If you’re a small merchant and you do a lot of cash business, please read on very carefully:
A federal law called the Bank Secrecy Act requires that banks report to the feds their customers’ transactions of over $10,000 in currency. More menacingly, the BSA makes it a federal crime for customers to try to dodge this paperwork burden (or just hedge their privacy) by making repeated smaller deposits or withdrawals that, totaled up, would meet the $10,000 threshold. When the Supreme Court ruled in 1994 that defendants could not be convicted of this “structuring” offense unless they knew the practice was illegal, Congress promptly changed the law to delete the willfulness requirement.
Until recent years, the structuring provision tended to go unenforced unless federal prosecutors were interested in some bigger illegality that the transactions helped to advance, whether it be international terrorism or just tax-dodging. Now that’s changed. As I explain in an op-ed today in the Baltimore Sun, the feds nowadays keep descending on small businesses and seizing their bank accounts on structuring charges, with no effort to allege other illegality. In the best-known instance of structuring in recent years, Eliot Spitzer knowingly manipulated transactions so as to hide his illegal nightlife habits; after Spitzer deployed a team of fancy lawyers, he got the Justice Department to drop the charges. But Main Street businesses, as I explain in the Sun, have not been so lucky:
Last month, the feds swooped down on a successful Maryland dairy business, South Mountain Creamery, seizing $70,000 in its bank accounts and formally charging its owners, Randy and Karen Sowers, with the offense of bank “structuring.”
…In Maryland, which has become the busiest federal prosecutorial district for structuring charges—coincidentally or not, the assistant U.S. attorney is the author of a book on forfeiture law—the feds last year seized $90,000 from the bank accounts of a farm stand on the Eastern Shore, and gave back only about half of it after filing no criminal charges.
Besides direct-to-consumer farmers, targets of federal action have included motels, restaurants, taxi companies, and car dealerships. You can read earlier work on the evils of forfeiture law here and more comprehensively here; more on structuring at Overlawyered.com here and here.