Drug Wars Cause Closer Scrutiny of Large Cash Transactions

By Porter, Sylvia | THE JOURNAL RECORD, September 22, 1989 | Go to article overview

Drug Wars Cause Closer Scrutiny of Large Cash Transactions


Porter, Sylvia, THE JOURNAL RECORD


If your business handles large sums of cash, or if you are personally involved in large cash transactions, Uncle Sam is likely to visit you to see what's going on.

The war on drugs is a big part of the reason. Because of it, a smorgasbord of federal enforcement agencies now has access to details of your transactions.

Beginning in 1970, the Bank Secrecy Act required all banks and savings and loans institutions to report to the IRS all deposits and withdrawals involving $10,000 or more in cash. In 1985, the requirement was extended to dealers of big-ticket items as well as, for instance, companies that sell money orders or transfer cash.

So far, though, the information was available only to the Internal Revenue Service. That all changed with the passage of the Anti-Drug Act of 1988. Now, those transaction reports are available to the FBI, the Drug Enforcement Administration and U.S. Customs.

In addition, the IRS has beefed up its enforcement of the Bank Secrecy Act and its scrutiny of those reports. The IRS has more than quadrupled the number of investigators in some areas where there seems to be a disproportionate number of large cash transactions.

``We believe that not all of these transactions are being reported,'' says Robert Quarles of the IRS in North Miami, Fla. (That area is among those targeted for special investigation.)

The information about cash transactions can then be compared to an individual's income tax return. Someone who pays cash for a $25,000 car on a reported income of $10,000 is likely to pique the interest of the IRS and perhaps the other agencies as well.

``The money is the key, always the key,'' said a New York-based Treasury Department investigator. ``It has led us to everything from people dealing with large quantities of drugs or illegal weapons to people who simply think they can avoid paying their taxes.

``Follow the money and you'll find the bad guys.''

The reporting requirements frequently lead to money-laundering operations, he said.

This new, intense scrutiny of cash transactions means that legitimate businesses must make extra efforts to be able to explain the nature of those transactions. …

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