In 1970 the US Government began its efforts to do away with financial privacy with a series of laws that affect financial institutions, businesses, and individuals. The laws include criminal violations with long terms of imprisonment and civil penalties including forfeiture of bank accounts and other assets including the loss of one’s home. These laws apply even if an individual has no illegal income.
The Bank Secrecy Act (BSA) was the first major legislation designed to keep track of all financial banking activities. The government has added numerous statutes and regulations which require financial institutions to keep records on its customers. A financial institution includes not only banks but also: security brokerage firms, jewelry stores, pawnbrokers, and travel agencies; car, plane and boat businesses; insurance companies; real estate closing businesses and others.
A financial institution must not only keep customer records, but must also report cash deposits or withdrawals in excess of $10,000 to the Treasury Department by filing a Currency Transaction Report (CTR). Financial institutions are also required to file Suspicious Activity Reports (SAR) for cash deposits of less than $10,000. The CTR and SAR require the financial institution to give the government a heads-up as to transactions which might otherwise go unreported unless the government inquired of a bank about its customer.
The Government’s effort to keep track of everyone’s financial dealings does not end with efforts directed to financial institutions. Federal regulations also require any company or individual engaged in business to report a cash transaction or series of cash transactions with a customer that exceeds $10,000 over a 12-month period.
The government also keeps track of banking activities of US citizens with offshore bank accounts and cash coming in or out of the US. A person who brings in or takes out of the US over $10,000 in cash or negotiable instruments must disclose this activity by filing a government form upon leaving or returning to the US. If a person has over $10,000 in one or more foreign financial institutions, another report must be submitted to the Treasury Department every year with the income tax return.
In 2010 the Foreign Account Tax Compliance Act (FATCA) was passed creating an obligation on US citizens and residents with assets outside the United States, to disclose the assets by completing a form titled “Statement of Specified Foreign Financial Assets”. The amount required to trigger the obligation to report the foreign assets varies depending upon different factors. Fifty thousand dollars in assets may trigger the obligation to file the form. FATCA also requires offshore financial institutions to report its US customers to the Treasury Department and pay a portion of income earned on the accounts to the IRS. Many banks around the world are now refusing to take on US citizens as customers.
These are just some of the laws designed to invade a person’s financial privacy. These laws apply even if a person is engaged in only legal activity, has committed no crimes, and is not trying to hide earnings of criminal activity. A person is subject to criminal prosecution and incarceration for failure to disclose financial information or for causing banks or other businesses to fail to file the required disclosure forms. The government does not have to hack into business records to invade financial privacy; its laws require businesses and individuals to give up the right to financial privacy or face criminal prosecution.
By Mark L. Horwitz
Criminal Defense Attorney
Law Offices of Mark L. Horwitz, P.A.
Offices in Orlando and Tampa