According to the Rochester Democrat and Chronicle out of Rochester, NY and Puck Daddy on Yahoo.com, former Buffalo Sabres defenseman Nathan Paetsch faces eight months home detention and must pay the U.S. government $265,000 as punishment for his role in an illegal gambling operation that was shut down last summer. Paetsch, 32, pleaded guilty on Monday morning to two charges relating to an off-shore gambling enterprise run out of The Marina Restaurant and Bar in Charlotte.
So, where does anti-money laundering (AML), gambling, and hockey collide? The CTR and SAR. Let’s start with the Currency Transaction Report aka the ‘CTR’ in bank speak. In sum, a financial institution is required to file a CTR “of each deposit, withdrawal, exchange of currency or other payment or transfer, by, through, or to such financial institution which involves a transaction in currency of more than $10,000…” A very common pattern with currency is for bank customers to ‘structure‘ currency transactions at or just below the reporting requirement, thus, not triggering the banks obligation to file the CTR, which electronically finds its way to the Financial Crimes Enforcement Network (FinCEN) and is used by law enforcement agencies, including the IRS Criminal Investigators, for source and supplementing money laundering and terrorist financing cases.
Structuring currency transactions, whether depositing or withdrawing, to avoid the CTR is a violation of federal law. For example, depositing $9,500 in currency on Monday at Bank ABC – branch 20 does not trigger the CTR. Subsequently, depositing $9,000 in currency on Tuesday at Bank ABC – branch 12 does not trigger the CTR either. However, considering banks are required to monitoring customer transactions, then transactions conducted in this manner typically result in the bank filing a Suspicious Activity Report (SAR) on the individual – on the SAR this person is identified as the suspect. The SAR ends up with FinCEN as well for a similar purpose. While a customer may be aware of a CTR that is filed, SARs are highly confidential and its violation of federal law to disclose the SAR to a person identified in the SAR. Moreover, SARs are not discoverable in legal proceedings either.
In avoiding the CTR with transactions conducted below the threshold, the banks compliance department most likely reviewed the account activity to identify any suspicious activity. Then, the source of funds is scrutinized and compared against a persons occupation, if known. If cash is inconsistent with a persons normal banking behavior and their occupation, one that does not involve cash, then typically the bank reports the activity (via the SAR) known to it and any information in the public domain about the transactor.
So, while not all CTRs result in SARs, when a person structures currency to avoid a CTR, then a SAR is as close to an empty net goal standing in the crease as one can get.