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#2067353 - 03/03/16 05:53 PM Business cash deposited to personal account
jfml14 Offline
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Joined: Mar 2016
Posts: 7
We have a customer who has a personal account and several business accounts. The business is used auto sales.
The customer has been depositing cash to his personal account, but he is not structuring. He has been asked the source of funds and says he has cash saved. A manager wants to file a SAR, citing business proceeds through his personal account. I go back and forth on this...if he is taking his "pay" in cash and depositing it to his personal account, how do I know if he is claiming that as income or not? Do I file a SAR on that? Possible tax evasion? The amount over a three month time period was approximately $11,000 cash. It could be saved cash like he says, it could be cash from his business. I'm leaning towards No SAR.
I'm looking for other opinions/what would you do?


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#2067367 - 03/03/16 06:17 PM Re: Business cash deposited to personal account jfml14
Elwood P. Dowd Offline
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The "business," corporation, partnership, sole proprietorship, what? If it's the latter, there is only one taxpayer and putting it in one account vs. another suggests very little. If the business is an entity then it's more likely that the individual thinks he is outsmarting the IRS by putting the cash into his personal account. Actually, it's really obvious to them that almost any business should have some cash receipts and its a red flag when they don't.

The question is whether you suspect the customer of income tax evasion. The fact that you can establish an alternate theory for his activity does not mean you don't have suspicions. By the way, your alternate theory would have required you to see if he was actually writing checks payable to himself from the business that appeared to be salary or draws. If so, your alternate theory is weakened. If not, it's strengthened.

Dig a little deeper.
In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.

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#2067380 - 03/03/16 06:53 PM Re: Business cash deposited to personal account jfml14
jfml14 Offline
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Joined: Mar 2016
Posts: 7
It is a corporation and he is the only signer. He does not appear to write any checks from the business to himself. He has transferred funds on occasion from his business to personal, but not a significant amount.

Thanks for the reply, Ken. I appreciate it.

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#2068123 - 03/08/16 09:19 PM Re: Business cash deposited to personal account Elwood P. Dowd
2old2new Offline
Joined: Jun 2009
Posts: 65
We have a personal account for a sole proprietorship used car dealer. Another local bank has the business account. Only cash is deposited to the personal account, about $55,000 last year. I would interested in others opinion of suspicious activity. Thank you.

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#2068129 - 03/08/16 09:37 PM Re: Business cash deposited to personal account jfml14
Daisy Doodle Offline
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Joined: Feb 2014
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Southern U.S.
I would have the branch inquire of him the source of his deposits. If he can't give you a credible explanation, I would probably file. If he tells you the cash is from the dealership, tell him he will either need to open an account for the business with you, or deposit the cash to the business account elsewhere.

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#2068139 - 03/08/16 10:12 PM Re: Business cash deposited to personal account jfml14
edAudit Online
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You are here
It is a sole proprietorship as such the account at the other bank is an individual account as well.
Opinions can be considered as coming from anywhere but my employer.


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#2068289 - 03/09/16 08:43 PM Re: Business cash deposited to personal account jfml14
AgentSmith Offline
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Joined: Dec 2015
Posts: 38
I chase these types of customers down often. Sometimes its to avoid analysis fees, sometimes they pay themselves in cash, and I'm sure sometimes the proceeds are illegal. He has given you a vague answer to the source so I would take that at face value. Then where do the funds leave to? That is where the SAR would be identified. Then run his business through a very thorough due diligence process with tax returns and financial. This will most likely flush out the issue tax evasion issue.

I'm personally hesitant to file on tax evasion unless its crystal clear. Such has large amounts of cash deposited followed by outgoing business expenses and no debits for taxes of any kind throughout a few year period.

Another research option would be to see if the bank has a tax levy history on the customer, which could build confidence that he's a tax cheat.

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#2069376 - 03/15/16 08:03 PM Re: Business cash deposited to personal account jfml14
PrimeTime Offline
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Joined: Nov 2014
Posts: 173
Was looking to bump this thread, although it's not the exact same scenario, as there is no cash involved.

John Smith is the president only authorized signer on ABC Express LLC. The business does have its own tax ID. Recently, we've noticed that there are checks drawn on the account of ABC Express LLC made payable to John Smith that are signed over to his wife, Jane Smith, and then deposited into Jane's personal account that John Smith is not on in any capacity. These checks are on approximately a monthly basis, and total over $50k for each of the past 2 years. Despite this, there is inconsistency enough (amounts differ drastically at times, multiple deposits are made some months but not others, etc) to evidence that this is not John Smith's monthly/weekly/bi-weekly payroll. When asked, the customer stated that these funds were being deposited in order to cover household expenses, although I'm not sure what size house requires $50k annually.

We've also identified that ABC Express LLC was dissolved via the Secretary of State website, right around the time of these items being deposited into Jane Smith's account.

Thoughts on this? To me, we have the appearance of tax evasion via the president attempting to not claim additional income though the deposit into an account that he is not listed on; although from a paper trail standpoint he really wouldn't be getting away with it as any lookback at said accounts would show the whole process.
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#2069378 - 03/15/16 08:12 PM Re: Business cash deposited to personal account jfml14
rlcarey Online
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Galveston, TX
When in doubt file and close the business account.
The opinions expressed here should not be construed to be those of my employer:

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