an anti-structuring provision.
Under the anti-structuring provision, if you were to make a bunch of smaller deposits into your checking account that add up to more than $10,000 over a short period of time (typically a few days or even a few weeks), the bank must report this, as well. In this situation, if the bank has reason to believe you’re breaking up a big deposit to avoid reporting rules, then the bank must file a Suspicious Activity Report.
The bank won’t tell you it’s doing this. But FinCEN may refer the report to a law enforcement agency (such as the FBI) to conduct an investigation if they suspect wrongdoing.
Now, this doesn’t happen every time, but if a full-scale investigation is launched, this could have far-reaching consequences. These could include having your assets frozen during the investigation and potential criminal charges if you’re found to have violated the law.
How worried should you be about depositing money?
For many people, this is a non-issue. If you don’t deposit $10,000 into your account either all at once or over a short period, then you aren’t going to trigger reporting requirements or risk a Suspicious Activity Report.
If you do happen to have deposits of $10,000 or more and you break them down into multiple separate deposits, though, then you could run into problems. Structuring can be considered a crime even if you legally obtained the money you’re depositing — if the government can prove you acted on purpose to evade reporting requirements.
You don’t want to find yourself potentially facing federal charges, so just be careful about making separate deposits that cross the $10,000 threshold. You’re better off depositing all the money at once so the bank can simply make its report and you can all move on.
Since $10,000 is a large amount of money, you’ll also want to make sure you’re putting the funds in the best bank account possible. Check out some great free savings accounts to see how to grow your money with interest. Just remember to not run afoul of the anti-structuring rules, to save yourself a lot of hassle.
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