Congress passed the Bank Secrecy Act of 1970 in order to locate instances of money laundering and tax evasion. IRS rules on bank reporting requirements primarily help law enforcement locate and prosecute individuals in the business of selling illegal drugs. In the wake of the 9/11 terrorist attacks on the World Trade Center, bank reporting laws under the Bank Secrecy Act also help shut down sources of terrorist financing within the United States.
The IRS requires banks to report, using Form 8300, any cash bank deposit of $10,000 or more in value. The IRS defines cash as currency or coins that are legal tender in the United States or another country. Banks do not report personal checks deposited into an account regardless of the amount, because such monies are traceable due to the funds being drawn on another customer’s account. If a bank account owner deposits a cashier’s check, bank draft, money order or traveler’s check into their account of $10,000 or more, and the bank believes the money will be used for criminal activity, the bank must report this transaction using Form 8300.
Some money launderers, terrorists or tax dodgers will make smaller deposits to avoid reporting requirements. If a customer deposits more than $10,000 into his account in separate transactions over a 24-hour period, the bank must count all the deposits as one transaction for reporting requirements. If a bank suspects a depositor is placing money at regular intervals into an account to avoid reporting, the institution also must report these transactions to the IRS.
Banks will mail Form 8300 within 15 days after a reportable transaction takes place. This form requires the bank to list its business information and the personal information of the depositor. In addition, the bank must describe the amount of the transaction and how the bank received the funds. After finishing the form, banks will send the form to the IRS Detroit Computing Center.