IRS Introduces New Compliance Form For Money Transfers

14 March 2003

The IRS announced Wednesday that a special category of financial institution, under the Bank Secrecy Act referred to as Money Services Businesses (MSBs), that issue or redeem money orders or traveller's cheques, are now required to use a new form to conduct this business, backdated to 1st March.

The new form replaces the interim Bank Suspicious Activity Report previously used. MSBs must file the form within 30 days of learning of a suspicious transaction, and must keep a copy of the filed form and supporting documentation for five years from the date it is filed. The US Postal Service also offers the new forms.

It is estimated that more than 200,000 businesses, including convenience stores, grocery stores, service stations, drug, and liquor stores, must complete the new form when they conduct a money service transaction that is both suspicious and for $2,000 or more. Those money service businesses that must use the new form also include businesses that transmit money

Transactions that must be reported are those that an MSB knows or suspects:

• involve funds derived from illegal activity or is intended or conducted in order to hide or disguise funds or assets derived from illegal activity;
• are designed to evade the requirements of the Bank Secrecy Act, whether through structuring or other means; or,
• serve no business or apparent lawful purpose, and the reporting business knows of no reasonable explanation for the transaction after examining all available facts.

If an MSB uses the old form to report suspicious activities, the IRS will return it to the originator with a request to complete a new form.

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