Imagine discovering you and your business are under investigation for money laundering or tax evasion – all because you made frequent cash deposits to your bank account. Small businesses, such as retailers, restaurants, and beauty salons, often receive much of their income in cash, requiring their owners to make frequent bank deposits.
While receiving cash payments from customers is perfectly legal, processing large amounts of cash in small, frequent deposits may have the appearance of “structuring,” an illegal practice that can have serious consequences: asset seizure, fines, and even prison time. Structuring is a crime even when the money is from legal sources. But there are steps that law-abiding business owners can take to avoid the appearance of structuring and avoid a costly investigation.
What Is Structuring?
The federal Bank Secrecy Act requires banks to report large cash transactions to the IRS to help in the fight against financial crimes, such as money laundering and tax fraud. Financial institutions must notify the government of any cash transaction over $10,000 by submitting a currency transaction report (CTR). Criminals attempting to hide the sources of their income or avoid paying taxes may split their cash transactions into amounts under $10,000 to avoid triggering a CTR.
The purpose of the Bank Secrecy Act is to increase banking transparency and prevent crime, but its rules for cash transactions may put unsuspecting small-business owners in a predicament. For example, owners may make frequent cash deposits under $10,000 because they don’t feel comfortable holding or transporting large amounts of cash or because of coverage limitations from their insurance policies. Unfortunately, these frequent cash deposits may cause a concerned financial institution to report suspicious activity to the government.
What Cash Businesses Can Do
Here are three ways cash-intensive businesses can help protect themselves from a structuring investigation:
Accepting Non-Cash Payments
Many businesses can reduce the burden of handling large amounts of cash by accepting more payment types, such as credit card, debit card, and contactless payments. With our Merchant Solutions, you can record transactions automatically, offer convenient payment options to your customers, and quickly and securely deposit business income into your Checking Account. Learn about Sun National Bank’s Merchant Solutions for small businesses today.