The two kinds of cash deposits that can lead to account seizures in the USA


Confiscation of assets by the U.S. government has been the subject of a number of posts. Americans abroad have been concerned about the confiscation of their assets through the various disclosure programs, the FBAR fundraiser and PFIC taxation.

Less attention has been paid to the confiscation of the assets of Homelanders. When it comes to cash, one can keep your cash outside the bank or keep your cash in the bank. The article referenced in the above tweet is further evidence of the propensity of governments on all levels to use “civil forfeiture” as a way to confiscate assets. On September 11, 2014 a post was published at the Isaac Brock society discussing government confiscation of cash that is NOT in the bank. The above tweet references an article that describes how the U.S. government is confiscating cash that is put into bank accounts (because it is supposed to be safe there).

From a a governmental perspective “civil forfeiture” is a very cost efficient way to confiscate cash. They are NOT required to prove or even fabricate any “wrong doing”. They just take the cash.

Make no mistake about it. The integrity of the U.S. government requires that it act within the confines of the law. And – “to be perfectly clear” – the confiscation of cash in bank accounts is perfectly legal. Given that morality is a function of legality, it is clearly and absolutely moral for the U.S. government to confiscate cash in the bank accounts of Americans. No doubt about. Absolutely no doubt! In fact, I’m sure that U.S. government officials would argue that the confiscation of cash is not only legal – but is the moral imperative of government.

Here is how they do it. They use the same statute that gave birth to our friend Mr. FBAR – Title 31 – The Bank Secrecy Act. I recommend that you read the article to get the detail, but here is how it works:

1. The Bank Secrecy Act requires that cash deposits in excess of $10,000 be reported. Yes, it’s analogous to the FBAR requirement for Americans abroad. In this case (if I am understanding it correctly), every cash deposit of $10,000 or more requires that a special “Form” (as you know “Form Crime” is very serous in the land of the free) be completed. Completion of the “Form” would notify the U.S. government of the deposit. As all Americans abroad know, forms are expensive and intrusive. Nobody wants to complete them. That said, (at least in my experience) most people who know of the legal requirement of the “Form” will complete it. Why? Well, because they don’t want to be charged with “Form Crime”.

2. The U.S. Government (which presumes all its citizens guilty of something all the time) operates under the assumption that (rather than running their businesses) Americans would rather spend their time thinking about how to avoid Forms (even if they don’t the Form exists). Therefore, (from a Governmental perspective) it’s quite rational and reasonable to expect that Americans will do everything possible to avoid a cash deposit of over $10,000 (since the $10,000 requires the extra work of filling out the Form).

3. Therefore, the U.S. Government has deputized the banks in America (it’s not just Foreign banks that have become U.S. government spies and enforcers) to be aware of patterns of cash deposits of less than $10,000. (The theory being that Americans are making a series of deposits that are less than $10,000) to avoid the requirement of the Form.

4. In furtherance of this objective, the Government, created a new crime called “structuring” – which is the crime of “structuring”  deposits under $10,000 to avoid reporting requirements – even when the money is from a perfectly legal source (you know like a coffee shop). Think of the crime of “structuring” as a way of punishing “anticipatory Form Crime”.

5. So, what happens is that the Government says:

You have been making a series of cash deposits under $10,000. We are going to punish you because we believe that an honest American would have made all the deposits as one in order to (1) ensure an absence of “Form Crime” and (2) to inform the Government of a $10,000 deposit.

6. The Government confiscates the money in your bank account.  The government punished you for “Anticipatory Form Crime” (even if you didn’t know the form existed). Immoral?  No, not all! Why because it’s all done according to law.

7. Here is where  it gets really interesting. The genius of this law is that it allows the Government to confiscate all balances in bank accounts that are the result of cash deposits – that are not reported to the U.S. Government. Why? The answer is simple. It’s possible that over time one could accumulate $10,000 that could have been deposited at once. You start small change and move on to dollars. Those individual cash deposits could, if not deposited, have later been part of a $10,000 deposit. Since that small deposit could have been part of a larger deposit, its:

right, just and equitable that the small deposit be confiscated by the government.

This is why all cash deposits are subject to seizure.

But, to keep it simple, look at it this way;

There are two kinds of cash deposits that could lead to account seizure:

1. Cash deposits above $10,000.

2. Cash deposits below $10,000.

This amazing story includes:

ARNOLDS PARK, Iowa — For almost 40 years, Carole Hinders has dished out Mexican specialties at her modest cash-only restaurant. For just as long, she deposited the earnings at a small bank branch a block away — until last year, when two tax agents knocked on her door and informed her that they had seized her checking account, almost $33,000.

The Internal Revenue Service agents did not accuse Ms. Hinders of money laundering or cheating on her taxes — in fact, she has not been charged with any crime. Instead, the money was seized solely because she had deposited less than $10,000 at a time, which they viewed as an attempt to avoid triggering a required government report.

“How can this happen?” Ms. Hinders said in a recent interview. “Who takes your money before they prove that you’ve done anything wrong with it?”

The federal government does.

Perhaps it’s time for investors to reconsider whether America is a safe haven for their investments.

P.S. Don’t steal! The U.S. Government doesn’t like competition!


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