Structuring, according to United States Code (USC) laws and regulations, is the attempt by one or more persons to avoid importation/exportation reporting requirements by partitioning a sum of $10,000 or more in currency or other monetary instruments, so that the divided amounts each fall under the reporting threshold. The law is designed primarily to combat criminal enterprises that traffic cash unreported to the IRS.
The official structuring law, as it pertains to entering or leaving the U.S with currency, 31 USC 5324 (c) (3), states the following:
“(c) International Monetary Instrument Transactions.—No person shall, for the purpose of evading the reporting requirements of section 5316—
(1) fail to file a report required by section 5316, or cause or attempt to cause a person to fail to file such a report;
(2) file or cause or attempt to cause a person to file a report required under section 5316 that contains a material omission or misstatement of fact; or
(3) structure or assist in structuring, or attempt to structure or assist in structuring, any importation or exportation of monetary instruments.”
The law says, in a nutshell, that you can’t legally divide a sum of $10,000 or more in cash between two or more people in order to make it appear that you each are carrying individual amounts under the reporting requirement. A typical example of structuring involves a family of three traveling together with a sum total of, say, $17,000.
To avoid having to file a report for the $17,000, the family divides the cash amongst them: Dad carries $5,000, Mom carries $4,000, and Son carries $7,000. When they attempt to travel through Customs as a family unit with the cash, though, Customs becomes suspicious. Individually, each family member’s cash amount falls below the reporting requirement, but Customs deems them as a single familial unit under the structuring law. As a result, Customs seizes the entire $17,000.
A second example involves a party of vacationers who has traveled outside the U.S. While vacationing, one of the travelers ends up with $21,000 in gambling winnings from a casino. To circumvent the reporting requirements, perhaps to avoid taxes on the winnings, the travelers split the $21,000 up among them in separate amounts, each under $10,000. As they attempt to pass through Customs, even as individuals, Customs recognizes their affiliation and suspects a structuring violation. Just like in the prior example, each individual’s cash is seized.
Structuring is a federal criminal offense, punishable by up to five years in prison, a fine, or both. Even though the law is in place primarily to combat tax evaders and criminal enterprises, there are times when individuals with legally upstanding and legitimate business/personal intentions can inadvertently become ensnared in a structuring violation.
For more information on structuring violations, contact Abady Law Firm at 800.549.5099. Or, contact via email to speak with a U.S. Customs Attorney if your currency has been seized at an airport or border.