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Bank Reporting Laws for Cash Deposits
Believe it or not, there are restrictions on certain cash deposits and it is regulated by your bank and the U.S. government. As a consumer and homebuyer, it’s important to be aware of cash transaction reporting guidelines.
The Bank Secrecy Act
The Bank Secrecy Act sets the guidelines for banks and businesses to report large currency transactions. The purpose of the act is to prevent tax evasion and money laundering by individuals using cash deposits to cover up the illegal source of their “earnings.”
Banks and businesses are required to submit a form to the IRS within 15 days after a large transaction. If a bank receives more than $10,000 in a single deposit, they are required by law to notify the government. In addition, they must report:
- Withdrawals of $10,000 or more
- Anyone using $10,000 or more to buy a cashier’s check or a bank draft
- If they multiple payments from the person within a year amounting up to more than $10,000
Reporting Suspicious Activity
According to the government, suspicious activity includes any deposit or withdrawal of $5,000 or more by someone who doesn’t typically make such a large transaction. The bank or business must notify the account holder that a report and flag has been made on their account. Up until a few years ago, the government was able to seize any large deposits that were not accompanied with the proper paperwork.
If you receive a large amount of cash, it is better to deposit it all at once. Do not break it up into smaller deposits. You could be accused of structuring, which is the illegal practice of making deposits to avoid reporting laws.
Keep Accurate Deposit Records
Make sure to keep accurate records of where your money is coming from and report any large deposits whenever necessary. This documentation is especially important if you make regular large deposits in case anyone ever questions your deposits or account. If you have documentation which shows how you obtained the money and when it was deposited, you can prove where the money came from and where it went.