Cash transactions usually have limited documentation, which lends them to criminal activities such as money laundering and tax evasion. To help in the fight against these crimes, U.S. banks fill out paperwork documenting larges amounts of cash that come into their institutions. The deposit amount requirement is based on the regulation created by the Bank Secrecy Act.
Bank Secrecy Act
The Bank Secrecy Act of 1970 is a federal law that requires documentation of large cash transactions. Its purpose is to hinder money laundering by creating a record of cash transactions that can be used by the government to track previously anonymous dealings. It has been useful in criminal, tax and other regulatory investigations since its creation.
How Much Can You Deposit?
After inception of the Bank Secrecy Act was created, banks and other organizations had to change the way they handled cash. Previously you could deposit or withdraw as much money as you liked without reporting it to the government. After this legislation, the law requires banks to fill out paperwork documenting deposits of cash of more than $10,000. Remember that the term “cash” includes a money order, foreign currency or bank draft for these purposes.
When you deposit more than $10,000 in a cash transaction to a bank, the bank is required to fill out a currency transaction report (CTR). It includes information about all parties included in the transaction, including yourself, any other person involved in a transaction and the bank. The bank then files the form through the Bank Secrecy Act to the U.S. Treasury Department.
It’s Not Just Banks
Some people mistakenly believe that it’s only banks that have to follow the regulations of the Bank Secrecy Act. Actually, if you receive a cash transaction $10,000 or more while doing business or trade, you must report it, too. You must file form 8300 with the IRS, which includes your information, the information of the person you received the money from and the details of the transaction.