If you run a small business that handles a lot of cash—whether you own a restaurant, convenience store, or service business—you need to know about a federal banking law that has cost innocent business owners their life savings. It’s called “structuring,” and violating it can result in the government seizing your business bank accounts, even if you’ve done nothing else wrong.
What Is Structuring?
Under federal law, banks must report any cash transaction over $10,000 to the Financial Crimes Enforcement Network (FinCEN). § 1010.311 Filing obligations for reports of transactions in currency.. This reporting requirement exists to help law enforcement detect money laundering and other financial crimes.
“Structuring” occurs when someone breaks up cash deposits into amounts under $10,000 specifically to avoid triggering these reports. 31 USCS § 5324. Federal law makes it illegal to “structure or assist in structuring” transactions with financial institutions for the purpose of evading reporting requirements. 31 USCS § 5324.
The key word is “purpose.” If you’re deliberately splitting deposits to avoid the reporting threshold, you’re violating federal law—even if every dollar you deposited came from legitimate business income.
The Consequences: Civil Forfeiture
The punishment for structuring isn’t just a fine. Under federal law, any property involved in a structuring allegation “may be seized and forfeited to the United States.” 31 USCS § 5317. This is called civil forfeiture, and it’s different from criminal charges.
In civil forfeiture, the government can take your money or property without ever charging you with a crime. The government files a case against the property itself, not against you as a person. You then have to fight to get your money back, often hiring expensive lawyers and navigating complex federal procedures.
For several years, the IRS aggressively pursued structuring cases even when business owners had no criminal intent and their money came entirely from legal sources. Small business owners across the country—including in North Carolina—found their accounts frozen and their money seized, sometimes putting them out of business entirely.
Real Impact on Small Business Owners
In 2014, Lyndon McLellan was simply running his convenience store in Fairmont, NC, as he had for over a decade. He was depositing his cash on hand every day or two, making sure to never amass more than $10,000 in cash because that was the limit his business insurance would cover. The IRS decided that Lyndon was “structuring” his deposits to avoid reporting by the bank, and they swooped in and confiscated his entire bank account, a total of over $107,000. Then, they charged him with…nothing at all. The US attorney never alleged any crime by Lyndon, but he still attempted to keep all of Lyndon’s money via civil forfeiture. It took over a decade for Lyndon to finally prevail and secure the return of his money, and his business could have easily gone under in the meantime.
Similarly, Ken Quran had $153,000 seized from his bank accounts in 2014. Quran owned a convenience store in Greenville, NC, a business he had operated for nearly 30 years at the time. He deposited and withdrew amounts under $10,000 regularly because he would deposit the receipts and withdraw cash to pay his vendors, as many independent c-store owners pay their vendor invoices with cash to get favorable terms. Quran was also never charged with a crime, but the federal government attempted to keep his money. Quran was able to win his case and get his money back in 2016, but two years without your operating capital is crippling for a business.
How often do these situations happen? Too often. According to the Institute for Justice, approximately $300 million per year is civilly forfeited in the 34 states that report their figures. Most of that is never returned, even if charges are never filed. Once the government decides it has a right to your property, it is very difficult to get it to change its mind.
Why Do Business Owners Structure Without Realizing It?
Many business owners who were caught up in structuring cases had no idea they were breaking the law. Some common scenarios include:
- Insurance concerns: Worrying that keeping more than $10,000 in cash on hand might not be fully insured
- Convenience: Depositing cash at the end of each business day rather than letting it accumulate
- Bad advice: Being told by a bank employee or acquaintance to “keep deposits under $10,000” without understanding why
- Misunderstanding the law: Thinking the reporting requirement itself is a problem, when in fact it’s routine and nothing to worry about
The irony is that filing a Currency Transaction Report (CTR) for deposits over $10,000 is a normal, everyday occurrence for banks. It doesn’t mean you’re suspected of anything. But trying to avoid the report by structuring deposits is itself a federal crime.
How to Protect Your Business
Here’s what every cash-intensive small business owner needs to know:
- Deposit your cash normally. If you have more than $10,000 in cash receipts, deposit it all at once. Don’t break it into smaller amounts.
- The bank report is not a problem. When your bank files a CTR for a large cash deposit, it’s routine paperwork. It doesn’t trigger an audit or investigation by itself.
- Keep good records. Document your cash sales and maintain clear business records showing the legitimate source of your deposits.
- Be consistent. Deposit cash on a regular schedule that makes sense for your business—daily, weekly, or whenever your safe gets full. Natural business patterns are fine; artificial patterns designed to stay under $10,000 are not.
- Never rely on informal advice about banking rules. If you have questions about cash reporting requirements, consult with a lawyer or accountant who understands Bank Secrecy Act compliance.
The Bottom Line
While recent reforms have reduced aggressive structuring enforcement against innocent business owners, the law remains on the books. Violators can face civil penalties up to the amount of the structured funds and potential criminal penalties, including fines up to $250,000 and five years in prison. 31 USCS § 5322, 31 USCS § 5321.
The best protection is simple: run your business honestly, deposit your cash normally, and don’t worry about routine bank reporting requirements. If you ever receive notice that your funds have been seized, contact an attorney immediately—you have rights, but they must be asserted promptly.
Understanding these rules can mean the difference between a thriving business and a devastating loss. Don’t let a misunderstanding of federal banking law put everything you’ve built at risk.
Here at Vita Bona Legal Services, we believe the best way to protect your business is through preventative steps. We will come to your location, learn about your business, and help formulate a plan to avoid running afoul of the law across many different areas of operations: employment, financial transactions, licensing, injury liability, and more. If you are interested, please reach out via email or schedule a call. We look forward to helping protect your business from all threats!
