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Discussion Starter · #1 ·
Former U.S. Speaker of the House of Representatives Dennis Hastert was indicted this past week for allegedly committing two crimes: "structuring" and lying to the FBI. It's a reminder that the cover-up is almost always worse than the original (alleged) crime. In this case, the former Speaker allegedly sexually abused one or more of his high school students. Though the statute of limitations had expired on that behavior, Hastert allegedly paid about half of a $3.5 million private arrangement to a former abused student in an attempt to keep that history under wraps.

But what the heck is "structuring"? Most people don't even know what it is, let alone that it's a crime carrying up to 5 years in prison and up to a $250,000 fine. (Hastert also faces up to another 5 years/$250,000 if he's found guilty of lying to the FBI.)

Structuring means structuring financial transactions in an artificial or contrived way in an attempt to avoid financial reporting. According to the indictment, Hastert's bank started asking him some questions about why he was withdrawing $50,000 in cash in repeated transactions. His bank and other banks are required to report all transactions of $10,000 or more to the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN), plus "suspicious" transactions. After receiving inquiries from his bank, Hastert allegedly reduced his cash transactions below the $10,000 threshold. Bad, amateur idea -- that's structuring. When the FBI got curious, they asked Hastert what was going on. Allegedly Hastert lied, saying he wanted to keep his money in cash because he was nervous about banks.

FinCEN is exactly the same agency that receives Form 114, the foreign accounts financial reporting form that many of us are familiar with and that has been around since the 1970s (albeit with a previous form number). Importantly, it appears to be possible, in theory anyway, to engage in illegal structuring if you're attempting to evade FinCEN Form 114 (or other financial) reporting -- for example, if you try to stay under the reporting threshold by artificially transferring money to/from non-reportable accounts. So I would recommend being very careful about such behavior, though it's quite simple conceptually to be careful. Just don't do anything artificial or contrived -- don't act guilty, basically. If you're partially or predominantly motivated to act a certain way financially in order to evade a financial reporting obligation, then you could be structuring. I wouldn't recommend that.

I also don't recommend lying. (Declining to answer a question is different and might be appropriate in particular circumstances, though it depends on the countries involved and their legal systems.)
 

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Discussion Starter · #2 ·
Former Speaker of the U.S. House of Representatives Dennis Hastert pleaded guilty in court as part of a plea deal with U.S. federal prosecutors. Prosecutors are reportedly recommending a prison sentence of up to 6 months, or about 5% of the possible maximum prison time Hastert faced.
 
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