Department of the Treasury Internal Revenue Service Publication 1148 (Rev. 4-83)

When any person engages with a financial Institution in a currency transaction of more than $10,000, the financial institution must record the identity of the person or persons involved and file a report with the Internal Revenue Service within 15 days.

This requirements arises out of the Currency and Foreign Transactions Reporting Act which was enacted as Title II of Public Law 91-508. Regulations were adopted on April 5, 1972, with an effective date of July 1, 1972 (37 F.R. 6912 (1972)). These requirements were revised effective July 7, 1980 (45 F.R. 37818 (1980)).

Various provisions of the regulations are summarized below. For the full text of the regulations, see Part 103 of Title 31, Code of Federal Regulations.

Who Must File

(31 C.F.R. section 103.22(2))

Every financial institution must file a report of each deposit, withdrawal, exchange of currency or other payment or transfer, by, through, or to that financial institution, that involves a transaction in rrency of more than $10,000. The >orts must be made on forms prescribed y the Secretary, and all information called for in the forms must be given.

Reporting Form to be Used

(31 C.F.R. section 103.25(a)) The Secretary has prescribed Form 4789, Currency Transaction Report, to make the required report.

Reports of Certain Transactions not
Required

(31 C.F.R. section 103.22(b)(1))
Except as otherwise directed in writing by
the Assistant Secretary of the Treasury
(Enforcement and Operations), this sec
tion shall not: (1) require reports of trans-
actions with Federal Reserve Banks or
Federal Home Loan banks; (2) require
reports of transactions between domestic
banks; or (3) require reports by nonbank
financial institutions of transactions with
commercial banks.

Exemptions to the Reporting Requirements (31 C.F.R. sections 103.22(b)(2), (c), and (f)) Except as otherwise directed in writing by the Assistant Secretary (Enforcement and Operations), a bank may exempt from the reporting requirement of this section the following:

1. Deposits or withdrawals of currency from an existing account by an established depositor who is a United States resident and operates a retail type of business in the United States. For the purpose of this subsection, a retail type of business is a business primarily en

gaged in providing goods to ultimate consumers and for which the business is paid in substantial portion by currency, except that dealerships which provide automobiles, boats or airplanes are not included and their transactions are not exempt from the reporting requirement of this section.

2. Deposits or withdrawals of currency from an existing account by an established depositor who is a United States resident and operates a sports arena, race track, amusement park, bar, restaurant, hotel, check cashing service licensed by state or local governments, vending machine company, or theater. 3. Deposits, or withdrawals, exchanges of currency or other payments and transfers by local or state governments, or the United States or any of its agencies or instrumentalities.

4. Withdrawals for payroll purposes from an existing account by an established depositor who is a United States resident and operates a firm that regularly withdraws more than $10,000 in order to pay its employees in currency. No other types of businesses may be exempted from the reporting requirements except for those shown in (1) through (4) above, unless authorized in writing by the Assistant Secretary (Enforcement and Operations). If a bank believes that circumstances warrant an exemption not provided for above, the banks may apply for approval of an exemption by writing to: Exemption Staff

Room 1134

Office of Enforcement and Operations
Department of Treasury
Washington, D.C. 20220.

In each instance where a transaction is exempted (1. through 4. above), the transaction must be in amounts which the bank may reasonably conclude do not exceed amounts commensurate with the customary conduct of the lawful, domestic business of that customer, or in the case of transactions with a local or state government or the United States or any of its agencies or instrumentalities, in amounts which are customary and commensurate with the authorized activities of the agency or instrumentality. This section does not permit a bank to exempt its transactions with a nonbank financial institution. (See Definitions, sections 1(h) through (k) for descriptions of nonbank financial institutions.)

Banks must maintain a record of each exemption granted. The record must include the name, address, type of business, taxpayer identification number and account number of the customer. The record must also specify the type of transaction(s) exempted and the dollar limit of

each type of exemption. When requested by the Assistant Secretary (Enforcement and Operations), a bank shall provide, within 30 days, a report of all exempted customers. The report must include all of the above information for each customer.

Where to Get Form 4789
(31 C.F.R. section 103.25(d))
You can get the form from most Internal
Revenue Service district offices.

When and Where to File

(31 C.F.R. section 103.25(a))

Form 4789 is due by the 15th day after the date the transaction occurred and should be mailed to the Internal Revenue Service Center, Ogden, UT 84201, or hand carried to your local IRS office.

Identification Required
(31 C.F.R. section 103.26)

Before completing any transaction for which a report is required, the financial institution must verify and record the name and address of the person making the transaction and the identity, account number, and any taxpayer identifying number of the person for whose account the transaction is to be effected. The identity of aliens must be verified by passport, alien identification card, or other official document showing foreign nationality or residence. In other cases, identity may be verified by a document normally acceptable as identification when cashing checks; for example, a driver's license or credit card. In each instance, the method used to verify the identity of the customer must be recorded on the report.

Definitions

(31 C.F.R. sections 103.11 and 103.41)
1. Financial Institution—Each agency,
branch, or office within the United
States of any person doing business in
one or more of the capacities listed
below:

a. a commercial bank or trust company
organized under the laws of any State
or of the United States;
b. a private bank;

c. a savings and loan association or a
building and loan association organized
under the laws of any State or of the
United States;

d. an insured institution as defined in
section 401 of the National Housing
Act;

.. a saving bank, industrial bank or
other thrift institution;

f. a credit union organized under the
laws of any State or of the United
States;

g. any other organization chartered under the banking laws of any State and subject to the supervision of the bank's supervisory authorities of a State.

h. a person who engages as a business in dealing in or exchanging currency as, for example, a dealer in foreign exchange or a person engaged primarily in the cashing of checks; I. a person who engages as a business in the issuing, selling or redeeming of traveler's checks, money orders, or similar instruments, except one who does so as a selling agent exclusively, or as an incidental part of another business;

J. a licensed transmitter of funds, or other person engaged in the business of transmitting funds abroad for others; k. a broker or dealer in securities;

I. each agent, agency, branch or office within the United States of a foreign bank.

2. Currency-The coin and currency of the United States or of any other country, which circulate in and are customarily used and accepted as money in the country in which issued. It includes United States silver certificates, United States notes and Federal Reserve notes, but does not include bank checks or other negotiable instruments not customarily accepted as money. 3. Person-An individual, a corporation, partnership, a trust or estate, a joint stock company, an association, a syndicate, joint venture, or other unincorporated organization or group, and all entities cognizable as legal personalities.

4. Transaction In Currency-A transaction involving the physical transfer of currency from one person to another. A transaction in currency does not include a transfer of funds by means of bank check, bank draft, wire transfer, or other written order that does not include the physical transfer of currency. 5. $10,000-An amount stated in United States dollars also means the equivalent in any foreign currency.

6. United States—The various States, the District of Columbia, the Commonwealth of Puerto Rico, and the territories and possessions of the United States.

Penalties

(31 C.F.R. sections 103.47 and 103.49) Civil penalties not to exceed $1,000 are provided for each currency transaction. report not filed or for each incomplete or inaccurate report filed. Financial institutions and their employees may be also subject to criminal prosection for willful failure to comply with the recordkeeping and reporting requirements, or for willfully submitting a report that contains false or misleading information. Depending on the gravity of the offense, criminal penalties may range from imprisonment of up to 5 years, a fine of up to $500,000, or both, for each offense. Currency transaction reports are useful in discovering offenses that may have been committed against the United States. Attempts to circumvent required filings may be construed as aiding and abetting such offenses.