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#2252010 - 04/07/21 11:03 PM Structuring non-taxable funds??
SARsSARsEvrywhre
Unregistered

Let's assume there are several cash debit transactions and they all look like "obvious" typical structuring amounts.

Would you file for structuring of cash withdrawals if the source of funds was a personal injury settlement? Personal injury settlements are not taxable income, so what sense would it make that a customer is trying to avoid IRS finding out about the money?

Would you file for structuring of cash withdrawals if the source of funds was an SBA PPP? What sense would it make that a customer is trying to avoid the government finding out about the money that the government gave to them?

And if you would file for structuring on the SBA PPP proceeds, then would you consider structured proceeds to also be a sign that there was fraud in the application for the SBA PPP? In other words, would you report that as just structuring on your SAR, or structuring AND possible PPP fraud?

(Assume no other indication of fraud in PPP besides the fact that they structured out the proceeds.)

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#2252014 - 04/08/21 11:23 AM Re: Structuring non-taxable funds?? Anonymous
Adam Witmer Offline
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Joined: Sep 2010
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If structuring is apparent, a SAR should be filed regardless of the source of funds as, structuring, in and of itself, is illegal. The recently updated BSA Exam manual explains this here: https://bsaaml.ffiec.gov/manual/AssessingComplianceWithBSARegulatoryRequirements/05. Also, see 31 CFR 1020.320(a)(2)(ii) for the technical citation.

Regarding your fraud question, I see no reason why you would include fraud as a reason on the SAR if the only concern is structuring. Structuring has to do with how the money was managed after the loan proceeds were received and has nothing to do with the loan itself.

I completely understand that filing a SAR for structuring sometimes doesn't feel logical, but again, the act of structuring itself is illegal and requires a SAR - whether or not the customer knows what structuring is and the fact that it is illegal.
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#2252020 - 04/08/21 01:28 PM Re: Structuring non-taxable funds?? Anonymous
ACBbank Offline
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Structuring itself, even if the source of funds is legitimate, would require a SAR.
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#2252067 - 04/08/21 08:25 PM Re: Structuring non-taxable funds?? Anonymous
SARsSARsEvrywhre
Unregistered

Thanks. I guess what I'm getting at is intent. A lot of structuring SARs involve the bank having to decide whether there was intent to structure. For instance, structuring after asking questions about CTRs, changing the amount of a transaction to avoid a CTR, refusal to provide info for a CTR, and that sort of thing are fairly easy determinations.

But in some cases we have a business customer who deposits $8,000- $10,000 cash repeatedly, seldom or never exceeding $10,000. In order to file a structuring report on that, we have to assume that the customer is holding back funds. It could be that there was no intent to structure whatsoever, and it just happens that they tend to make about $8,000 or so in a day.

If a consumer gets a personal injury settlement of $50,000 and they take out $10,000 today for a new car and $10,000 tomorrow to give to their mom and $10,000 Friday to take a vacation, that doesn't automatically mean they were structuring. We have to make some guesses about intent. So, that's what led me to question whether our cases of structured personal injury settlement proceeds are basically nonsense.

We have no indication of intent to avoid a CTR other than the transaction amounts and timing.

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#2252072 - 04/08/21 09:21 PM Re: Structuring non-taxable funds?? Anonymous
Rocky P Online
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Florida
Sorry to respectfully disagree,. If a customer took out $10,000 in cash three times in a relatively short period, IMHO, the regulators would consider it structuring, intent or no intent.- same with the other examples.
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#2252074 - 04/08/21 10:21 PM Re: Structuring non-taxable funds?? Anonymous
edAudit Online
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Determination of a structure is not black and white, You or some other bank employee needs to have a conversation with the client to determine if it is a structure. If the example is not a structure you would need to document, document and then document.

Your example could be structuring or possibly not. Customer could have millions in the bank and the 50k could be just a red herring. There may be a reason for the transactions of close days. Customer could be in the bank on those days anyway for other transactions. 10,000 for a vacation would seem suspect for a small depositor but may be in line for a billionaire.
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#2252081 - 04/09/21 11:26 AM Re: Structuring non-taxable funds?? Anonymous
Adam Witmer Offline
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Joined: Sep 2010
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I agree with what the others said and want to add that your bank isn't the judge and jury; a bank's job isn't to determine if structuring occurred. Its job is to report "suspicious" transactions that could be structuring. The intent very well may be fine, but if it looks like structuring and you have nothing to explain why the transactions aren't structuring, you should be considering it for a SAR. I've come to believe that the vast majority of non-bankers have no idea that structuring is a crime (or that "structuring" is even defined), and most would not do it if they really knew better. The thing with SARs is that we have to look at the quantifiable data. If the data looks like structuring, you don't need intent to file.

All of that said, you obviously have to look at each instance on a case-by-case basis as there could be mitigating factors that will sway a decision one way or another.
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All statements are my opinion, not those of my employer, and should not be taken as legal advice.
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#2252098 - 04/09/21 03:06 PM Re: Structuring non-taxable funds?? Adam Witmer
SARsSARsEvrywhre
Unregistered

Thanks, all. Good points, all.

I'll be seeing our regulatory exam team again this fall. One thing they've mentioned at recent exams is that they think we file too many SARs, particularly for structuring, particularly for cases where we have no indication of structuring other than dollar amounts and timing, for a small number of transactions with no real pattern of structuring established. Of course, that was a verbal-only tip.

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#2252105 - 04/09/21 04:01 PM Re: Structuring non-taxable funds?? Anonymous
ColoradoAML Offline
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Joined: Mar 2018
Posts: 182
I think structuring is deceptively difficult. The exam manual gives some instruction to examiners that's consistent with what yours may have said:

"...two transactions slightly under the $10,000 threshold conducted days or weeks apart may not necessarily be structuring. For example, if a customer deposits $9,900 in currency on Monday and deposits $9,900 in currency on Wednesday, it should not be assumed that structuring has occurred. Instead, further review and research may be necessary to determine the nature of the transactions, prior account history, and other relevant customer information to assess whether the activity is suspicious. Even if structuring has not occurred, the bank should review the transactions for suspicious activity."

It's easy to agree with that statement in general, but in practice there are very few transactions that meet that pattern that we wouldn't file on.

There are plenty of reasons that a customer could deposit $6,000 on Monday and $6,000 on Wednesday, and we may not always know or be able to learn all the details of every single situation. Part of our process is to determine if it seems like it may be a one-time event and is coincidental. If that may be the case, our investigators have the ability to note it as such. If it happens again though, we go back and reconsider the original decision with the new information.

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#2252264 - 04/12/21 10:01 PM Re: Structuring non-taxable funds?? Anonymous
SARsSARsEvrywhre
Unregistered

Good point and thanks for the exam manual info, that's very helpful too.

When we're having trouble deciding whether to file, we file. The downside to filing a SAR when we arguably didn't really need to file is fairly minimal (the risks include filing an inaccurate or incomplete SAR and thus creating BSA exam problems about a SAR that never needed to exist) but the downside to failure to file a SAR when some examiner a year later decides we should have filed but didn't file, is enormous.

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#2252314 - 04/13/21 06:18 PM Re: Structuring non-taxable funds?? Anonymous
Comply 101 Offline
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But in some cases we have a business customer who deposits $8,000- $10,000 cash repeatedly, seldom or never exceeding $10,000. In order to file a structuring report on that, we have to assume that the customer is holding back funds. It could be that there was no intent to structure whatsoever, and it just happens that they tend to make about $8,000 or so in a day.
I started working at a bank one time as their BSA Officer and had this exact scenario. They said his construction firm paid employees and vendors in cash. Normal activity, no SAR ever filed. I added up cash activity over a year and it was around $1.2 million dollars with only one CTR filed because of a Friday being Mondays business day. I presented my team with similar construction companies that had absolutely no activity like this one outlier. I did a 314b with another bank I saw they had activity with and their answer confirmed what I already knew. He was doing the same thing in reverse over there. Making cash deposits from our withdrawals. It wasn't my job to determine if it is illegal or not, but with that much cash and no CTRs, what are the chances it is not structuring or intentional? Pretty slim.
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