The Treasury Inspector General for Tax Administration (TIGTA), has released an audit of the way the IRS Criminal Investigation mishandled the enforcement of the Bank Secrecy Act (BSA) by primarily enforcing structuring provisions against legal source funds, and comprimising the rights of many property owners.
As described in the audit, the BSA requires U.S. financial institutions to file reports of currency transactions exceeding $10,000 or multiple currency transactions that aggregate over $10,000 in a single day. It is a violation of Title 31 of the United States Code to “structure, or attempt to structure or assist in structuring any transaction with one or more domestic institutions” Violators can be fined, imprisoned or both, the audit noted, adding that any property involved in violation of the law is subject to seizure and forfeiture.
Under mounting pressure from Capitol Hill and increasing media scrutiny, in October 2014, CI announced it would no longer pursue the seizure and forfeiture of funds related to legal source structuring. “Most of the seizures for structuring violations involved legal source funds from businesses”, the audit revealed. Consequently, $17.1 million was seized and forfeited to the government in 231 legal source cases. “CI primarily relied on patterns of banking transactions to establish probable cause to seize assets for structuring violations”, the audit said. It then went on to spell out a number of ways CI “compromised the rights of some individuals and businesses”. Commenting of the results of the audit, J. Russell George, the inspector general, said: “Criminal Investigation has now made important improvements to this program; however, the IRS should ensure that protections are in place so that people have rights and that innocent people do not feel compelled to settle a civil forfeiture matter under the pressure of possible criminal prosecution”.