The Internal Revenue Service reminded small businesses that provide money services, including money transfer services, check cashing, and money orders, may be accountable to reporting and record keeping requirements under the Bank Secrecy Act (BSA).
The BSA, passed in 1970 to fight money laundering in the United States, requires businesses to keep records and file reports that have a high degree of usefulness in criminal, tax, and regulatory matters. The documents filed by businesses under the BSA requirements can be used by domestic and international law enforcement agencies to identify, detect and deter money laundering whether it is in furtherance of a criminal enterprise, terrorism, tax evasion or other unlawful activity.
As a partner in the U.S. National Money Laundering Strategy, the IRS seeks to achieve a balance between enforcement of the money laundering laws and education, offers the following BSA requirements to assist with education and compliance with the law:
Reporting Cash Payments Over $10,000 Received in a Trade or Business (Form 8300)
The general rule is that you must file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if your business receives more than $10,000 in cash from one buyer as a result of a single transaction or two or more related transactions.
Reporting Foreign Bank and Financial Accounts (FBAR)
If you own a foreign bank account, brokerage account, mutual fund, unit trust, or other financial account, then you may be required to report the account yearly to the Internal Revenue Service.
Registration of Money Services Businesses
According to the January 2006, U.S. Money Laundering Threat Assessment report, many money services businesses (MSBs) are not registering with the U.S. Department of Treasury's Financial Crimes Enforcement Network (FinCEN) despite the fact that the law started requiring such registration in 2001. MSBs that fail to register, or to renew their registrations, may be subject to civil and criminal penalties under the Bank Secrecy Act.
Suspicious Activity Report
Suspicious Activity Reports (SARs) are one of the government’s main weapons in the battle against money laundering and other financial crimes since these reports generate leads that law enforcement agencies use to initiate money laundering investigations.
The Small Business and Self-Employed Operating Division of the IRS has a team of BSA Specialists that provides education to money services businesses on the reporting and recordkeeping requirements of the BSA. Visit http://www.irs.gov/businesses/small/article/0,,id=152532,00.html for more information.