Deposit Structuring Law

Money laundering is illegal.  To catch money launderers, there is a bank rule that any cash deposit over $10,000 has to be reported to the government for vetting. 

This would be easy to get around if you just deposit $9,000 over and over again.  So there is also a law that if you structure your deposits with the specific purpose to avoid getting reported, this is also illegal. Thanks to Bloomberg Law for the link.

The odd thing about this law is that it doesn’t have to be structured this way because you are money laundering.  If you are intentionally structuring it to avoid reporting because you don’t want the government in your business, that is also illegal, even if the actual money is not. 

Furthering the challenge to regular depositors, the IRS doesn’t have to prove the structuring before confiscating the funds in the account.  So if they see a series of almost-$10,000 deposits, they can take it and force the depositor to sue to get it back.  Since this often costs tens of thousands of dollars in legal fees, which you don’t get back even if you win, it is often not worth the trouble. If the IRS confiscates $30,000 and it would cost $25,000 and 2 years to get it back, it may not be worth it.

This doesn’t seem very fair.