John Doe owns a few fast food rest. franchises that are usually associated with cash. Cust. for a few years. Doe routinely deposits lots of cash into his personal account then writes checks from it, does inter-company transfers, etc. Typically he will deposit money each day with more than $10,000. in one week. No dollar amount pattern. Lots of overdrafts. maybe rests. not doing so well. I know franchises eat up a lot of the owners' money with fees...However, I am wondering if you would file a SAR due to the thousands going into his account...maybe say not explainable...or just wait, or what...noticed some larger amounts associated with gambling in local gambling pit...maybe he has that sort of problem...

We have filed on this situation but it usually involves structuring of cash transactions into the personal account. However, if they are transacting business activity from the personal account and depositing cash we would probably file for using a personal account for business purposes.

If this guy is a sole proprietor, there's nothing in the law that says he has to have a business account labeled as such. But if you have a policy that requires SPs to have a business account (a good policy, IMO), you can enforce it.

Running cash into his personal account when he has business accounts isn't activity with a reasonable business explanation. Unless he can justify what he's doing (legitimately), I think you have a SAR candidate.

I've submitted SARs before on sole-props who liked to pay themselves in cash. While this, in and of itself, is not illegal, not paying taxes is. If they are in a mostly cash business and paying themselves in cash, I would look for checks made tayable to taxing authorities. Absent any such evidence, you may have a case of tax evasion.

Tax evasion is not a SAR'able offense.

I am going to have agree with John again. We have a similar situation at my FI and I have been filing on the customer quarterly for over 2 years. The Feds and the State seem to think we are making the right decision.

Devsfan -- why do you think tax evasion is not a SARable event? Tax evasion is illegal and if the customer is conducting transctions at your bank it is reportable.

There are many many posts on BOL regarding the "Tax Evasion" discussion.

I think we all will have to agree to disagree until FinCEN comes out with specific guidance ...

IMHO :o)

The SAR Activity Trends Tips & Issues report dated May 2008 makes references to SARs filed for tax evasion. I quote, " Specifically, illicit activity related to tax evasion included:

*cashing check payable to businesses and the diversion of cash business receipts in a manner possible designed to evade tases; and
*misusing the tax exempt status of organizations to conduct real estate-related businesses and disquise the profits as contributions.

oh I agree with you Dolly ... :o)


I think some people have a hard time jumping to the conclusion that someone isn't paying taxes. How do you really know?

While I agree that sometimes it is a "no brainer" - sometimes the decision needs a little more thought and research.

Don't forget that if an individual uses "electronic means" to move funds/hide funds (possibly for tax evasion purposes) it can trigger money laundering statutes. That was why money laundering was mentioned as a possible charge against Elliot Spitzer...he had wired funds to other accounts to disguise them.

It is a murky world in finance and money laundering can rear its ugly head in unexpected places.

Wow, lots of good points here. Thanks...now, for your info, my custs' businesses are LLCs. The cash goes into his personal account and then he transfers from that account to the operating accounts to cover costs. I know the law of the land is pretty clear about customers taking business checks payable to their business and then depositing them into their personal account....I find it harder to "prove" that the cash going into his account comes from his business...now i can use the argument that it doesn't make sense, not typical, etc. and use that as the base for my SAR but....just how do you word the narrative for such an example....

I love to end my SARs with:


"the activity is not the sort in which the particular customer would normally be expected to engage"