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#2248772 - 02/05/21 07:08 PM SAR for cash out, when source of funds is legit?
Sammy Sarosaurus
Unregistered

Customer's business involves consulting work. She gets paid by a lot of clients, and they all pay by check. Many of these are large, well-known local companies, and they always clear.

She deposits the checks here, 1 or 2 per week. The following week, she gets out a nearly-equal amount in cash. For instance if she deposits an $8,500 check this week, she'll be back next week to withdraw at least $8,000 in cash. Next week if she deposits $6,250 by check, she'll come back about a week later and withdraw $6,000 in cash. If she deposits two checks for $3,325 each, she'll come back a week later and take out $6,000 or $6,500. This totals well over $200,000 per year in cash outs. There are never any CTRs (well, maybe 1 or 2 per year) because the weekly deposits (which are the basis for her amounts to get in cash) are always below $10,000. There does not appear to be any attempt to hold the checks to avoid CTRs (based on the dates the checks say they were issued). There does not appear to be any attempt to split large payments up into multiple checks (if someone owes her $12,217, the check is for $12,217, and her next cash out will be $12,000).

Do you see a SAR? What type of activity? I do not see structuring in this. It's just a "Hmm, that's a lot of cash" type of SAR and there's no checkbox for that express reason. Having doubts about filing a "no apparent economic, business, or lawful purpose" SAR (which, by the way, is under the heading of "money laundering" because how can this be laundered money if we know the source is legit?)

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#2248774 - 02/05/21 07:19 PM Re: SAR for cash out, when source of funds is legit? Anonymous
Skittles Offline
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TN
Has anyone asked the purpose of these cash withdrawals?
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#2248777 - 02/05/21 07:31 PM Re: SAR for cash out, when source of funds is legit? Anonymous
Sammy Sarosaurus
Unregistered

OP here. Yes. "Investments."

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#2248780 - 02/05/21 07:39 PM Re: SAR for cash out, when source of funds is legit? Anonymous
Richard Insley Online
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Richard Insley
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Toano, VA
There's a word that means whatever you want! I'm having trouble thinking of any type of business that requires investors to use cash.
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#2248781 - 02/05/21 07:39 PM Re: SAR for cash out, when source of funds is legit? Anonymous
BrianC Offline
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I don't know of too many (ok any) investment firms that accept cash. Remember, that a SAR isn't just based on a suspicious source of funds, it can also be based on suspicious use of funds. (Consider a charity that receives legit donations but then uses the donations to fund terrorism instead of building houses or feeding starving children.)
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#2248782 - 02/05/21 07:45 PM Re: SAR for cash out, when source of funds is legit? Anonymous
RockChucker, CAMS Offline
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The Country
Originally Posted by Sammy Sarosaurus
OP here. Yes. "Investments."


Maybe a follow up conversation is in order to ask additional questions regarding these investments.
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#2248785 - 02/05/21 07:55 PM Re: SAR for cash out, when source of funds is legit? Anonymous
Richard Insley Online
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Richard Insley
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Toano, VA
There are three stages to a successful ML operation: placement, churning, and repatriation. Churning can be any kind of financial activity that confuses the paper trail that would otherwise exist. Converting funds from Entity #1's bank balances to cash and then placing the funds (now in the form of currency) into the hands of Entity #2 is a good way to hide a relationship between Entity #1 and Entity #2. We could imagine a few scenarios (kickbacks, embezzlement, illegal political contributions, etc.) where something like this could be one part of a larger criminal enterprise.
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#2248790 - 02/05/21 08:57 PM Re: SAR for cash out, when source of funds is legit? Richard Insley
Sammy Sarosaurus
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Originally Posted by Richard Insley
[this] is a good way to hide a relationship between Entity #1 and Entity #2. We could imagine a few scenarios (kickbacks, embezzlement, illegal political contributions, etc.) where something like this could be one part of a larger criminal enterprise.


Ah, and that makes me reflect on the fact that the money is coming from these large well-known companies --- companies of the size, type, complexity, and very deep pockets which all means that they most likely have a bidding process for things on which they spend money, so, kickbacks could be an explanation for why this is conducted in this manner. There's also the fact that this is the only part of our customer's business we have (From what account does he pay his bills, make purchases, and run all his other business operations? Some other bank, we guess..)

And, would we go from imagining a few scenarios where something like this could be part of a larger criminal enterprise, to saying we have the basis for filing a SAR?

Here we mostly file structuring SARs (9 out of 10 anyway) and I'm although I'm pretty comfortable imagining/theorizing a reasonable explanation for some customer activity, I'm much less comfortable using that sort of "Well, maaaaybe" logic when deciding to file a secret report to 27 federal law enforcement agencies.

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#2248791 - 02/05/21 09:15 PM Re: SAR for cash out, when source of funds is legit? Anonymous
rlcarey Offline
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Galveston, TX
Then it comes down to what Skittles first said - contact the customer and ask them point blank what they are doing. If you don't like the answer send them down the road as it appears, unless they are using additional pay to play services from you, this relationship is a big money loser with the necessity to handle that much cash. There is no legitimate reason in the world that this is going on.
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#2248801 - 02/05/21 10:45 PM Re: SAR for cash out, when source of funds is legit? Anonymous
Richard Insley Online
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Richard Insley
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Toano, VA
Originally Posted by Sammy Sarosaurus
There's also the fact that this is the only part of our customer's business we have
Adding this to the picture moves me squarely into Randy's camp. It's time for a showdown. I'd approach this as relationship with two strikes: we're losing money on you and we don't know what you're up to. Unless the customer comes up with a believable explanation AND expands the relationship so you can make a profit, I'd invite her to take this part of her business to the bank(s) that DO have a profitable relationship with her. Maybe if these other banks saw this part of her business and combined it with her other banking activities, they might be filing SARs, too.
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#2248808 - 02/06/21 12:02 PM Re: SAR for cash out, when source of funds is legit? Anonymous
ACBbank Offline
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New York City
No legitimate broker dealer accepts cash. If the individual is using cash for "investments" she provide documentation reflecting such. Regarding the funding source - are you sure these checks are legitimate? There are always stories of embezzlement and employee theft in the news? What type of consultant makes that much money?
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#2248812 - 02/06/21 03:31 PM Re: SAR for cash out, when source of funds is legit? Anonymous
Richard Insley Online
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Richard Insley
Joined: Oct 2000
Posts: 9,876
Toano, VA
Originally Posted by Sammy Sarosaurus
...I'm much less comfortable using that sort of "Well, maaaaybe" logic when deciding to file a secret report to 27 federal law enforcement agencies.
Filing no SAR may be the correct choice, but get a clear understanding of what's going on before you make that decision. If you get pushback ("what's the risk in doing nothing?"), relate the case of Capital One -- https://www.fincen.gov/news/news-re...ment-action-against-capital-one-national
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#2249166 - 02/12/21 03:55 PM Re: SAR for cash out, when source of funds is legit? Anonymous
Anonymous
Unregistered

What is the balance / transaction history in this account? Is it minimal, and the customer is just using it as a "pass through"?

Or is it an active account?

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#2249191 - 02/12/21 07:03 PM Re: SAR for cash out, when source of funds is legit? ACBbank
HappyGilmore Offline
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Pulling people out of the ditc...
Originally Posted by ACBbank
What type of consultant makes that much money?


all the BOLer gurus, for sure for sure wink
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#2249192 - 02/12/21 07:06 PM Re: SAR for cash out, when source of funds is legit? Anonymous
HappyGilmore Offline
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Pulling people out of the ditc...
one interesting aspect of this is that they always wait a week or so from the deposit to the withdrawal of funds, almost like they are waiting to make sure the check is not returned for some reason. i also find the "investments" answer as evasive and suspicious.

many years ago, MsGilmore and I paid cash for everything, and we lived out of the old cash-envelope system. when both of us were paid, we converted all but a minimal amount to cash and it went into the envelopes. but we were far below that $200k amount.
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#2249303 - 02/17/21 06:21 PM Re: SAR for cash out, when source of funds is legit? HappyGilmore
John Burnett Offline
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John Burnett
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Cape Cod
Originally Posted by HappyGilmore
Originally Posted by ACBbank
What type of consultant makes that much money?


all the BOLer gurus, for sure for sure wink

Don't tell my wife!
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#2249308 - 02/17/21 07:01 PM Re: SAR for cash out, when source of funds is legit? Anonymous
ACBbank Offline
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ACBbank
Joined: Jul 2006
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New York City
I need a job with BOL!
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