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#1642794 - 12/23/11 03:16 PM Is a SAR required?
Anonymous
Unregistered

It's that time of the year again. As many of you have experienced in the past, some of our business customers are withdrawing cash from their accounts to pay their employees' bonuses. Is there anything wrong with paying employees in cash? So as long as they are not structuring, should I be raising my eyebrow to file a SAR? This seems to be one of the grey areas in making the determination to file a SAR. Any feedback would greatly be appreciated.

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#1642798 - 12/23/11 03:19 PM Re: Is a SAR required? Anonymous
Tater Offline
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Joined: Jan 2006
Posts: 617
Missouri
If it's normal and customary for your customer(s) to do this every year at this time for the bonuses, I wouldn't be led to file a SAR. I would document in my non-filed SARs that this is normal and customary so you can prove it to your examiners.

I suppose the only other thing might be if they are trying to evade paying payroll taxes for their employees by paying in cash?
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#1642803 - 12/23/11 03:28 PM Re: Is a SAR required? Tater
ACBbank Offline
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ACBbank
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New York City
Originally Posted By: Tater
I suppose the only other thing might be if they are trying to evade paying payroll taxes for their employees by paying in cash?


That's exactly it. After many arguements with the FDIC and OCC, plus multiple requests from IRS SA's, I have been filing SAR's on those who take out large sums of cash to pay out holiday bonuses. It's just not worth the fight with the regulators in my opinion.
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#1642839 - 12/23/11 04:09 PM Re: Is a SAR required? Anonymous
Anonymous
Unregistered

Why would you make such simple assumtion that cash payroll leads to tax evasion? What if it's just another way to bookkeeping? What if they are reporting everything correctly on their business tax returns? If the customer withdraws more than $10K in one session to pay their employees, why is that deemed suspicious? WHY CAN THEY NOT PAY THEIR EMPLOYEES IN CASH? There is no law prohibiting the employers to pay their employees in cash.

In a similar situation, if a business customer makes a large withdrawal to buy office supplies or to alleviate business expenditures, is that also considered tax evasion because it was done by CASH? Something to think about..

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#1642846 - 12/23/11 04:17 PM Re: Is a SAR required? Anonymous
ACBbank Offline
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ACBbank
Joined: Jul 2006
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New York City
I'm well aware that businesses can pay their employees with cash. I even know that the IRS states it on their website. That said, the regulators didn't care. They want an SAR filed. Period. There are many bankers who will tell you similar stories about various nonsense recommendations made by some regulator.

There are some things worth fighting with them over, this isn't one of them.
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#1642854 - 12/23/11 04:36 PM Re: Is a SAR required? Anonymous
Anonymous
Unregistered

My understanding was that regulators cannot require you to file a SAR. SARs are more discretionary than anything else. Obviously if there is insider abuse that is one thing, but just a cash withdrawal? That doesn't make any sense. I would ask the regulators to point out in BSA where it states you MUST file a SAR for activity such as this.

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#1642864 - 12/23/11 04:32 PM Re: Is a SAR required? Anonymous
ACBbank Offline
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ACBbank
Joined: Jul 2006
Posts: 3,959
New York City
Anon, you're right, SAR's are discretionary. The decision making process is always open for criticism. A cash withdrawal is not the potential underlining crime here, tax evasion is. SAR's are required for any potential crime. Is it a stretch to assume that someone paying bonus in cash is skipping their payroll tax? Maybe. Is it a fight I want to have? No, not really.

I pick and choose my battles and this isn't worth it in my opinion. I'd rather agree to file the SAR(s) and get a clean examination then risk a major problem over this issue.
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"100 victories in 100 battles isnt the most skillful. Subduing the other's military w/o battle is the most skillful." Sun-Tzu

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#1642868 - 12/23/11 04:34 PM Re: Is a SAR required? Anonymous
Tater Offline
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Joined: Jan 2006
Posts: 617
Missouri
If it were me, if the business did this each year at this time for the same reason and I had not filed on them in the past, I would not file now. If this is new and your gut tells you that they are trying to evade taxes, file.

I agree that you cannot be compelled but if this has come up, you'll have to able to document your decision against filing. My examiners wouldn't think twice about it unless they had other information to share about why we should...
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#1642934 - 12/23/11 05:48 PM Re: Is a SAR required? Anonymous
Neytiri Offline
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Neytiri
Joined: Jul 2002
Posts: 645
Pandora
We pay our bonuses in cash. And run them through payroll and all taxes are paid. Geez. A SAR for a normal transaction? I certainly would not file on a flimsy "maybe".

Smacks of defensive filing, which I thought we weren't supposed to do anymore. And didn't think examiners were supposed to make banks file SARs anymore either.

I certainly would have disagreed on this issue.

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#1642967 - 12/23/11 06:50 PM Re: Is a SAR required? Anonymous
Anonymous
Unregistered

It would be nice if examiners examined institutions based on the facts of the regulations, not their own opinions and interpretations. But there is only so much push back you can provide. Ultimately, if they think you are in the wrong (even when you can prove you are RIGHT), they will still have a finding on the issue...

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#1642986 - 12/23/11 06:59 PM Re: Is a SAR required? Anonymous
West Coast Comp Offline
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Lost in the rain.
I agree that just because they got cash isn't sufficient to file a SAR, but if your regulator is making an issue of it I would side with ACB that it's not an issue worth fighting over, there are bigger fish. Sometimes itís not worth being right.
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