CASH COURIERS: The physical movement of cash is one way terrorists can move funds without encountering the AML/CFT safeguards established in financial institutions. Some groups have converted cash into high-value and hard-to-trace commodities such as gold or precious stones in order to move assets outside of the financial system.
Cash couriers have transferred funds to a number of countries within the Middle East and South Asia. Direct flight routings are used for simple transfers; however, indirect flight routings using multiple cash couriers and changes in currencies take place within more sophisticated schemes.
Large parts of Africa and the Middle East have predominantly cash-based societies, and this naturally lends itself to cash flows using alternative remittance systems or by courier. Analysis of a number of terrorism cases has shown that money couriers are active even within Europe and between countries with a well functioning financial system. In most cases couriers are involved in moving funds generated outside the financial system and kept out of the financial system to avoid detection.
As a cash courier the most complex system is that of Hundi/Hawala. Mostly used in South Asia and Middle East, it is a successful mean to transfer money in cash to desired destination. It has been used by charities and individuals very effectively. In order to control cash movement currency reporting and structuring are important elements for to control for AML/CTF.
2. Current efforts to curb cash movement
BSA FILINGS Analysts have identified a strong link between, terrorist subjects and CTR and other BSA filings. A new rationale for reporting and recordkeeping requirements is emerging in the fine print of recent government reports. Increased public awareness of the BSA has effectively deterred large currency transactions in, and cross-border movements of, criminally-derived funds. Curtailing the flow of illicit funds is itself a worthy policy objective, and is one that underlies the money laundering statutes.1
Things changed in 1985, that February, the Bank of Boston pleaded guilty to and was fined $500,000 for violations of the Bank Secrecy Act. In the course of that criminal proceeding, the public learned that that Bank of Boston had exempted a known criminal organisation from the CTR filing requirements.2
3. STRUCTURING AS CRIME Thus, one key issue that divided the Tobon-Builes and Anzalone lines of cases was the distinction between "imperfect" and "perfect" structuring. Imperfect structuring occurs when one transacts and structures currency transactions in an attempt to evade a currency transaction report, but the transactions, when aggregated, nonetheless triggers a financial institution's duty to file a CTR. Perfect structuring, in contrast, occurs when one structures currency transaction in such a way as to never trigger the bank's CTR filing obligation.
US Congress addressed the problem of structuring,3 and, in particular, addressed the emerging distinction between perfect and imperfect structuring. It did so by enacting an anti-structuring statute.4 To address the problem of "imperfect" structuring, US Congress forbade5 the act of causing or attempting to cause the non-filing of a required report, effectively adopting an aider and a better theory of liability against those who conduct transaction cause or attempt to cause a bank to fail to file a CTR.
US Congress also amended § 5324 to prohibit structuring as a means of evading certain recordkeeping and reporting requirements. In 1992, US Congress amended § 5324(a) to make it a crime to structure financial transactions to evade the reporting and recordkeeping requirement relating to the cash purchase of cashier's checks and similar instruments in amounts of $3000 or greater. In 2001, US Congress expanded the reach of § 5324(a) again by prohibiting structuring to evade the recordkeeping requirement relating to wire transfers in amounts of $3000 and greater.
4. CURRENT PROHIBITIONS The prohibitions apply to persons transporting large sums of currency into and out of the United States, including those individuals structuring cash amounts between different travellers to evade a CMIR filing.6
The criminal penalty provisions for violations of the BSA were originally codified7 which in proscribed misdemeanour provided for penalties for any person who wilfully violates any provision of the BSA.8 In the mid-1980s, US Congress abandoned the misdemeanour/felony dichotomy of former law in favour of the felony/aggravated felony dichotomy that exists today.9
The crime of structuring takes place by evading a CTR.10 "Imperfect" structuring happens when a dealer of money attempts to defeat a financial institution's reporting or recordkeeping requirement in a transaction or series of transactions that nonetheless implicate that duty.11 Structuring occurs when a person "conducts or attempts to conduct one or more transactions in currency, in any amount, at one or more financial institutions, on one or more days, in any manner, for the purpose of evading the reporting requirements.12
The key to understanding the difference between imperfect and perfect structuring is the aggregation rule. For purposes of CTR filings, bank and non-bank financial institutions have a duty to aggregate multiple cash transactions made in a single business day on behalf of the same person, even if made at different branches, and even if made into or out of different accounts of the same person.
A structuring has manifold elements, and these elements include multiple currency transactions in different financial institutions.13 However, the state has to prove that the accused knew the all of evading of reporting or record keeping.
In structuring cases direct evidence includes: i) admissions; ii) teller conversations; circumstantial evidence includes, prior experience inferring knowledge, intent based on pattern and purposes of high dollar case transaction.14
Structuring cases involve many issues such as: lawful source of structured funds; difference between legitimate and illegitimate funds, identifying the unit of prosecution.
5. CONCLUSION So far efforts of nations have minimised the impact of cash couriers except the system of Hawala and Hundi prevalent in South Asia and Middle East. Efforts are being made to minimise its effect on transnational crimes.
(The writer is an advocate and is currently working as an associate with Azim-ud-Din Law Associates)
1. Particularly 18 U.S.C. § 1957.
2. That event led to US Congressional hearings in April 1985 that awakened the banking community and their regulators to the need to enforce BSA requirements.
3. In the Money Laundering Control Act of 1986.
4. 31 U.S.C. § 5324.
5. See 31 USC § 5324 (a)(1).
6. Subsection 5324(c)(3) proscribes structuring to evade a CMIR.
7. 31 U.S.C. §§ 1058 and 1059.
8. Section 1059, in turn, proscribed felony penalties for certain aggravated violations, including serial misdemeanour violations.
9. What was formerly punished as a misdemeanour under former § 1958 was, after legislative amendments in 1984, made punishable by a five-year term of imprisonment and a fine of $250,000.
10. Evading a CTR under subsection 5324(a)(3) termed "perfect" structuring, occurs when an individual structures cash transactions in such a way that the transactions, taken together or apart, never implicate the financial institution's duty to file a report or keep a record. Perfect structuring typically involves one of two fact patterns.
11. See subsection 5324(a)(1).
12. Though the regulation defining structuring is not essential to the enforcement of § 5324, it has nonetheless been relied upon by courts in defining the reach of § 5324.
13. Financial institutions include a domestic financial institution and knowledge and intent.
14. However such cases are fraught with many challenges such as pattern being retied must be very strong and Trier of facts must be wary while relying on a strong pattern.