Structuring Charges That Follow Drug Money Investigations.

31 U.S.C. § 5324 and the Money Laundering Control Act prohibit structuring transactions to avoid required financial reporting; however, “structuring” and “money laundering” are two very different charges. A structuring conviction does not require proof that the money involved came from some criminal act. If the money was legitimately earned and deposited in amounts intended to evade financial reporting, a defendant can still be charged with and convicted of structuring.

When facing a structuring charge that arises after a drug-money investigation, the government is still required to prove a specific purpose. While the prosecution does not need to show the funds came from criminal activity, it must show the transactions in question were the result of a purposeful effort to evade reporting requirements. This means the government must show that the transaction pattern was designed to evade reporting, not just that multiple transactions were made in amounts under $10,000. Simply executing multiple small transactions does not make it structuring, so the government must be able to connect the pattern of transactions back to an intent to evade reporting.

This is a key way in which a structuring charge is different from a money-laundering charge. Specifically, while a structuring charge is prohibited under 31 U.S.C. § 5324 and is an “inchoate” offense, meaning no harm needs to have happened, money laundering is prohibited under 18 U.S.C. § 1956 and is a substantial offense involving proceeds of “specified unlawful activity.” To prove a money-laundering charge under 18 U.S.C. § 1956, the government must prove that the transaction involved criminal proceeds and was intended to promote a crime or conceal the nature of a crime. Structuring charges, on the other hand, are strictly prohibited under 31 31 U.S.C. § 5324 for any and all funds.

How do cash-reporting rules turn deposits into a section 5324 allegation?

Under Section 5324 of the Bank Secrecy Act, the federal government can charge individuals for structuring transactions with the intent to evade required financial reporting. This includes causing a report to be missing, reporting a false nature or amount, or purposefully providing materially false information. This includes transactions conducted through domestic financial institutions or a nonfinancial business.

According to 31 U.S.C. § 5313, individuals and businesses are required to file a Currency Transaction Report (CTR) when conducting cash transactions that exceed $10,000. However, the $10,000 threshold applies only to transactions conducted in cash, not transactions involving electronic transfers or checks, which generally do not trigger CTR obligations.

Banks and other financial institutions typically aggregate the total of all same-day cash transactions when determining whether they need to file CTRs. This means that multiple cash deposits or withdrawals conducted during the same day will trigger CTR obligations if their sum total exceeds $10,000. Banks are also required to report any “suspicious transactions” involving $5,000 or more, meaning these reports could be sent to the government even if you never made multiple cash deposits or deposits that added up to more than $10,000.

With this in mind, why would the federal government bring structuring charges against someone who has deposited cash? Structuring charges are generally brought against individuals and businesses who intentionally make multiple small cash deposits or withdrawals to avoid triggering the $10,000 Currency Transaction Report requirement. This type of activity is prohibited by 31 U.S.C. § 5324, and anyone suspected of this activity could face prosecution. When facing structuring charges, defendants need to be prepared to make a strategic decision about how to defend themselves in federal court, and if needed, reach an agreement with the government. If your business is being targeted in a federal investigation, we can help you make informed decisions about how best to defend against a potential structuring charge.

Which agencies trace the records behind a suspected structuring pattern?

Financial institutions that receive multiple cash deposits or withdrawals (even multiple deposits in different branches of the same bank) that add up to $10,000 or more in one business day typically review the transactions for indications of structuring. If you have conducted multiple deposits or withdrawals that trigger a Currency Transaction Report (CTR) and the bank suspects that this indicates a structuring attempt, the bank will file a Suspicious Activity Report (SAR). This report goes to the Financial Crimes Enforcement Network (FinCEN), and the transaction data can then be shared with law enforcement agencies.

As we have discussed, FinCEN is responsible for receiving reports from financial institutions that fall under the Bank Secrecy Act and other pertinent statutes. FinCEN generally uses this information to develop intelligence reports for law enforcement agencies. Once FinCEN shares the information with a law enforcement agency, that agency has the authority to investigate a suspected federal crime.

The federal agencies that commonly handle investigations into alleged structuring include:

• Internal Revenue Service Criminal Investigation, The IRS Criminal Investigation is responsible for investigating financial crimes involving federal tax violations. Due to the possibility of structuring charges stemming from financial reporting violations, the IRS Criminal Investigation is often involved in structuring cases.
• Federal Bureau of Investigation, The FBI has a broad mandate to investigate financial crimes. However, the FBI generally investigates suspected structuring offenses when they are part of a broader federal investigation into financial or organized crime. If you are facing the possibility of a structuring charge, it is possible that the government is investigating a wider variety of offenses in which you may be implicated.
• Homeland Security Investigations, HSI is responsible for investigating financial crimes involving violations of international law. While HSI can certainly investigate suspected structuring in a domestic setting, HSI is typically involved in investigations into international financial and currency movement.

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When can that transaction pattern become a federal case, and when can laundering counts accompany it?

Can you be charged with structuring and money laundering at the same time? Yes, this is very possible if the transactions in question satisfy both statutes. Structuring charges are about avoiding the Currency Transaction Report (CTR) requirements under the Bank Secrecy Act. Money laundering charges require a finding of criminal proceeds and a finding of specific intent (such as concealing the source of the money or using the money to promote another criminal act). As a result, if a financial transaction pattern suggests both an intent to evade financial reporting requirements and a violation of the Money Laundering Control Act, then both types of charges could be appropriate.

How are federal structuring charges brought?

Federal prosecutors have multiple options at their disposal when it comes to bringing structuring charges. Depending on the circumstances, federal prosecutors will file a criminal complaint, seek a grand jury indictment, or file an information to initiate a case. These are all different in procedural respect, though they are all charging documents that will serve as the basis for an enforcement action in federal court.

What is the standard for charging vs. The standard for conviction?

A key issue that is often overlooked is that there is a significant difference between the burden of proof for charging versus the burden of proof for conviction. For example, a criminal complaint may initiate a case upon a showing of probable cause, while a felony information may be filed only after the defendant waives indictment in open court. The same standard applies to a federal grand jury indictment, and the grand jury will return a “true bill” if it finds that the probable cause threshold has been met. This is a different standard than the one used at trial. In order to secure a conviction in federal court, the government must meet the “proof beyond a reasonable doubt” standard, which is much harder to meet. This means that even if a government attorney finds substantial evidence to bring structuring or money laundering charges in federal court, it does not mean they have the evidence to secure a conviction.

How long does the government have to file charges?

Another key issue is whether the government has missed the statutory window to file charges. Under 18 U.S.C. § 3282, the statute of limitations for the vast majority of noncapital federal offenses is five years. If five years have passed since the structuring offense and no indictment was found or information instituted within that period, and no statutory exception applies, the charge may be barred.

What can a section 5324 conviction cost before and after forfeiture proceedings?

A standard structuring violation under Section 5324 of the Bank Secrecy Act carries up to a five-year federal prison sentence. While the maximum statutory penalty applies in all cases, it can reach a ten-year prison sentence in some cases. For example, the statute allows for a ten-year sentence if structuring more than $100,000 in a rolling twelve-month period or structuring funds while in violation of another federal law are involved. These are considered statutory aggravating conditions, and a ten-year sentence can be sought if federal prosecutors are able to prove the presence of one or more aggravating conditions.

Along with the possibility of a five- to ten-year prison sentence, structuring charges also carry a fine. For individuals, each individual structuring violation carries a fine of up to $250,000. Companies can face fines of up to $500,000 for each violation.

Along with structuring charges, federal prosecutors will often seek forfeiture of assets that were either used in the crime or acquired with criminal proceeds. Structuring charges are considered inchoate offenses, which means that even though a criminal act has not necessarily happened yet, it is still a crime. With that in mind, the government can seize assets that it believes would have been involved in or resulting from a continuing criminal conspiracy (such as a drug money laundering scheme). This means a forfeiture charge can carry significant ramifications for a business owner’s company even if they avoid sentencing to a lengthy federal prison term.

In a civil forfeiture proceeding, the government generally must prove by a preponderance of the evidence that the property is subject to forfeiture; criminal forfeiture is imposed as part of the criminal case and is governed by the criminal proceeding’s proof requirements. This is the same standard of proof that is used in most civil litigation. For this reason, a forfeiture claim can still result in the government seizing assets owned by individuals or companies even if they are found not guilty of criminal structuring in federal court.

Contact a Federal Criminal Defense Attorney

Nothing here is legal advice, and the details of your case matter. Todd Spodek and Spodek Law Group take federal criminal and white collar cases nationwide, from offices in New York, Brooklyn, Queens and Los Angeles. You can reach the firm at 888 348 8028.