New York Governor Eliot Spitzer announced his resignation earlier today, after he and his suppliers were found transferring large amounts of cash among their financial accounts. See Reuters and the New York Times for more details.
Reporting systems
In the US, banks are required to file Currency Transaction Reports when customers make large cash transactions. The regulation is supposed to discourage these transactions, while alerting the Federal government to possible criminal activities. As a lawyer who has prosecuted corporate crime, Spitzer knew about the US$10000 reporting threshold that triggers these notices – and he posted more than 150 transactions that fell just shy of that limit.
Spitzer also knew about the Mann Act, because he led a successful effort to increase New York State’s criminal penalties for international and interstate offenses, as described in this Times article. When the governor made his interstate date, he violated Federal law and a state law that he championed. RootsWeb has a brief discussion of the Mann Act, and there’s always Wikipedia.
People still matter
Important parts of these reporting systems are not fully automated. People have to take notice and action for these systems to work well. Read more about this in Larry Dignan’s article at ZDnet (via BoingBoing), and in the Wall Street Journal. The second figure in Dignan’s article is a handy flowchart of the system.
Updated 2000 HT 13 March 2008: A former student of mine passed along the following information, which I used to update the post. Banks file Suspicious Activities Reports (SARs) when they find a pattern of transactions:
Tags: cash, crime, government, new-york, reporting, software, system, USAFYI, there may have been some bad data in one of your sources. It’s not a 10K threshold for SARs. It’s a 10K Threshold for CTRs which is for any cash transaction. SARs are based on potential exposure due to suspicious transactions. The more common thresholds are 5K if you can name a suspect and 25K if you can’t.
