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Switzerland’s Oldest Bank Indicted on U.S. Tax Charges
The US Attorney’s Office for the Southern District of New York recently announced the first ever indictment of a Swiss bank. The indictment, returned by the grand jury and unsealed on February 2, 2012, alleges that Wegelin & Co. conspired with US taxpayers and others to hide from the Internal Revenue Service (IRS) more than $1.2 billion in secret assets and the income these accounts generated.
Concurrent with this indictment, the US government seized more than $16 million from Wegelin’s correspondent bank account in the United States, in accordance with a civil forfeiture complaint and seizure warrant. Wegelin is charged in a superseding indictment with Michael Berlinka, Urs Frei and Roger Keller, three client advisers at the bank who were previously charged with the same conspiracy.
The government alleges that the defendant’s conspiracy in this case corresponds with Swiss banking giant UBS’ announcement on or about July 17, 2008 that it was closing its US cross-border banking business. UBS thereafter began notifying clients that they could continue to maintain undeclared accounts at Wegelin and certain other Swiss private banks. It was at this time that Wegelin’s executive committee, including its managing partners affirmatively decided to capture the illegal US cross-border banking business lost by UBS by opening new undeclared accounts for US taxpayer clients fleeing UBS.
The defendants in this case are currently only charged with conspiracy. However, their alleged conduct in the indictment could open them up to various other offenses. For example, the indictment alleges the transmission of a long list of checks and wire transfers from Wegelin to US taxpayers for the purpose of repatriating funds from these undeclared accounts. This list of transactions shows that most of the amounts transferred were under the $10,000 reporting requirement and sent to the same recipient over relatively short periods of time. Such behavior, if proven to have been undertaken to evade reporting requirements, is known as structuring, or “smurfing,” and is prohibited under the anti-structuring statute. The indictment also alleges that Wegelin instructed clients to carry cash and to avoid taking more than $10,000 with them on international flights, all to allegedly avoid reporting requirements. According to the statute, each such transaction can be charged as a separate and distinct offense. Therefore, defense counsel will have to take into consideration the possibility of a multi-count superseding indictment against the defendants when negotiating with prosecutors.
Another interesting observation for defense counsel to consider is the fact that the US taxpayer clients are identified as co-conspirators but have not yet been named as defendants themselves. These unindicted co-conspirators might have provided the US government with information about Wegelin’s alleged wrongdoing in exchange for proffer letters or non-prosecution agreements. Alternatively, the government may have merely agreed to delay the return of any such indictments to see how cooperative or useful these co-conspirators prove to be against Wegelin. When weighing the multitude of factors impacting the defendants’ decisions to accept plea agreements, defense counsel should recognize that all such witnesses will be particularly susceptible to cross-examination should this case go to trial.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
65 Count Indictment Against Texas Man for Bankruptcy Fraud and Structuring Financial Transactions
The U.S. Attorney’s Office for the Western District of Texas announced charges against Jack Texas Alves. The grand jury returned a 65 count indictment against Mr. Alves for one count of bankruptcy fraud in violation of 18 U.S.C. 152 and 64 counts of structuring domestic financial transactions in violation of 31 U.S.C. 5324(a)(3).
The indictment alleges that in a bankruptcy court filing on May 23, 2008, Mr. Alves falsely stated the amount of cash he had in his possession was $4,000 when in fact, Mr. Alves knew he possessed substantially more cash which he concealed from the bankruptcy court and creditors. The indictment further alleges that Mr. Alves engaged in a pattern of structuring bank deposits, totaling more than $100,000 in a 12 month period, for the purpose of evading reporting requirements. According to a detailed list in the indictment, from February 24, 2010 until May 12, 2011, Mr. Alves made a total of 64 bank deposits-each one between $5000 and $8100.
Not mentioned in the accouncement or the indictment is whether Mr. Alves’ bank notified FinCEN of these transactions by filing suspicious activity reports or SARs. The indictment dates all of the transactions and it isn’t suprising that the bank caught on to Mr. Alves activities. For example, Mr. Alves made a deposit almost every business day for nearly two months. Each deposit was shy of the standard trigger for reporting purposes, $10,000. Bank’s are instructed to report structured transactions when series of deposits in a short duration of time add up to an amount that would have otherwise been reported if deposited together. Furthermore, banks are prohibited from telling a person that they filed an SAR about them to FinCEN. Thus, Mr. Alves likely had no idea that the bank had sent the SAR to FinCEN where it was being processed by analysts who eventually coordinated with law enforcement officials about the transactions.
The indictment also indicates that the government is seeking forfeiture of two bank accounts currently seized. Pursuant to 18 U.S.C. 981(a)(1)(C), 28 U.S.C. 2461 and Federal Rules of Criminal Procedures Rule 32.2, the government is seeking to forfeit funds that Mr. Alves alledly concealed from the bankruptcy court and creditors. Pursuant to 31 U.S.C. 5317(c)(1)(A) and Rule 32.2 the government also seeks forfeiture of the funds involved in the structured transactions. The funds the government looks to forfeit amount to nearly $400,000.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
FinCEN Proposes Reporting Requirement of International Transport of Prepaid Access Products at U.S. Borders
Furthering the U.S. Department of the Treasury’s efforts to address the potential misuse of prepaid access products, the Financial Crimes Enforcement Network (FinCEN) recently proposed adding certain tangible prepaid access devices to the list of monetary instruments to be reported when transported into or out of the United States. FinCEN’s proposal would add devices such as general use prepaid cards, certain gift cards, and potentially cell phones to the list of other monetary instruments that must be aggregated to determine if they exceed more than $10,000 and included on the Currency and Monetary Instrument Report (CMIR), the form used to report international transport of funds at U.S. borders. The proposal is intended to address certain devices that can be used as a substitute for currency, as they provide access to funds by any bearer of the device. This product attribute, as FinCEN’s cooperation and consultation with law enforcement has indicated, may enable the anonymous transfer or concealed transport of illicit funds across the U.S. border.
Excluded from the proposal are credit cards and debit cards, and codes and personal identification numbers or items like computers or web enabled cell phones, or other devices that are not dedicated to accessing specific prepaid funds.
“The proposal we’re releasing today is a further step in our staged approach, building upon our newly implemented regulations of prepaid access, in a coordinated effort with law enforcement to shine a light on the transfer of money obtained through illicit activity,” said FinCEN Director James H. Freis, Jr. “Reporting tangible prepaid access devices puts another tool at the disposal of law enforcement to interrupt the transfer of monetary value anonymously across international borders when that value was obtained illegally.”
Current regulations require that a CMIR be filed regarding the international transportation, mail, or shipment of currency or other monetary instruments – defined as coin or currency, traveler’s checks, checks, promissory notes, money orders in bearer form, and bearer bonds among others – in an aggregate amount that exceeds $10,000. FinCEN’s proposal will update U.S. reporting requirements, which have been in place since the 1970s, to reflect the emergence of new payment methods and monetary instruments that could be used to facilitate illicit financial activity.
While FinCEN was already developing regulatory proposals in this area, the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 required the issuance of regulations in final form implementing the BSA, regarding the sale, issuance, redemption, or international transport of stored value, including stored value cards. FinCEN defined prepaid access and included new regulatory requirements in July 2011, expanding beyond the previous framework for certain products known as “stored value.”
This proposal should serve as a warning to those who frequently travel with monetary instruments worth over $10,000. Travellers will need to accurately add up the total value of their monetary instruments and account for items such as gift cards, prepaid cards, and possibly even pre-loaded cell phones. If a traveller either fails to report or reports inaccurately their total value of monetary instruments, including these new items, such items can be seized by U.S. Customs and Border Protection and subsequently subject to forfeiture. Such seizures will make transporting money even more expensive by enabling the government to levy fines and penalties against travellers.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Proactive Suspicious Activity Report Review Leads to the Arrest of Army Officer and Recovery of Iraqi War Funds
FinCEN recently reported that a U.S. military officer used his official position to steal currency designated for war use, transferred the funds to the United States, and then spent that money on personal items. When the defendant conducted transactions with the stolen currency at financial institutions, those transactions triggered anti-money laundering detection protocols. The resulting SAR led to a quick arrest and recovery of the stolen currency.
This is an example where the underlying crime went undetected, but where BSA reporting requirements resulted in the identification of transactions involving the fruits of the crime. The facts of the case stated that for a period of almost 2 years, the defendant was deployed to Iraq and was responsible for making monthly payments in U.S. currency, derived from an emergency relief program, to Iraqi nationals. At any one time, the defendant had nearly $300,000 in cash locked in a safe.
During his deployment, the defendant stole nearly $700,000 of the funds, which consisted of newly issued $100 bills. The defendant then forwarded the currency to his home address before returning from Iraq. After returning home, the defendant opened accounts at several different depository institutions and began to deposit the stolen currency into the accounts. In a 3-month period, the defendant made numerous currency deposits on consecutive days or the same day for less than $10,000. In all, the defendant deposited more than $350,000 in stolen currency into the accounts.
With the stolen money in the accounts, the defendant proceeded to purchase cashier’s checks for tens of thousands of dollars. The defendant used the checks to purchase expensive vehicles, electronics, computers, furniture, and handguns. Eventually a financial institution filed a SAR on some of the transactions. Of note, the SAR described a series of cash deposits on consecutive days or on nearly consecutive days where the source of the funds could not be determined and the aggregate amount exceeded reporting requirements.
An IRS agent conducted a proactive review of SARs and opened an investigation. Within a few months, agents executed a search warrant and found approximately $300,000 in currency at the defendant’s residence. The currency was still in the original wrappers from the Bureau of Engraving and Printing. Agents also seized around $50,000 from bank accounts and approximately $100,000 in investment accounts. Investigators, through either seizures or asset recovery, accounted for nearly all the stolen money.
A Federal jury sentenced the defendant to several years in prison for structuring of financial transactions, theft of government property, and money laundering.
FinCEN serves as the financial intelligence unit (or FIU) of the United States. An FIU is the central agency within a jurisdiction responsible for collecting, analyzing, and disseminating financial information in furtherance of law enforcement investigations and prosecutions. By analyzing the suspicious transactions utilizing the fruits of originally undetected criminal activity, FinCEN was able to work backwards and obtain a conviction of the defendant for the underlying criminal activity. SARs and other reporting requirements were specifically implemented to deal with scenarios such as this one involving suspicious financial transactions, transfers of money, and originally undetected transnational criminal activity.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
FinCEN Implements New Rule Requiring U.S. Banks to Seek Information from Foreign Banks on Iranian Financial Ties
On October 5, 2011 the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) delivered to the Federal Register a final rule to implement section 104(e) of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA) to complement Treasury’s ongoing efforts to protect the international financial system from abuse by Iran. The rule becomes law upon its publication in the Federal Register.
The new rule will be published in 31 C.F.R. Section 1060.300 and is entitled “Reporting obligations on foreign bank relationships with Iranian-linked financial institutions designated under IEEPA and IRGC-linked persons designated under IEEPA.”
The goal of this new rule is to further separate the U.S. financial system from Iran by ensuring that no foreign banks with which U.S. institutions have corresponding accounts with have any ties to suspect Iranian financial institutions. The outcome of this rule will be to further isolate the Government of Iran, disrupt its ability to develop weapons of mass destruction or support terrorism, and encourage the broader international financial system to isolate Iran if it wants to benefit from doing business with the United States.
The rule accomplishes these goals by requiring a U.S. bank, upon a request from FinCEN, to inquire into whether any of the foreign banks with which it holds a correspondent account has dealings or accounts associated with the Government of Iran, blocked Iranian banks, or the Revolutionary Guards (IRGC). The rule also requires, upon request, inquiries into a foreign bank’s transfers of funds for or on behalf of, directly or indirectly, an Iranian-linked financial institution or IRGC associated entity designated under IEEPA within the preceding 90 calendar days.
The new rule also requires that the U.S. bank request from the foreign bank a notification if the foreign bank subsequently establishes an account for an Iranian-linked financial institution designated under IEEPA at any time within 365 calendar days from the date of the foreign bank’s initial response. A laundry list of requirements is listed in the new regulation dictating the specific disclosures a bank must report to Treasury with regards to financial dealings involving Iranian entities designated pursuant to IEEPA and any of the foreign banks with which the U.S. bank has a correspondent account. U.S. banks have 45 days after a request from FinCEN to file their initial report. A U.S. bank will also have 10 days to file a report to FinCEN if they are subsequently informed that a foreign bank they hold an account with opens an account with an Iranian-linked financial institution.
This line of inquiry will ultimately determine whether or not that foreign financial institution itself will be prohibited from maintaining or opening, in the United States, a correspondent account or payable-through account. As authorized by Congress in CISADA, if the Secretary of the Treasury determines that the foreign financial institution knowingly engages in certain specified activities, that foreign financial institution will not be allowed to maintain or open such accounts with U.S. financial institutions. Those specified activities include facilitating a significant transaction or transactions or providing significant financial services for a financial institution whose property or interests in property are blocked pursuant to IEEPA. This prohibition is specifically aimed at disrupting Iran’s proliferation of weapons of mass destruction or delivery systems for weapons of mass destruction, or in connection with Iran’s support for international terrorism, or for the IRGC or any of its agents or affiliates whose property or interests in property are blocked.
Failure of a U.S. bank to comply with FinCEN’s request for inquirt into the Iranian-linked affairs of a foreign financial institution will subject the U.S. bank to both civil and criminal penalties as enumerated in 31 U.S.C. Sections 5321(a) and 5322.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Suspicious Activity Report (SAR) Leads to Recovery of Funds Derived from Foreign Corruption
As was reported in our last blog post about Suspicious Activity Reports (SARs), such reports are critically important to the U.S. government’s efforts to detect complex criminal activity. FinCEN, the U.S. Department of the Treasury’s office responsible for analyzing such filings, has been more active than ever in detecting criminal activity. Since SARs are filed by a financial institution without the target’s knowledge they give the government a head start in their investigations. The information contained in the reports is analyzed by teams of government analysts who develop trends and establish findings that assists the government’s subsequent investigation.
One area of criminal activity SAR analysts focus on is foreign corruption. Analysts will search SARs for key terms such as “politically exposed person” or “PEP,” “foreign corruption,” and “senior foreign political figures.” In 2010 analysts documented 1,294 SARs related to the terms mentioned above. Most of the reports are filed by depository institutions like banks, but other institutions like securities dealers and money services businesses also filed “foreign corruption” related SARs. Most of the reports involved amounts or aggregate amounts between $100,000 and $50,000,000 and identified the activity as BSA/Structuring/Money Laundering.
One such SAR exposed a foreign corruption scheme to Federal officials. The government ultimately seized and forfeited criminal proceeds valued at more than $100 million from the findings of that initial SAR and its subsequent investigation. The investigation revealed that several subjects conducted a complex series of transactions, over a period of several years, using the proceeds of foreign corruption.
The investigation centered on the circumstances surrounding a foreign civil case in which the judge found for the plaintiff and ordered the defendant to pay the plaintiff (and heirs) the U.S. equivalent of half a billion dollars. Soon after the judgment in the civil case, law enforcement commenced an investigation into the possibility that the decision in the civil case was the result of a bribe, worth tens of millions of dollars, paid to the judge through a group of attorneys. This investigation led to the arrest of several individuals involved in the civil case, including the plaintiff’s heirs, the judge, and the attorneys. The judge and attorneys were convicted of bribery.
After the bribery scandal broke, a financial adviser (and co-conspirator) helped the plaintiff and his heirs set up corporate and trust structures to conceal and launder large portions of the public corruption proceeds. A significant portion of the corruption proceeds were then moved through these entities to or through bank and investment accounts located in the United States.
U.S. authorities became involved when members of the plaintiff’s family attempted to open accounts in the United States. Through the use of Bank Secrecy Act (BSA) data, especially SARs, and investigative information provided by foreign authorities, investigators identified approximately 2 dozen accounts in the United States that contained the proceeds of the fraud and bribery schemes.
All of the plaintiff’s family and heirs involved the scheme were arrested, pleaded guilty, and were sentenced to prison. The financial advisor was arrested and has yet to be tried.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
FinCEN Executes Civil Penalty Assessment Against Michigan Man
Last Friday, the Financial Crimes Enforcement Network (FinCEN) announced the imposition of a $25,000 civil penalty against Mohamed Sheikh for alleged violations of the Bank Secrecy Act. Specifically, the assessment alleges that Sheikh willfully violated the structuring requirements of the Act and further, that Sheikh was acting as an unregistered money transmitter.
Sheikh was the manager of Abbas Phone Card and Grocery store, located in eastern Michigan. The FinCEN civil penalty assessment comes two years after federal criminal charges were imposed against Sheikh, the store owner (Sheikh’s brother), and Sheikh’s two sons. Beginning in 2009, the individuals were investigated and subsequently arraigned in federal court for allegedly engaging in fraudulent transactions relating to the federal food stamps and WIC programs. Following their guilty pleas, Sheikh and his brother were sentenced to a period of incarceration, followed by a probationary period, and each were ordered to pay a restitution amount of $718,743 to the United States Department of Agriculture (USDA). The sons received probation and were ordered to pay a restitution of $439,809 to the USDA. Restitution is the government’s method of imposing criminal fines.
The execution of the civil penalty assessment against Sheikh relies on enforcement regulations in the Bank Secrecy Act. The Bank Secrecy Act requires those engaging in money services to register with FinCEN every two years, and further, financial institutions must also report monetary transactions of $10,000 or more. It is a violation of the Act if transactions are “structured” to avoid the reporting requirement, such as making multiple transactions under $10,000 rather than engaging in a single transaction over $10,000. The civil penalty assessments directly benefit the U.S. government, and in this situation, will be paid to the U.S. Treasury Department.
What is interesting is the fact that FinCEN has chosen to impose the civil fine on Sheikh, the manager of the store, rather than the store owner and Sheikh’s brother, Aidarus Abbas Mohamed. This means that either the evidence against Sheikh was stronger than the evidence against Mohamed, or that FinCEN will be assessing Mohamed with a civil penalty in the near future. Either way, Sheikh must unfortunately deal with the staggering amounts of restitution for his criminal case and the newly imposed civil fine from FinCEN.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
FinCEN Imposes Civil Fine on Money Services Business in Georgia
The Financial Crimes Enforcement Network, or FinCEN, is an enforcement branch of the U.S. Treasury Department. FinCEN was established in 1990 to investigate financial crimes, such as money laundering and fraud. In 1994, the branch increased in power when it was delegated with authority to enforce regulations under the Bank Secrecy Act (BSA).
Today FinCEN issued a financial penalty assessment against Altima, Inc., located in Norcross, Georgia. Altima is a money services business and therefore subject to specific reporting regulations under the BSA. Typically, a money services business is any entity that engages in transactions relating to money orders, traveler’s checks, check cashing and currency exchange. Such businesses are required to register with FinCEN once every two years, in addition to other reporting requirements.
According to the assessment, Altima failed to comply with the registration requirements and implement an anti-money laundering program. The assessment alleges that Altima engaged in numerous monetary transactions with entities in Iran. The assessment goes on to state the potential civil penalties it has the ability to impose, specifically, up to $5,000 for each registration violation and up to $25,000 for failure to implement an anti-money laundering program. However, FinCEN only imposed a $5,000 fine against Altima.
The imposition of only $5,000 is great news for Altima. The fact that Altima failed to register repeatedly and implement the required program could have resulted in much larger fines. Altima was owned and managed by one individual, and dissolved in September 2010, which is perhaps why the assessment is minimal. The last money services business that received an assessment, in March of this year, was required to pay $25,000 in civil fines.
Any institution that engages in monetary transactions within the U.S. must be aware of FinCEN and it’s regulatory power. Further, for institutions engaging in transactions with sanctioned countries, such as Iran, investigations by the Office of Foreign Assets Control (OFAC) is also a possibility. It is extremely important to follow proper compliance procedures regarding the U.S. financial system in order to avoid legal action.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Tax Evasion and Filing a False Tax Return – The Government’s Back-up Plans
Previously in this blog we discussed federal offenses such as money laundering, bulk cash smuggling, unlicensed money transmitting businesses, and smurfing. These are all serious offenses in their own right; offenses that can send someone to prison for up to 20 years. But as is the case in many financial crimes there are two offenses related to all the above that the goverment can additionally charge someone of at its own discretion. They are tax evasion and filing a false tax return.
Although these tax crimes are separate and distinct from the other financial crimes mentioned, the conduct of the underlying financial offense often overlaps and quite organically evolves into a subsequent tax crime. For example, someone who launders money, smuggles cash, or structures payments isn’t likely to truthfully report this illicit income in their tax returns. But let’s take a closer look at the offenses and understand why the government can convict someone of the tax offenses even if it cannot convict the person for the underlying financial crimes that originally motivated its investigation.
Tax evasion, 26 U.S.C. 7201, is the more serious of the two tax crimes because it carries the harshest penalties. An individual defendant can be charged with a separate tax evasion charge for every year the defendant evaded taxes. For each tax evasion charge the defendant faces a maximum penalty of 5 years and a $100,000 fine. For corporate defendants the fine could be as steep as $500,000 for each offense.
There does not need to be a filing or a false statement to convict someone of tax evasion. All the government must do is demonstrate beyond a reasonable doubt that the defendant (1) underpaid taxes; (2) engaged in an affirmative act of evasion or attempt to evade; and (3) acted willfully. So even if the government doesn’t catch a defendant smuggling cash out of the country it can still charge him with tax evasion if it later finds out that the money was put into an overseas bank account with the intent of evading tax liabilities.
Filing a false tax return, 26 U.S.C. 7206, is very similar to the offenses of false statements and perjury. Each individual ‘false’ filing can be charged as a separate offense and an individual defendant can face prison sentences as lengthy as 3 years and a $100,000 fine per offense. Corporate defendants can be fined as much as $500,000 per offense.
For the government to successfully prosecute someone under this offense they must prove beyond a reasonable doubt that the defendant (1) signed the tax return or related document; (2) signed under penalty of perjury; (3) the return or related document was in fact false; (4) the falsity was material; and (5) the defendant acted willfully. Most people file their taxes but probably don’t report illicit funds in their returns. By under-reporting or concealing material facts about the sources of income may subject a defendant to the provisions of this statute. For example, a defendant that fails to accurately mention in his return the funds that he received from overseas because they were under the $10,000 reporting requirement may never be investigated for a structured transaction offense but could very well be investigated for filing a false tax return. The government may not be able to prove that the underlying transaction was intended to evade a reporting requirement; but the government knows the money exists in the defendant’s account and that it is unaccounted for in the return.
It is evident that the government has plenty of tools in its kit when it suspects someone of committing a financial crime. With the ever growing link between global terrorism and financial crime it would be unwise to expect the government to withold from using any of its tools to prosecute people.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Evading currency reporting requirements? Immigration and Customs Enforcement has a Bulk Cash Smuggling Center for that.
The U.S. government has a plethora of criminal statutes designed to curb the illicit transfer of funds and the flow of money in the underground economy. Federal law enforcement officers can investigate unlicensed money transmitting businesses (i.e. hawala) pursuant to 18 U.S.C. 1960, ensure compliance with reporting requirements in 31 U.S.C. 5316, investigate structured transfers (or “smurfing”) subject to 31 U.S.C. 5324, investigate RICO related foreign travel in 18 U.S.C. 1952, and intercept bulk cash smuggling pursuant to 31 U.S.C. 5332. These are in addition to the anti-money laundering and tax evasion statutes also found in the U.S. code.
Law enforcement officers from the FBI, Customs and Border Protection, Homeland Security Investigations and Immigration and Customs Enforcement rely on these authorities to, either directly or indirectly, disrupt and dismantle criminal networks that move bulk cash. Although you may not consider yourself an associate of a criminal network, you are still at risk of being criminally prosecuted for technical violations of these statutes.
At least since 9/11 and the USAPATRIOT Act the U.S. has identified the link between illicit funds, criminal enterprises, and terrorist organizations that endanger American national security. To curb these threats Congress has unapologetically empowered the executive branch to shine a light on funds transfers by either targeting institutions or individuals that facilitate money transfers or targeting the transfers themselves when they are worth more than $10,000 USD. From the U.S. government’s perspective, if everyone with legitimate funds complied with its financial laws, then the only funds left to be transferred outside the law would be the ones derived from illicit activities. Therefore it is imperative for any individuals looking to move around money to fully comply with Treasury’s reporting requirements and to utilize only licensed money transmitters, in addition to satisfying any tax liabilities. Merely paying your taxes will not exonerate you from violations of the financial criminal statutes listed above.
As if the federal government didn’t have enough assistance from the authority granted to it by Congress, ICE provides a law enforcement resource known as the Bulk Cash Smuggling Center (BCSC). The BCSC provides real-time tactical intelligence, investigative support and expertise to federal, state, tribal, local, and foreign law enforcement authorities. This center is available to law enforcement officers 24-hours a day so that they always have access to financial investigative expertise that will help them better follow the money trail, seize and forfeit criminal proceeds. In addition to using K-9 units to identify large amounts of cash, BCSC has awarded government contracts to technology firms to research and develop nonintrusive technology that can more accurately identify large amounts of U.S dollars, Canadian dollars, and Euros. These efforts have recently made enforcement more effective than ever. In 2010 alone 203 individuals were arrested and over $101 million USD was seized. Many of the offenses can lead to sentences that could be as severe as several years in prison.
So please, be mindful of these laws the next time you need to transport money internationally between family members or friends. There is no law limiting the amount of money you can move, so long as you follow the rules associated with moving it.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
