IRS Reporting Requirements for Banks: BSA & Transaction Monitoring

A banker and her clients.

The Bank Secrecy Act (BSA) was passed in 1970 to help federal authorities uncover and prevent money laundering. The act requires banks to report certain transactions, and the requirement is not limited to traditional banks. Brokerage firms, casinos, companies that issue and cash money orders and dealers in precious metals and jewelry are all subject to the same requirements.

Tracking Large Cash Transactions

If a bank detects that a customer has made a cash transaction of more than $10,000 in a single day, it is required to file a Currency Transaction Report (CTR) with the IRS within 15 days. If a customer has made multiple transactions totalling $10,000, the bank must file a CTR. The transactions can be in multiple accounts -- checking, savings, IRA or loans. The IRS defines cash as currency, money orders, bank drafts, cashiers checks and travelers checks. Personal and business checks are not considered cash. If a bank suspects suspicious activity involving as little as $5,000 in cash, it is required to submit a CTR. Some bank customers are exempt. Retail and commercial enterprises that routinely deposit and withdraw cash for their business needs are not reported although they need to apply for the exemption annually.