Defending Clients Accused of Evading Currency Reporting Requirements

At David B. Smith, PLLC, our lawyers have the experience and insight to effectively defend clients who have been accused of breaking up currency transactions to evade reporting requirements. Based in Alexandria, Virginia, and New York City, we defend clients against structuring charges nationwide.

Avoiding or Reducing the Serious Consequences of Structuring Charges

Structuring (once known on the street as “smurfing”) involves conducting a series of small financial transactions in place of a single transaction of over $10,000 in currency with the intention of avoiding the filing of either a Currency Transaction Report under the Bank Secrecy Act or IRS Form 8300 (required to be filed by a nonfinancial trade or business under 31 U.S.C. § 5333).

The structuring statute, 31 U.S.C. § 5324, also applies to persons who, for the purpose of evading the reporting requirements of 31 U.S.C. § 5316 (requiring travelers transporting over $10,000 in cash or monetary instruments to file a report with Customs), “structure, or attempt to structure, any importation or exportation of monetary instruments” (31 U.S.C. § 5324(c)(3)).*

Structuring charges are often brought when the government cannot prove more serious money laundering charges, and in both cases, defendants may be subject to draconian civil and criminal asset forfeiture.

In recent years, the Department of Justice set up federal-state-local task forces to investigate and prosecute nothing but structuring cases. This ill-considered policy led to a sharp rise in the number of prosecutions and forfeiture cases based on structuring. The local police and sheriff’s departments that participate in these task forces are motivated to do so by the prospect of receiving 80 percent of the money they seize for forfeiture, which can be used to pay for cruisers, equipment, salaries and other law enforcement related expenses. In other words, these task forces are primarily motivated by the search for off-budget revenue sources — not legitimate law enforcement goals. They are victimizing hundreds of upstanding citizens with unblemished records.

David Smith was featured as forfeiture expert in New York Times article on I.R.S. abuse of structuring and civil forfeiture. This article led Congress to demand reforms from the IRS and DOJ, which greatly reduced the abuse of the structuring law. Read the full article as a pdf here.

In May 2016, the House Committee on Ways and Means issued a bipartisan report urging the IRS and the DoJ to review their structuring policies and cases, and return wrongfully seized assets to victims of the IRS’ abuse of power. Read the Committee’s eye-opening report as a pdf here.

Attorney David B. Smith — a nationally recognized authority on money laundering, structuring and asset forfeiture — is well prepared to protect the interests of clients facing structuring charges. He has handled more than 50 structuring cases in the past five years. To schedule a consultation, call us today.

* Three different federal statutes require (1) financial institutions and (2) persons engaged in nonfinancial trades and businesses to file reports with the Internal Revenue Service when a customer or client engages in a currency transaction in excess of $10,000 and require (3) travelers entering or leaving the United States while transporting more than $10,000 in currency or other defined “monetary instruments” to file a report with Customs. For many different reasons, often entirely innocent, people break up currency transactions below the $10,000 reporting threshold in order to avoid having a bank, a trade or business file the required report with the Internal Revenue Service or to avoid having to report their transportation of a large sum of currency to Customs. In an effort to stop persons from avoiding the reporting requirements, Congress has made it illegal to “structure” or break down such transactions to evade these statutory reporting requirements. Unfortunately, few people realize that structuring is a felony and also carries harsh forfeiture penalties (all the money structured). The vast majority of people who violate this law don’t know they are doing something illegal.

The complicated anti-structuring statute is codified at 31 U.S.C. § 5324. The term “structuring” is not defined in the statute. However, it is defined in a regulation found at 31 C.F.R. § 103.11(gg).

In order to show that a person is guilty of structuring to avoid having a bank file a Currency Transaction Report (CTR) with the IRS, the government must prove three elements: (1) the defendant (or a claimant in a civil forfeiture case) must have engaged in acts of structuring cash desposits or withdrawals at a financial institution; (2) he must have done so with knowledge that the financial institution involved was legally obligated to report currency transactions — deposits or withdrawals — in excess of $10,000 to the government; and (3) he must have acted with the intent to evade this reporting requirement (U.S. v. MacPherson, 424 F.3d 183, 189 (2d Cir. 2005)).