31 U.S. Code § 5324 | Evade Reporting Requirement

31 U.S. Code § 5324 - Evade Reporting Requirement

Let's review the federal statute of Title 31 U.S. Code 5324 structuring transactions to evade reporting requirements. In context, “structuring” means breaking up large financial transactions into smaller ones to avoid triggering reporting requirements. For instance, banks must report any cash transaction over $10,000 to the government.

Suppose you want to avoid this reporting requirement. In that case, you might decide to make multiple smaller cash deposits under $10k, which would be illegal structuring.

It's a federal offense to deliberately structure transactions to evade reporting requirements.

One of the primary goals of 31 U.S.C. 5324 is to prevent money laundering, drug trafficking, tax evasion, and other financial crimes. This reporting requirement can help federal law enforcement agencies detect suspicious activity.

Structuring is an effort to keep transactions from being noticed. Thus, this federal law makes it a crime to intentionally evade reporting, even when the money comes from valid legal sources.

31 U.S.C. 5324 says, “Domestic Coin and Currency Transactions Involving Financial Institutions. No person shall, for the purpose of evading the reporting requirements of section 5313(a) or 5325 or any regulation prescribed under any such section, the reporting or recordkeeping requirements or any regulation prescribed under section 21 of the Federal Deposit Insurance Act or section 123 of Public Law 91–508…”

(1) cause or attempt to cause a domestic financial institution to fail to file a report required or any regulation prescribed under any such section…”

(2) cause or attempt to cause a domestic financial institution to file a report required that contains a material omission or misstatement of fact…”

(3) structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more domestic financial institutions…”

What Is Structuring?

Under federal law, banks must file a Currency Transaction Report (CTR) for all cash deposits of $10,000 or larger. Likewise, non-financial businesses that receive a cash payment of $10,000 or more must report the transaction to the Internal Revenue Service (IRS) by filing Form 8300.

Thus, as noted, illegally structuring a transaction occurs when you deliberately set up a significant cash transaction so it does not trigger the reporting requirements.

A standard method to avoid reporting transactions is “smurfing,” which means breaking up a large cash deposit into a series of smaller deposits to avoid detection by the bank.

Evading Reporting – Quick Facts

There are some essential facts you should know about Title 31 U.S.C. 5324 structuring transactions to evade reporting requirement prohibited law, such as the following:

This federal statute makes it a federal crime for any person or entity to knowingly structure or attempt to structure any transaction with the intent to evade reporting requirements.
You violate this law if you structure a transaction with a financial institution so a required report is not filed or file a report that contains an omission or misstatement of fact.
It's also unlawful to structure or assist a transaction between multiple financial institutions so that neither report it.
This law also applies to non-financial trade or business by making multiple small transactions that cause an erroneous report or spreading transactions between companies to evade reporting.
The law covers transactions involving banks, credit unions, money services businesses, and other financial institutions.
To be found guilty, the government must prove a deliberate intent to structure transactions.

What Are the Related Federal Laws?

31 U.S. Code Chapter 53, Subchapter II, records and reports on monetary instrument transactions, has several federal laws related to 31 U.S.C. 5324, structuring transactions to evade reporting requirements prohibited, such as the following:

31 U.S.C. 5311 – Declaration of purpose,
31 U.S.C. 5312 - Definitions and application,
31 U.S.C. 5313 - Reports on domestic coins and currency transactions,
31 U.S.C. 5314 - Records and reports on foreign financial agency transactions,
31 U.S.C. 5315 - Reports on foreign currency transactions,
31 U.S.C. 5316 - Reports on exporting and importing monetary instruments,
31 U.S.C. 5317 - Search and forfeiture of monetary instruments,
31 U.S.C. 5318 - Compliance, exemptions, and summons authority,
31 U.S.C. 5318A - Special measures for jurisdictions, financial institutions, international transactions, or types of accounts of primary money laundering concern,
31 U.S.C. 5319 - Availability of reports,
31 U.S.C. 5320 - Injunctions,
31 U.S.C. 5321 - Civil penalties,
31 U.S.C. 5322 - Criminal penalties,
31 U.S.C. 5323 - Whistleblower incentives and protections,
31 U.S.C. 5325 - Identification required to purchase specific monetary instruments,
31 U.S.C. 5326 - Records of certain domestic transactions,
31 U.S.C. 5329 - Staff commentaries,
31 U.S.C. 5330 - Registration of money-transmitting businesses,
31 U.S.C. 5331 - Reports relating to coins and currency received in nonfinancial trade or business,
31 U.S.C. 5332 - Bulk cash smuggling into or out of the United States,
31 U.S.C. 5333 - Safe harbor concerning keeping open directives,
31 U.S.C. 5334 - Training regarding anti-money laundering and countering the financing of terrorism,
31 U.S.C. 5335 - Prohibition on concealment of the source of assets in monetary transactions,
31 U.S.C. 5336 - Beneficial ownership information reporting requirements.

What Are the Penalties and Defenses?

Suppose you are convicted of violating 31 U.S.C. 5324 by structuring a transaction to evade reporting requirements. In that case, you face the following penalties:

A fine of up to $250,000 for an individual, or
A fine of up to $500,000 for an organization,
Forfeiture of the structured funds,
Up to five years in federal prison.

Notably, suppose the conviction is part of an ongoing pattern of illegal activity of over $100k in 12 months. In that case, you face an enhanced penalty of double the fine and federal prison time. A federal prosecutor must prove that you intended to evade the reporting requirements, which can be challenging.

Perhaps we can argue that conduct does not establish that you had a specific intent to evade reporting requirements. Maybe we can show you had a legitimate reason to break up the transactions.

Maybe we can say that you paid in installments and deposited the money as it was received. Perhaps we can argue that you made separate smaller cash deposits in consecutive days because of fear of robbery and did not want to take the chance of carrying large cash amounts.

If guilt is not in doubt, maybe we can negotiate with the prosecutor for a favorable plea agreement. Contact our law office for a free case consultation. The Hedding Law Firm has offices in Los Angeles, CA.

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