I have a customer who has a small side business. This customer purchases a money order with over $5,000.00 of cash. This customer does not normally deposit this amount of cash. It raises a tax evasion question for me, but are we responsible for reporting this as suspicious activity?

Post deleted by WildTurkey

I wouldn't say it automatically qualifies as suspicious activity, but because this is not a typical transaction for this customer, I do think it qualifies for further review. Who was the money order payable to, and how was it used? Also, if you 314(b) (yes, "314(b)" is now a verb), I suggest contacting the institution that took the MO for deposit to see if there is any unusual activity on the other end.

If, after reviewing all of the facts, the transaction still appears to be suspicious, then file.

I recently had the same situation - a similar amount of money and a cashiers check - and did file. I did not 314(b) as my thought process was the same as yours, i.e. they do not deposit that amount of cash in the normal course of business.

Once is a charm, twice is a pattern, and three times is an SAR. I wouldn't file on a case like that if the customer did it for the first time and it's only $5,000 - he may be paying a bail or buying a car from a private party.

The SAR has been revised twice since its initial publication. Although other federal crimes have been added to box 35, “Income tax evasion” has not. Showing deference to those who designed the form, I would consider any related filing to be "voluntary."

I have no doubt that the possibility of adding it to the form has been discussed. It’s possible that the draftsmen decided against it because: 1) not all income tax avoidance is criminal in nature, 2) taxes are not actually “evaded” until the return is filed or 3) tax fraud can be reported directly to the IRS – there is no reason to use a SAR.