Just curious - does anyone file a SAR for suspected tax evasion. It is such a huge allegation - I am not sure I would feel comfortable completing a SAR if I didn't have hard proof.

It's a SUSPICIOUS activity report. If you customer is doing something that makes you think they're evading the tax man and it meets the $$ thresholds, I don't see how you can not file.

Remember, tax evasion is one of the central elements in money laundering. That's how they got Al Capone!

Prior thread.

Greg is dead on... you bet you can file for tax evasion and should if you believe it’s going on! If the activity is suspicious then you need to report it… What you may think is a simple tax evasion may prove to be part of a sophisticated money laundering scheme being perpetrated by a large narcotics trafficking organization or a violent street gang. Don’t get into the mode of thought that tax evasion is somehow inferior to “drugs” or “terrorism”. The fact is, many violent groups (drug dealers, terrorists etc) launder money and evade taxes which can ultimately lead to their undoing- especially if an alert banker files a SAR. That said, many people evade taxes on legal income… which is also a serious issue and deserves to be reported. Remember, you’re not expected to have hard proof… just reasonable suspicion.

If you notice, there isn’t a specific box for tax evasion on the SAR so you’ll either have to write it in or check the “money laundering/ structuring/ bsa” box… money laundering is pretty much just tax evasion in progress so that should cover you. Also, SAR information is not disclosed to the subject is not going to know whether your allegations are accurate or not. Good question, hope this helps!

Anon - you have provided no regulatory guidance to support your statements.

If this is your personal opinion - then so be it - but we usually try to stick to the facts in this forum and when we don't, we usually try and preface it that it is an opinion statement.

Thank you everyone for your opinions. We have decided to not report it.

RLCleary: we will let everyone decide on their own whether or not my post has value or not. I feel certain most people will read what I write as it is intended- for specific legal guidance consult an attorney… this is an open forum… expect some opinion.

However, I will be happy to break this down complete with legal cites:

1) 26 USC 7201 makes it a felony to attempt to evade or defeat any federal tax.
2) 31 USC 103.18(a)(1) states in relevant part that: A bank may also file with the Treasury Department by using the Suspicious Activity Report specified in paragraph (b)(1) of this section or otherwise, a report of any suspicious transaction that it believes is relevant to the possible violation of any law or regulation but whose reporting is not required by this section.
3) 31 USC 103.18(2)(i)-(iii) discloses under which circumstances a financial institution is REQUIRED to file a SAR.

I think these three bullet points about sum it up. 1), we have established that tax evasion is a crime and according to bullet 2) it can be reported voluntarily on the SAR. If the activity meets the guidelines established by the law noted under bullet 3) it must be reported. This should be pretty clear but I’m sure those that want to pick it apart will.

The main thing here is this… it doesn’t really matter what you *THINK* the underlying criminal activity is- you are to report the suspicious activity. The reason we don’t see things like tax evasion, narcotics trafficking, extortion, public corruption etc as options under Part III section 35 is because you (as a banker) are not in a good position to really know what the underlying criminal activity is, you are just an unwilling participant so to speak. The reason we do see things like check kiting, loan fraud, embezzlement etc is because you (as bankers) are in a much better position to know specifics- after all, in most of those instances you are the victim.

Like I said in my first post, what you may think is tax evasion is really drug money laundering or vice versa. So why don’t we do this… you guys use the SARs to report suspicious transactions and leave it up to the 5-0s to determine the underlying crime.

RL, should you have further qualms with my post, please provide specific legal references as to why I am wrong. Thanks

I don't believe rlcarey suggested you were wrong, only that it might be helpful to other readers if you added the legal rationale for your conclusion. You have since indicated that income tax evasion is a federal crime, that the activity might be indicative of other criminal acts and that the filing would be voluntary. Obviously, that's a reasonable opinion to hold. It's now clear to everyone that you would file if it was your decision, not that you believe SkiDoo is required to file.

What we do is the following, in general:

If we "think" the customer is hiding income we report it if the customer is structuring deposits as part of the suspected evasion;

If the customer specifically tells us they are hiding income we report so that we can't be found to be complicit.

If there is no structuring and just a "guess" they might be hiding income we would not report absent any other information.

I would like to throw out a question and get as much feedback as possible.
As it relates to activity with MSB deposits... at what point would you/could you assume that tax evasion is going on?
Would it be large dollar items (no reason for such large items to go through an MSB)...
Would it be repeated use by one corporation of an MSB.. i.e. not necessarily large checks but more than could be used to pay day workers (the usual reason that corporations say they use MSBs)..
And would you file a SAR for suspected tax evasion?
Your comments and thoughts would be appreciated.

Ken, thanks for clearing that up. Guess I could have been a little more specific in my post. I'll certainly work on it in the future.

BTW: I went ahead registered... hope to participate a little more than I have in the past.