Consistently making cash deposits just under $10,000 could lead to money laundering charges for small-business.
Randy and Karen Sowers are living every small-business owner’s worst nightmare. The couple owns the successful South Mountain Creamery which produces and delivers farm fresh, all natural and sustainable dairy products in rural Maryland. The Sowers do significant sales at farmers’ markets, where customers usually pay in cash. In 2011 and 2012, they earned around $300,000 in sales from these markets and deposited the cash into their bank account as the money would come in. Little did they know that they would soon be accused of violating the Bank Secrecy Act and would ultimately be forced to forfeit nearly $30,000 as part of a settlement agreement with the U.S. Attorney for their district.
The deposits the Sowers made from the farmers markets were all under but close to $10,000. Federal Law requires that all cash transactions over $10,000 be reported on a Currency Transaction Report (CTR) to the Financial Crimes Enforcement Network (FinCEN). This is done as a measure to identify criminals who engage in illegal activities like money laundering, human trafficking, drug smuggling and tax evasion. To avoid triggering a CTR, many criminals break up the large amounts of cash they generate into bundles just under $10,000. This process of making deposits in smaller amounts to avoid a CTR is known as “structuring” and it is illegal, leading to criminal charges and confiscation of the money involved. But what happens if you run a small business that just happens to generate slightly less than $10,000 in cash sales on a consistent basis? You can run afoul of this law.
