- 4.26.13.1 Overview
- 4.26.13.2 Structuring Provisions of the BSA
- 4.26.13.3 Form 8300 Structuring
-
This section addresses the issue of transactions structured to avoid certain recordkeeping and reporting requirements of the Bank Secrecy Act (BSA) and/or 26 USC 6050I ( Form 8300).
-
This section will address the following:
-
The law and regulations as they relate to structuring,
-
Identification of potentially structured transactions,
-
Development of a structuring violation case; and,
-
Preparation of the administrative file.
-
-
Structured transactions may be discovered in the course of:
-
A BSA examination,
-
An IRC § 6050I examination, or
-
An income tax examination.
-
-
Although there are many similarities in transactions structured to avoid the BSA and IRC § 6050I, there are enough sufficient differences so that these will be addressed separately.
-
The examples of structuring and the methods to identify such activity presented in this IRM section and IRM 4.26.9 and IRM 4.26.12 are not all inclusive. The examiner should constantly be alert for new patterns.
-
) 31 USC 5324 prohibits certain actions by any person who acts with the purpose of evading:
-
The reporting requirements of Section 5313 (Currency Transaction Reports), or
-
The reporting requirements of Section 5325 (reports required to be made upon the request of the Secretary respecting information required to be recorded upon the sale of certain monetary instruments), or
-
The reporting requirements of Section 5316 (Report on Exporting & Importing Currency and Monetary Instruments), or
-
The reporting or recordkeeping requirements imposed by any order issued under section 5326 (Targeting Orders), or
-
The recordkeeping requirements under Section 21 of the Federal Deposit Insurance Act and Section 123 of Public Law 91-508 relating to funds transfers. See 31 CFR 103.33.
-
-
The actions prohibited by 31 USC 5324 include:
-
Structuring or assisting in structuring, or attempting to structure or assist in structuring, any transaction with one or more domestic financial institutions
-
Causing or attempting to cause a domestic financial institution to fail to file a report required under section 5313(a) or 5325 or any regulation prescribed under any such section or to fail to file a report or to maintain a record required under section 5326 (targeting order) or to fail to maintain a record required pursuant to any regulation prescribed under section 21 of the Federal Deposit Insurance Act or section 123 of Public Law 91-508 (the funds transfer recordkeeping regulations found at 31 CFR 103.33)
-
Causing or attempting to cause a domestic financial institution to file a report required under section 5313(a) or 5325 or any regulation prescribed under any such section or to file a report or to maintain a record required under section 5326 (targeting order) or to maintain a record required pursuant to any regulation prescribed under section 21 of the Federal Deposit Insurance Act or Section 123 of Public Law 91-508 (the funds transfer recordkeeping regulations found at 31 CFR 103.33) that contains a material omission or misstatement of fact.
-
-
The definition of structuring for purposes of currency transaction reporting is found at 31 CFR 103.11(gg). The elements of the structuring regulations are:
-
A person acting alone, in conjunction with others, or on behalf of others,
-
Conducts or attempts to conduct,
-
One or more transactions in currency,
-
In any amount,
-
At one or more financial institutions,
-
On one or more days,
-
For the purpose of evading the reporting requirements of 31 CFR 103.22 (requiring CTRs).
-
-
The definition is specifically written to include those transactions which occur beyond a single business day and transactions which are conducted through more than one financial institution, but only if the purpose of the transaction(s) is to evade the reporting requirements. It is not the intent of the definition to expand the reporting requirements of a financial institution.
-
The definition of structuring is not the same as, and is separate from, any requirement to report suspicious transactions. However, attempts to structure need to be reported as suspicious transactions on the appropriate Suspicious Activity Report (SAR) form.
-
Each BSA compliance examination will include steps to identify transactions that may have been structured to avoid the reporting requirements as listed in IRM 4.26.5.
-
The examiner's focus in looking for structuring during a BSA compliance examination should be on whether the financial institution has systems in place to be able to detect structuring, whether such systems are being implemented, and whether the financial institution is filing SARs to report structured transactions. Structured transactions may involve any number of persons and/or the financial institution being examined. The BSA examination should include steps to identify if there is involvement by:
-
The financial institution acting alone for its own reasons,
-
The financial institution acting in concert with its customers
-
The financial institution acting in concert with non-customers (such as laundering funds for other unrelated businesses)
-
Employees of the financial institution acting without the knowledge of the institution and in concert with customers
-
Financial institutions other than the one being examined
-
Customers acting without the knowledge of the financial institution or its employees.
-
-
How transactions may be structured is dependent upon the specific financial services being offered. In IRM 4.26.9, financial services provided by financial institutions that are subject to examination by the Internal Revenue Service for compliance with the BSA are discussed. Within that discussion are sections describing the types of records that should be maintained. There is also a subsection for each industry entitled Money Laundering Trends, which includes examples of structured transactions. The examiner should review the appropriate subsections of IRM 4.26.9 as part of the pre-planning process. An effective pre-plan includes a working knowledge of the methods which may be used to structure transactions.
-
IRM 4.26.1 describes money laundering and some methods used to "clean" the funds and return them into the legitimate economy. When considering whether the financial institution may be laundering funds for its own benefit or for the benefit of non-customers, several issues should be addressed in the examination:
-
Can the financial institution account for the amounts and the sources of the funds available for the financial services being offered? This can normally be accomplished by a cash flow analysis. The analysis does not initially need to include the entire period under examination. If a firm is actively involved in laundering funds, it is likely that the amounts will be material and that it will occur over an extended period of time. A representative selection of two to three months may be sufficient to uncover such activity. It is important that the analysis not only account for the amount of funds available, but also their sources.
-
Are the financial services provided strictly for the benefit of the customer? It needs to be determined whether the firm is using the "cover " of providing financial services for layering, placing, or integrating funds into the economy.
-
-
Various examination techniques are available:
-
Select a random sample of transactions and trace them through the records. Determine whether any sales are being regularly made to owners and/or employees.
-
Scan transaction records for sales where the fees are waived and determine whether this is part of a marketing plan or an indication of self-dealing. While self-dealing may not be illegal, it might be indicative of an attempt by a Money Services Business (MSB) agent to evade the currency transaction or SAR reporting programs of the agent’s principal (e.g., when the agent of a money transmitting business does not transfer a customer’s funds through the principal’s proprietary system).
-
Use information from prior administrative file(s). Have there been any unusual increases in the total value and/or volume of all services offered and/or for a specific service? Can the increase be accounted for as part of the growth of the business? How was it funded? Is the total value and/or volume of all services offered consistent with other businesses in the area? Is it consistent with the customer base?
-
Review voided transactions to ensure that the transactions were cancelled and not merely voided in the accounting records. This can be accomplished by tracing voids to any records prepared by third parties, such as issuers of money orders and travelers checks.
-
Examine the institution’s BSA AML compliance program and its implementation in the location you are examining. All of the elements of an AML compliance program, as mandated by 31 CFR 103.64 (for casinos) and 31 CFR 103.125 (for money services businesses), must be examined. The details of such an examination are discussed in IRM 4.26.6. Check specifically for the presence of a monitoring methodology to detect structuring. If such a methodology is in place, evaluate its effectiveness against your own testing. Examine the potential structuring transactions that have been identified by the monitoring methodology. While the presence of a functional monitoring methodology is not in and of itself sufficient to verify the absence of structuring, the presence of a sound monitoring program can lead to a determination that, from a risk evaluation viewpoint, participation by the financial institution in structuring may be less likely. Conversely, the absence of a monitoring methodology may be an indication of an environment where structuring is likely to occur.
-
-
The motivation for structuring by individuals is the same as that of a financial institution. The primary difference is that the customer is not in control of the transaction. In order to successfully structure a series of transactions, the customer may:
-
Obtain the cooperation of the financial institution and its owners,
-
Obtain the cooperation of an employee,
-
Lower the amount of the transaction to avoid any identification requirements,
-
Use agents of larger financial institutions to complete the transactions (for example, when an individual goes to multiple money transmitter locations that happen to be agents for the same company)
-
Use third parties as initiators or recipients of transactions to complete the transactions,
-
Complete the transactions at a number of different financial institutions, or
-
Complete numerous small transactions over a number of days.
-
-
There is a balance between the need to disguise the transaction and the need to move large sums of funds inherent in any structuring enterprise. Fees that are charged for the transaction, the time involved in handling small transactions, the potential need to involve others, and the need to place the transactions with more than one financial institution in order to remain anonymous, all work against the customer seeking to structure transactions. However, the relative lack of sophisticated compliance systems compared to depository financial institutions has made MSBs an attractive vehicle through which to structure funds. As specific industries consolidate, the economies of scale make the use of sophisticated detection systems possible.
-
Various methods can and should be employed to detect structuring by customers. All of the methods described in the subsections below should be utilized, if possible, during the course of an exam. The examiner should always be prepared to adjust the audit plan to consider any method that would assist in revealing structured transactions.
-
One method is to establish a dollar threshold. The threshold is determined by considering these factors:
-
What is the largest transaction amount that can be conducted without requiring identification of the customer? The need for anonymity will cause the customer to consider the thresholds that trigger a recordkeeping requirement for the financial institution. The financial institution itself may establish thresholds. The major money transmitter companies require identification at amounts well below $3,000. Check cashers, although their first BSA threshold is over $10,000, will often establish controls well below that as part of their internal risk management.
-
What is the impact of the maximum face value of a single transaction? If the maximum value of a single money order is $500, consider how many can be purchased at one time but remain below the identification requirement. Some financial institutions have established their own limits on transaction amounts. For example, a money transmitter may set a limit of $2,500, wire companies may establish limits for non-traditional transactions, or a major retailer may set a limit for the purchase of money orders at $2,999. While such limits appear to eliminate reportable transactions, they simply require the customer to be more sophisticated in the methods employed to circumvent these limits. The examiner should be especially alert to the potential use of agents or nominees in these situations.
-
Ask the institution what they consider to be the average transaction size per individual transaction for each category of service offered. Do a trend analysis of the data sample to see if there are significant variations in the average transaction sizes. This can lead to indications of structuring.
-
-
Another method is to eliminate legitimate activities from the scope of records to be examined. The vast majority of activity through a financial institution is legitimate. During the initial interview, the examiner should determine what transactions could be eliminated from the scope of the examination. Consider legitimate transactions either by amount, characteristics, range of transaction values, and the frequency of customer activity within a day as well as over time. As examples:
-
Who is the primary customer of a check casher? If the primary customers are presenting payroll checks, then it should be possible to eliminate checks with odd dollar amounts (because of withholding) and of a certain maximum amount. If the primary customers are presenting government assistance checks, there is a pattern present in both the amounts and when these are presented that should make it possible to eliminate them.
-
What is the average number and dollar range of money orders purchased by customers who are using money orders as replacements for checks?
-
What is an average value range of wire transmissions? Is it possible to profile legitimate activity and exclude it from the examination?
-
What is the average amount of travelers’ checks sold to a typical customer?
-
Determine and consider: if the same customer is sending transmissions to different addresses with the same recipient (or slight variations), or to the same recipient at different addresses (for money transmissions).
-
-
Another method is to consider the impact if the financial institution offers more than one type of financial service. For example, a customer may seek to transport funds from one location to another by wiring a portion and purchasing money orders or travelers’ checks for the balance. What is the interrelationship, if any, in the records of the financial institution that would reveal this?
-
Another method is to analyze the data from multiple locations. Customers may conduct their transactions either at different financial institutions within a given area or through branch locations of the same financial institution. Consideration should be given to periodically merging transactions from these examinations. Sorting the merged data in various fields may reveal a pattern of structuring. Before conducting this type of analysis, the examiner must consider the issue of the prohibition against maintaining unauthorized databases.
-
If a financial institution offers multiple services, then another method is to determine if the financial institution has monitoring in place to compare the records of one activity (e.g., money transmission) against another within the same location, or across different locations. If so, a sample of these records should be examined to determine if structuring is occurring by utilizing different services within the same location, or different locations, in the same financial institution. If not, consideration should be given to requesting and evaluating data within a timeframe that will allow the examiner to compare transaction records for different services offered by a financial institution at the same location, or at locations in close physical proximity.
-
In the course of an examination, the examiner may encounter transaction(s) that appear to be structured. However, accounting entries are not evidence of a structuring violation. It is necessary that further information be developed before a determination can be made that transactions were structured.
-
The anti-money laundering statutes are interrelated. The various statutes under Titles 12, 18, and 31 are meant to work together as part of an overall effort by the government to combat money laundering. Therefore, the examiner must account for the source of the funds and address any possible legitimate reason for the transaction.
-
These are civil compliance examinations. The examiner is not to conduct a criminal investigation, nor conduct the examination at the direction of CI, or use the examination simply for the purpose of gathering data for CI.
-
These examinations may not be conducted for the purpose of gathering information for use in any tax matter. Once the Title 31 matter has been resolved, the examination must be concluded.
-
Because CI and SB/SE BSA have some overlapping responsibilities under the BSA, the names of individuals to be interviewed should be forwarded to CI to determine whether they are the subjects of any criminal investigation or pose a flight risk.
-
The safety of the employee conducting a structuring interview is a factor in considering the location of the interview. Interviews of customers should be held in an IRS office.
-
The examiner who will conduct the interview should consider the following:
-
What are the potential violation(s)?
-
What are the elements of the violation(s) that must be proved?
-
What records are available to prove the violation(s)?
-
Who is in possession of those records?
-
How will those records be obtained?
-
Who must be interviewed to explain those records?
-
-
To make a proper determination, certain information must be obtained from the interview:
-
What is the person’s knowledge of the BSA?
-
Can a pattern be identified in the transactions to support a determination that it is an ongoing activity?
-
Are there other transactions that have been structured and have not been identified?
-
What is the total value of all structured transactions?
-
If the transactions are structured, for what purpose were they structured?
-
Can you determine the source or likely source of the funds used? Are they from a legal source? In some instances (especially if funds are derived from a criminal source), it may only be possible to eliminate legitimate sources and by inference conclude that the remaining sources are illegal.
-
Were sufficient funds initially available to conduct a series of transactions which would constitute an apparent violation (e.g., above the $10,000 reporting threshold for reporting)? It is necessary to show that the transaction could have been conducted as a single transaction and that the person took actions to break it up to avoid a currency transaction report.
-
To what extent does the person use the services offered by depository financial institutions (this includes checking accounts and credit cards)? Does it appear that a customer has access to banking services but has significant activity through an MSB or a casino to hide the customer’s identity?
-
-
If the subject of the structuring interview is a financial institution (including owners/officers), knowledge of the BSA may be established from prior IRS visits. The examiner should, through a series of open-ended questions, determine the extent of the interviewee’s knowledge of the law. While the interviewee may have shown knowledge during a prior visit(s), the examiner should be prepared to address the interviewee’s lack of recall of the BSA as a possible defense.
-
If the subject of the interview is an employee, the most difficult portion of the interview is to establish knowledge of the BSA. The 1994 Money Laundering Suppression Act (PL 103-325) established that the government needs only to show that the transactor knew that there was a BSA reporting requirement, but did not need to show that the transactor knew that structuring was illegal. The law was enacted subsequent to the Supreme Court decision in Ratzlaff v. United States (510 U.S. 135 (1994)), which held that, under prior law, the government must show the transactor knew structuring was illegal.
-
If the subject of the interview is a customer, the questioning should be limited to determine whether or not the financial institution was involved in the structuring.
-
The examiner should establish the interviewee’s knowledge of the BSA through a series of open-ended questions. The examiner should also establish that the interviewee had such knowledge at the time the transaction(s) occurred. Examples of open-ended questions are:
-
What do you know about currency transaction reports?
-
When did you acquire this knowledge?
-
Who told you and what were the circumstances?
-
What do you believe the law says about breaking a transaction into smaller amounts to avoid the currency report?
-
-
Examples of poor interview questions (because they are not open-ended questions) are:
-
Did you know that a Currency Transaction Report would be filed if you cashed a check for over $10,000?
-
Did you know that a record would be made if you sent a wire transfer of more than $3,000 with currency?
-
Did you know that it is illegal to structure a transaction to avoid the Currency Transaction Report?
-
-
The examiner should also interview the compliance officer and compliance personnel:
-
To determine knowledge and understanding of the BSA requirements in the organization, examine training records to determine the amount and extent of training on BSA requirements;
-
To determine if the compliance officer and personnel have knowledge of how transactions within the organization are supposed to occur; and
-
To determine the existence of and evaluate the effectiveness of monitoring and reporting mechanisms.
-
-
The presence or indication of structuring that is undetected by the financial institution, despite the presence of a compliance program with all of the required elements, may indicate a weakness with respect to the compliance program.
-
Civil penalties or referrals to CI should be pursued only if the results of the interview establish that:
-
The transactions were structured to avoid a currency transaction report;
-
The person(s) involved had knowledge of the BSA;
-
No legitimate purpose existed for structuring the transaction(s): and,
-
The amounts involved are material.
-
-
Use of the Letter 1112 is not appropriate to cite the structuring violation. If you have established all of the elements as listed above, potential civil penalties should be considered, or a referral for possible criminal investigation should be made using Form 5104, Report of Apparent Violation of Financial Recordkeeping and Reporting Regulations, or Form 2797 , Referral Report of Potential Criminal Fraud Cases, as appropriate. See IRM 4.26.8.
-
The following are possible BSA violations as a result of structuring:
-
Structuring violation
-
Failure to report the suspicious activity (structuring)
-
-
If the subject of the structuring interview is the financial institution for which there is an open BSA compliance examination, the workpapers relating to the structuring issue should be included in the open compliance examination file.
-
If the subject of the structuring interview is an employee or customer and it is determined that the financial institution is not involved, a separate administrative file should be prepared. The file should be forwarded as appropriate.
-
If evidence of the employee and/or customer structuring warrants a referral to CI, then the examiner should forward a Form 2797 to CI as outlined in IRM 4.26.8.
-
If evidence of the employee and/or customer structuring does not warrant a criminal referral but may be sufficient for a civil referral to FinCEN, the examiner’s manager should contact the IRS FinCEN liaison. If FinCEN determines a referral is warranted, the examiner should forward a Form 5104 to FinCEN as outlined in IRM 4.26.8.
-
If a referral to CI or FinCEN is not warranted, the examiner should forward the file of the employee and/or customer structuring to the CI Lead Development Center.
-
-
When the evidence found in a BSA examination indicates that customers may have structured their transactions with the non-bank financial institution and that their purpose for structuring was a potential violation of 26 USC 7201 or 7206, then a Form 5346, Examination Information Report, should be prepared.
-
In general, Form 8300 structuring cases are developed in the same manner as the BSA structuring cases discussed previously in this section.
-
Additional factors must be considered:
-
Form 8300 is a dual-purpose form. Authority for requiring the information comes from IRC 6050I and 31 USC 5331. Section 6050I requires a person engaged in a trade or business who receives cash of more than $10,000 in the course of that trade or business to file an information return with respect to the transaction. The prohibition against structuring is found in 26 U.S.C.6050I(f), whereas the structuring provisions for 31 USC 5331 are found in 31 USC 5324.
-
As set forth in Section 6050I(d) and Treas. Reg. 1-6050I-1(c)(1), the definition of cash includes certain monetary instruments, if received in a "designated reporting transaction" or in "any transaction in which the recipient knows the instrument is being used to avoid the reporting requirements of 6050I" .
-
Causing an incomplete or false Form 8300 to be filed is within the scope of a structuring violation.
-
-
The preplan for a Form 8300 compliance review will include steps to identify transactions which may have been structured to avoid the reporting requirements of 26 USC 6050I.
-
The prohibition against structuring found in 26 USC 6050I(f) applies to any person(s) involved in a transaction. These include but are not limited to:
-
The trade or business and/or owners and officers
-
Employees of the firm
-
Customers
-
-
With respect to amounts received on or after February 3, 1992, the regulations (see 26 CFR 1.6050I-1(c)) define cash to include monetary instruments (such as cashier’s checks, bank drafts, traveler’s checks, or money orders) having a face value of not more than $10,000 when received in a designated reporting transaction (see IRM 4.26.10and section 1.6050I-1(c) (1)(B)(1)), or when received in any transaction in which the recipient knows the instrument is being used to avoid reporting of the transaction under section 6050I (section 1.6050I-1(c)(1)(B)(2)).
-
In each of the following examples a customer tenders three monetary instruments of $8,000 each and currency of $7,000 in a transaction with a trade or business:
IF THEN The transaction is for the purchase of a consumer durable. It is not structured under 26 USC 6050l(f) since the monetary instruments are within the definition of cash for this business and the transaction must be reported. The transaction is for the purchase of real property. May be a violation of 26 USC 6050l(f). Additional facts required. See next discussion point. The transaction is for the purchase of real property and the customer originally intended to tender all currency but changed it after becoming aware of the reporting thresholds. May be a violation of 26 USC 6050l(f). Additional facts required. The customer provides false identification information and causes an incorrect or incomplete Form 8300 to be filed. May be a violation of 26 USC 6050l(f). Additional facts required. -
In setting the scope and depth of a Form 8300 compliance review, several factors should be considered:
-
To determine the threshold amount of customer payments to be reviewed, consider what number of payments is normally made in a single transaction for the specific industry. For example, if customers make an initial payment, a financing payment, and the balance of the down payment, then the expected number of payments is three. Adjust the threshold to identify three payments, which total more than $10,000.
-
To detect the potential involvement of owners/officers and employees when recording the transaction for later analysis, also record the names of employees involved.
-
-
It is as important to consider all legitimate reasons for the method of payments as it is to pursue those that support a structuring violation. Absent additional facts, such as active assistance by the firm to structure the transaction, the essential determination to be made is whether the firm caused the method(s) of payment or the customer.
-
In each of the following examples, the customer tenders $9,000 in currency and the balance is paid as indicated.
IF EXPLANATION The balance is financed at a below market rate. Below market rate plans are marketing tools. The plans normally restrict both the length of the contract and the amount available for financing. Absent other facts, such a transaction is not structured. The balance is financed at a materially higher rate than that generally offered to the public. In transactions where the customer has no credit or a poor credit history, businesses may seek to limit their exposure. This can be done by requiring a substantial down payment and/or a higher rate of interest. Absent other facts such a transaction is not structured. The balance is paid by credit card. Some credit card plans offer incentives, such as air miles, for use of the card. There are normally restrictions on the total amount available for the incentives. Absent other facts such a transaction is not structured. The balance is paid by check. Various scenarios may explain this type of transaction: -
The customer wanted to see what it would be like to have such a large amount of currency on hand.
-
The customer may have been seeking to limit the amount to be spent and the business made additional sales beyond that limit.
-
The customer is from out of town and did not think a personal check would be accepted, but had a general idea as to the total cost. Absent other facts such a transaction is not structured.
The balance is paid with multiple cashiers checks. The customer has multiple certificates of deposit. The customer was issued a cashier's check for each CD redeemed. The element to consider is whether the face value of each of the cashier's checks is typical for a CD or suggests the avoidance of a currency transaction report. -
-
Once a transaction has been identified as a potential violation of 26 USC 6050I(f), evidence beyond a mere accounting record must be developed.
-
At some point in the compliance review, those transaction(s) that have been identified as possible structuring violations should be reviewed with the business. In addition to an interview with the "responsible party," request that the employee(s) involved in the transaction(s) be present and/or available. The focus of the interview must be solely to determine:
-
Additional facts and circumstances which clarify whether the transaction is indeed structured, and
-
Any potential involvement by the firm and/or its employees.
-
-
If the focus of the interview becomes solely the customer and/or an employee of the business (acting without its knowledge), the interview must be terminated, since the purpose of the review is the firm’s compliance with the provisions of 26 USC 6050I(f).
-
The anti-structuring provisions of 26 USC 6050I(f) work in tandem with other anti-money laundering statutes (Titles 12, 18, and 31). If a civil penalty or a criminal referral is being considered, it is necessary to establish that no legitimate purpose existed for structuring the transaction. Evidence supporting structuring includes a violation of another statute and/or violating the tax provisions of Title 26.
-
If the purpose for the structuring interview is to determine whether the business was involved in structuring, the interview should be held at the place of business.
-
When the focus of the interview is a customer, the safety of the Service employee will be the primary factor in selecting the site of the interview. The interview will normally be conducted in an IRS office.
-
The interview is similar to a BSA structuring interview. See IRM 4.26.13.2.3.3. The primary difference is that the examiner must establish the interviewee’s knowledge of 26 USC 6050I.
-
Recognize that many times in structuring a transaction to avoid the filing of Form 8300, a violation of the BSA has also occurred. For example, a customer purchasing real property tenders 50 money orders of $500 each (purchased with currency) as part of the down payment. Since monetary instruments are not considered cash for real property transactions, lacking additional facts it is not a reportable transaction. But, if the customer purchases $3,000 or more in money orders from a single vendor then the customer will be required to provide identification (31 USC 5325). To avoid this, the customer may purchase just under $3,000 from a single vendor over a number of days. This is a potential violation of the BSA structuring statutes (31 USC 5324).
-
The interview will include questions to determine the interviewee’s knowledge of the BSA. Actions taken to avoid any BSA reporting or recordkeeping requirement will be developed, but only if such actions are part of a potential 26 USC 6050I(f) violation.
-
The techniques for establishing the interviewee’s knowledge of the Form 8300 reporting requirements are the same as for a BSA structuring interview. See IRM 4.26.13.2.3.3.
-
Civil penalties or criminal sanctions should be considered if the results of the interview establish that:
-
The transactions were structured to avoid a Form 8300 report or the filing of a false or incomplete report;
-
The person(s) involved had knowledge of 26 U.S.C. 6050I;
-
The amounts involved are material;, and,
-
No legitimate purpose exists for structuring the transactions and indicates a violation of another statute (other than 31 U.S.C. 5324),
-
-
Waiving penalties under the provisions of 26 U.S.C. 6724 may not be appropriate in structuring cases.
-
Single structured transactions should not be referred unless the source of the funds is from an illegal activity.
-
If the subject of the interview is the trade or business for which there is an open 8300 examination, then the workpapers relating to the structuring issue should remain with the 8300 examination.
-
If the subject of the structuring interview is an employee or customer and it is determined that the trade or business is not involved, the relevant information concerning the customer or employee should be copied and an Examination Information Report ( Form 5346) should be prepared. The file on the trade or business should be closed.
-
When the evidence found in a Form 8300 examination indicates that customers may have structured their transactions with the non-financial trade or business and that their purpose for structuring was a potential violation of 26 USC 7201 or 7206, a Form 5346, Examination Information Report, should be prepared for each customer who appears to have failed to file.
-
If the Form 8300 compliance review is not closed and the related customers’ income tax examinations indicate that the business participated in the structuring:
-
The information from the customers’ income tax examinations may be used in the 8300 structuring case on the business.
-
Upon completion of the 8300 review, the examiner(s) and manager will confer and determine whether penalties are warranted under IRC 6721 for violations of IRC 6050I. When warranted, a Referral Report for Potential Fraud Cases ( Form 2797) should be prepared.
-
-
Where more than one person participated in the structuring violation and sanctions are contemplated against each person:
-
The elements of a violation, as listed in IRM 4.26.13.3.2.3, must be shown for each person.
-
A separate administrative file should be prepared for each person.
-