Yes. Breaking up cash deposits, withdrawals, or other bank transactions into smaller amounts so the bank will not file a currency transaction report is a federal crime called structuring, under 31 U.S.C. section 5324. It does not matter whether the money came from a paycheck, a cash business, a gift, or savings. The crime is splitting up the transactions for the purpose of evading the report, not the source of the funds.

The reporting rule and the structuring ban

According to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), federal law requires financial institutions to report cash transactions of more than $10,000 conducted by or for one person, including several cash transactions that add up to more than $10,000 in a single day (FinCEN customer notice). FinCEN also says there is “no general prohibition against handling large amounts of currency,” and that the report is required whatever the reason for the transaction. It warns that structuring “may lead to a required disclosure from the financial institution to the government.”

Section 5324(a) forbids acting “for the purpose of evading” that reporting requirement in several ways, including to “structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more domestic financial institutions.” Parallel bans cover transactions with nonfinancial businesses and moving monetary instruments into or out of the country.

FinCEN’s own examples of structuring include splitting $15,000 from the sale of a truck into two deposits on the same day, and cashing two $9,000 checks on consecutive days to pay for business supplies, each done to avoid the report. Structuring can span more than one day and more than one account.

What the government has to prove

Nothing in section 5324 requires that the money be connected to any other crime. The key mental element is the purpose of evading the report. The penalty for structuring is written into section 5324 itself and does not depend on a willful violation: the general penalty section for these reporting laws, 31 U.S.C. section 5322, covers a person “willfully violating” them but expressly excludes section 5324.

Depositing less than $10,000 is not a crime in itself. The offense turns on the purpose of evading the report, and the government has to prove that purpose like any other element.

Penalties and forfeiture

A structuring conviction carries a fine, up to 5 years in federal prison, or both. The maximum rises to 10 years, with a doubled fine, only if the structuring happened while violating another federal law or as part of a pattern of any illegal activity involving more than $100,000 in a 12-month period (section 5324(d)).

The money itself is also at risk. When sentencing for structuring, the court must order forfeiture of all property involved in the offense and any property traceable to it, and property involved in structuring can also be seized and forfeited in a civil case (31 U.S.C. section 5317(c)). The Internal Revenue Service may seize property for structuring only if it came from an illegal source or was structured to conceal a violation of another criminal law, and an owner who requests a court hearing within 30 days after notice of the seizure must get the property back unless the court, after a hearing, finds probable cause that the property was involved in structuring and that one of those two conditions is met.

Structuring is a federal offense, and federal district courts have exclusive jurisdiction over federal offenses (18 U.S.C. section 3231), so the case is not a California state charge. For other federal charges, see federal crimes.

How California law differs

California’s money-laundering statute, Penal Code section 186.10, covers transactions through financial institutions totaling more than $5,000 within seven days or more than $25,000 within 30 days, but only when they are done with specific intent to promote or carry on criminal activity, or with knowledge that the money is “the proceeds of, or is derived directly or indirectly from the proceeds of, criminal activity.”

California also has a reporting-evasion law, Penal Code section 14166. It punishes conducting transactions through financial institutions as part of a scheme to avoid a required currency report, but only when the person also intends to disguise that the money came from criminal activity or to promote criminal activity. Neither California statute reaches legitimately earned money moved with no criminal purpose. Someone who keeps deposits of honestly earned cash just under $10,000 to avoid the report can face a federal structuring question without meeting either California statute’s criminal-purpose element.

What matters if you are asked about this

  • Whether deposits or withdrawals were deliberately kept under $10,000, and how often.
  • Whether anyone discussed staying under the reporting line, with a bank employee, a business partner, or in messages.
  • Whether there is a legitimate, documented reason for the amounts, such as depositing each day’s receipts from a cash business on a regular schedule.

Talk to a lawyer before you talk to a bank or a federal agent

If a bank has flagged your account or frozen funds, or you believe you are being investigated for structuring, do not try to explain the deposits to a bank employee or a federal agent on your own. The Law Offices of David S. Chesley can review what happened and how the law applies to your situation. Call (800) 755-5174.