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The War on Cash Destroys a Small Entrepreneur
The War on Cash Destroys a Small Entrepreneur
Lyndon McClellan is a small entrepreneurwho owns and operates L & M Convenience Mart in Fairmont, North Carolina. L & M comprises a gas station, convenience store, and a small restaurant serving hot dogs, hamburgers, and catfish sandwiches. One day last July, more than a dozen federal, state and local law enforcement agents swarmed Mr. McClellan’s business, including agents from the FBI and the North Carolina Alcohol and Law Enforcement agency—and they were “asking” for him. When Mr. McClellan arrived, he was escorted by two federal agents into his stock room for a private chat. The agents showed him paperwork indicating that he had made two cash deposits totaling $11,400 within a 24-hour period in his bank account at the Lumbee Guarantee Bank. They informed him that the papers also indicated that he had a history of “consistent cash deposits” of less than $10,000, which was a violation of the the Federal law against “structuring.” They also informed him that the IRS had seized all of the $107,702.66 in L & M’s bank account.
What Mr McClellan did not know was that it was against the law to make cash deposits of less than $10,000. Banks are legally obligated to report any deposit of more than $10,000 to the U.S. Treasury Department. But if an individual makes several cash deposits of less than $10,000 over an unspecified period of time that total more than $10,000, then he is presumed to be a money launderer or drug trafficker who is committing the dastardly crime of structuring, that is, seeking to circumvent the bank’s reporting requirement and maintaining the privacy of his financial affairs Thus banks are also required to file “suspicious activity reports” on cash deposits of less than $10,000.
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Justice Department Rolls Out An Early Form Of Capital Controls In America
Justice Department Rolls Out An Early Form Of Capital Controls In America
Something stunning took place earlier this week, and it quietly snuck by, unnoticed by anyone as the “all important” FOMC meeting was looming. That something could have been taken straight out of the playbook of either Cyprus, or Greece, or the USSR “evil empire”, or all three.
This is how the WSJ explained it:
The U.S. Justice Department’s criminal head said banks may need to go beyond filing suspicious activity reports when they encounter a risky customer“The vast majority of financial institutions file suspicious activity reports when they suspect that an account is connected to nefarious activity,” said assistant attorney general Leslie Caldwell in a Monday speech, according to prepared remarks. “But, in appropriate cases, we encourage those institutions to consider whether to take more action: specifically, to alert law enforcement authorities about the problem.”The remarks indicate that banks may be expected to do more than just file SARs, a responsibility that itself can be expensive and time-consuming.
Some banks already have close relationships with law enforcement, said Kevin Rosenberg, chair of Goldberg Lowenstein & Weatherwax LLP’s government investigation and white collar litigation group. Ms. Caldwell’s remarks “speak to moving forward in a more collaborative way,” said Mr. Rosenberg.
A tip-off from a bank about a suspicious customer could lead law enforcement to seize funds or start an investigation, Ms. Caldwell said.
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