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 In reality, though, this tactic often backfires. It can expose them
to closer scrutiny from both the banks and federal law enforcers
than they may otherwise have attracted, said current and former law
enforcement officials.
In unrelated cases, former Speaker of the House Dennis Hastert and
Daryan and Daryll Warner, sons of former FIFA vice-president Jack
Warner, learned the lesson the hard way. Last week it emerged that
they had all been accused of the federal crime known as
"structuring."
Hastert, who left Congress in 2007, was charged with structuring the
withdrawal of more than $950,000 in cash to evade a requirement that
banks report cash transactions above $10,000, and lying to the
Federal Bureau of Investigation about his withdrawals, prosecutors
said. Hastert, scheduled for arraignment on Thursday, has made no
public statement since the federal charges were filed last week.
The Warner brothers and their associates deposited more than
$600,000 in cash at bank branches in New York, Miami and Las Vegas
in 2011, breaking the money up into smaller amounts to make sure
transactions did not exceed the $10,000 threshold, according to a
2012 U.S. complaint that was unsealed last week. Both have pleaded
guilty and are cooperating with prosecutors probing corruption at
FIFA, while their father, who denies wrongdoing, stands accused of
soliciting payments worth $10 million from the South African
government.
It is not known whether the banks reported structuring by Hastert or
the Warners to the Treasury Department, possibly sparking criminal
investigations. It is illegal for banks to discuss whether they have
filed such reports.
The reason drug traffickers and others keep deposits and withdrawals
under $10,000 is that the primary U.S. anti-money laundering law,
the Bank Secrecy Act (BSA), requires banks to file with the Treasury
Department so-called Currency Transaction Reports, or CTRs, on
transactions involving more than $10,000 in cash.
What many don't necessarily realize, however, is that a CTR is not
likely to be noticed by authorities unless the party involved was
already under investigation, said a former federal agent who was
responsible for reviewing such documents. What does catch the
attention of law enforcers, instead, is when someone tries to
prevent a bank from filing a CTR by breaking up a cash transaction,
said the source.
The source, who declined to be named due to the sensitive nature of
his private sector work, said: "The avoidance of a CTR gets more
attention than the filing of one."
Banks file so-called Suspicious Activity Reports, or SARs, when they
suspect a customer has done something shady, like breaking up cash
deposits to evade CTRs.
Congress made CTR evasion, or structuring, a crime under the Bank
Secrecy Act in the 1980s because drug traffickers in Miami were
using small armies of so-called "smurfs" to travel between banks and
branches to make small deposits. It is punishable by up to five
years in prison and forfeiture of the money involved.
Between 2009 and 2014, the Justice Department prosecuted 787
structuring cases involving 1,126 defendants, according to
statistics provided by a department spokesman.
Law enforcement agencies rely heavily on bank reports on structuring
in order to build cases against financial criminals, said Richard
Weber, chief of Internal Revenue Service – Criminal Investigation.
"Bank Secrecy Act data and evidence of structuring have long been
valuable tools for law enforcement to use as initial indications of
financial and other crimes. In some cases, structuring may be the
only indication that additional crimes are being committed," Weber
told Reuters.
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Between March 2012 and March 2015, banks filed more than 500,000
reports warning authorities of structuring activity, according to
data released by Treasury's Financial Crimes Enforcement Network
(FinCEN). Structuring is the suspicious activity that banks most
often report to authorities. Although FinCEN does not publish
statistics on CTR filings, between 40 million and 45 million were
filed during the same time period, FinCEN spokesman Steve Hudak
said.
AUTOMATED SOFTWARE
Banks rely both on tellers and automated systems adept at detecting
structured transactions, scanning activity across branches on
different days, including those completed at ATMs. Some systems can
even spot such activity in related accounts belonging to, for
instance, members of the same family.
These software solutions are offered by a number of companies,
including Oracle Corp, Nice Systems, and SAS.
None of the software companies and IT specialists contacted by
Reuters responded to requests for comment on the specific detection
settings of their systems. Such details are often closely guarded to
prevent tipping-off criminals.
"They're generally going to look for repeat transactions that are in
the $9,000 to $10,000 range," said Rob Rowe, a former bank
compliance officer and now a lawyer with the American Bankers
Association, an industry trade group.
But banks may watch anything between $5,000 and $10,000 when dealing
with customers deemed high-risk, he added.
When a teller spots potential structuring activity, or when
automated systems detect it, the customer's account is flagged and
an investigation begins. During that probe, the bank will contact
the customer and ask for an explanation of the transactions, but if
the bank is not satisfied with the customer's response, a SAR is
then filed to warn authorities.
Automated systems have become sophisticated and can even help a bank
determine the legitimacy of a customer's explanation, said Michael
Zeldin, a former Justice Department official.
He said the owner of a flower shop may claim he made regular $9,000
deposits because that is the amount of cash his business generated
on a daily or weekly basis, but the best automated systems can pull
up deposits made by similar flower shops to see if the customer's
claim bears out.
(Reporting by Brett Wolf; Editing by Soyoung Kim and Martin Howell)
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