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Beware the money laundering laws

Beware getting snagged into a money laundering prosecution

Northern Virginia white collar/ blue collar criminal defense lawyer pursuing the best defense

Dec 14, 2016 Beware getting snagged into a money laundering prosecution

Money laundering is a federal felonySee 18 U.S.C. § 1956 and 26 U.S.C. § 6050I.

Part of the money laundering legal scheme is to assure that businesses — whether providing goods or services (including law firms) that receive a total of over $10,000 cash (defined as cash plus such instruments as cashier’s checks under $10,000) from one party at one time, or spread out over time for a transaction must file a report of that transaction with IRS form 8300. Doing otherwise can be at the business’s own peril carrying potential criminal and civil penalties.

The money laundering laws are geared to such crimes as illegal trade in drugs and other contraband, and efforts to evade paying taxes. Sadly, the $10,000 IRS Form 8300 reporting threshold has not increased in decades, to keep up with inflation.

When I was an internal financial auditor at Wall Street’s then-named Irving Trust Company during the year before law school, I always was required to look out for compliance with the federal money laundering laws whenever reviewing cash deposit activity, whether the cash was deposited in one lump sum exceeding $10,000 or was spread out in separate deposits at the same or separate bank branches totaling over $10,000.

Working as a financial auditor was the closest I ever came to a law enforcement role, on a limited basis with such items as checking on IRS Form 8300 filings, checking for forged signatures of corporate officials, counting the cash drawer of a teller who was absent without leave, and following up with my department and the teller’s cash drawer (and greeting the arriving FBI agents) over the robbery of a teller at a branch I was auditing when I was a safe distance away eating lunch outside.

Unfortunately, unsuccessful were lawyers’ valiant litigation efforts in the 1990’s to be exempted from such reporting pursuant to the Sixth Amendment’s right to counsel provision.

Consequently, all businesses need to be careful anytime that one customer’s cash transactions come close to exceeding $10,000. The business cannot lose track of those accumulated transactions. When in doubt, a qualified lawyer should be consulted.

Following are some Internal Revenue Service information websites on Form 8300 reporting: Form 8300 Reference Guide; FAQ’s for an automobile dealerships, that are also relevant to other businesses; IRS manual on investigating money laundering and other currency crimes;

I find it distasteful to file such a form. However, my only alternative is to ask my clients or their paying friends or family members to pay by such a format as credit card or debit card that will not require my filing the IRS form 8300. That simply means that another entity (for instance the bank or credit card processor) will be reporting the transaction to the government.

The money laundering laws alone are enough reason for every business to have first-rate accounting and bookkeeping services. Gone are the days when a small business proprietor should take that role on himself or herself without having employees or contractors doing the work.

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