FIFA scandal shows breaking up deposits is red flag for authorities

Thu Jun 4, 2015 1:19am EDT
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By Brett Wolf

ST. LOUIS (Reuters) - Many criminals and some legitimate businessmen who don't want the U.S. government to be informed of their financial activity rely on a simple tactic: break up bank deposits and withdrawals so that each is under $10,000.

    In reality, though, this tactic often backfires. It can expose them to closer scrutiny from both the banks and federal law enforcers than they may otherwise have attracted, said current and former law enforcement officials. 

    In unrelated cases, former Speaker of the House Dennis Hastert and Daryan and Daryll Warner, sons of former FIFA vice-president Jack Warner, learned the lesson the hard way. Last week it emerged that they had all been accused of the federal crime known as "structuring."

    Hastert, who left Congress in 2007, was charged with structuring the withdrawal of more than $950,000 in cash to evade a requirement that banks report cash transactions above $10,000, and lying to the Federal Bureau of Investigation about his withdrawals, prosecutors said. Hastert, scheduled for arraignment on Thursday, has made no public statement since the federal charges were filed last week.

    The Warner brothers and their associates deposited more than $600,000 in cash at bank branches in New York, Miami and Las Vegas in 2011, breaking the money up into smaller amounts to make sure transactions did not exceed the $10,000 threshold, according to a 2012 U.S. complaint that was unsealed last week. Both have pleaded guilty and are cooperating with prosecutors probing corruption at FIFA, while their father, who denies wrongdoing, stands accused of soliciting payments worth $10 million from the South African government. 

It is not known whether the banks reported structuring by Hastert or the Warners to the Treasury Department, possibly sparking criminal investigations. It is illegal for banks to discuss whether they have filed such reports.

    The reason drug traffickers and others keep deposits and withdrawals under $10,000 is that the primary U.S. anti-money laundering law, the Bank Secrecy Act (BSA), requires banks to file with the Treasury Department so-called Currency Transaction Reports, or CTRs, on transactions involving more than $10,000 in cash.

    What many don't necessarily realize, however, is that a CTR is not likely to be noticed by authorities unless the party involved was already under investigation, said a former federal agent who was responsible for reviewing such documents. What does catch the attention of law enforcers, instead, is when someone tries to prevent a bank from filing a CTR by breaking up a cash transaction, said the source.   Continued...

The logo of soccer's international governing body FIFA is seen on its headquarters in Zurich, Switzerland, May 27, 2015. REUTERS/Ruben Sprich