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I'm a US taxpayer (non-resident alien) and I'm being pushed by a friend to do the following:

  1. He will transfer 40k from a US bank account that he owns to my personal account.
  2. I will withdraw this amount and hand it back to him in cash.
  3. He will take this money outside the US.

Now, I know this is a terrible idea, and sounds totally illegal. I will NOT proceed with his plan, but I want to reject his proposal backing up my arguments with IRS information. Is there official documentation that says why this cannot be done?

jlhonora
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    This is not primarily a tax issue; this is a money-laundering prevention issue. As a starting place I would show him the 10k cash declaration requirement on leaving the US. – Grade 'Eh' Bacon Sep 22 '16 at 15:34
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    Also - how well do you know this person? Might be straight-forward fraud where he'll steal your money and then reverse the initial transfer (depending on form the transfer takes). Ask yourself: why does your 'friend' need you to be involved? Why couldn't he just take the money out himself? The fact that the plan is more complicated than the easiest form, shows you something fishy is going on. – Grade 'Eh' Bacon Sep 22 '16 at 15:36
  • @Grade'Eh'Bacon just fyi, I will NOT follow his plan, not a chance. I'm just gathering facts to let him know why I wont, with sound arguments. – jlhonora Sep 22 '16 at 15:42
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    Something to remember in these kinds of situations: "No.", is a complete sentence. – Pete B. Sep 22 '16 at 15:46
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    Have you asked your friend what he thinks this arrangement will actually accomplish? – quid Sep 22 '16 at 17:19
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    I"m betting that OP's "Friend" is trying to scam him out of $40K – JohnFx Sep 22 '16 at 18:35
  • If I didn't know any better then I would guess that you are trying to learn the American banking system so that you can set up a scam ring yourself and this question is merely an attempt to learn about what kind of things people are aware of and what they are not aware of so that you can plausibly execute your scam... – MonkeyZeus Sep 22 '16 at 19:25
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    @MonkeyZeus if that was the case then I would've used a throwaway account. I may be new to "money" but I'm active in other SE sites. – jlhonora Sep 22 '16 at 19:45
  • @jlhonora I meant to put a smiley face at the end of that so you knew I was just trying to make a funny comment. Sorry about that :( . I'm sure there are people that do employ such a tactic though. – MonkeyZeus Sep 22 '16 at 19:48
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    Anyways, one serious thing to consider is the possibility of getting nabbed for a Gift Tax. However, everything else sounds horrifically fishy about your friend. – MonkeyZeus Sep 22 '16 at 19:50
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    I think this question is based on a faulty assumption. Specifically, you are looking for arguments with which you can reject his request, but the reality is that he should have to provide the arguments for why you should. The only response to this request should be, "Why do you want to do this?", which puts the onus on him to provide a credible reason (hint: he can't) – Kevin Sep 22 '16 at 23:10
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    You forgot "4. The transfer to your account gets reversed because it was fraudulent" – CodesInChaos Sep 23 '16 at 11:04
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    This person doesn't sound like a friend. – ceejayoz Sep 23 '16 at 13:35
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    Withdrawing $10k or more in cash within a certain timeframe will trigger a report to the Financial Crimes Enforcement Network. The difference here is that the report is in your name, instead of his. Whether they knock on your door or not, who knows. – rtaft Sep 23 '16 at 15:02
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    @Grade'Eh'Bacon It's not money laundering, it's the exact opposite. OP's friend wants to transfer his clean money to OP's account and then receive cash. He'll have no way of proving it's legality, hence he'll turn clean, "in-the-system" money into dirty, "off-the-grid" money. It might be scam or stupidity but not laundering. – Agent_L Sep 23 '16 at 16:43
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    @Agent_L : or the OP's friend wants to transfer money from a hacked bank account or any account which does not belong to him but somehow got access to it (an account belonging to a parent, spouse, etc.), wants to steal money from it, but obviously doesn't want to go to the bank personally to take it out. Maybe he even cannot, as he will be asked to show an ID and will get busted as the account doesn't belong to him. But he might know the password to the online banking site and just needs a gullible mule to conceal it was he who stole the money. – vsz Sep 23 '16 at 20:43
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    Someone with sufficient rep should add the scams tag. – R.. GitHub STOP HELPING ICE Sep 25 '16 at 02:56
  • Tell him that you need to pay a 5% transaction fee before they'll release the funds, and that he has to send that via Western Union. Then tell him that your bank is having some trouble finding the transaction, and ask him for his SSN and the username and password for his online banking, so they can go in and fix it. Once you have that, oops, there's another fee you forgot about, he'll need to send you that too... – Dan Henderson Sep 25 '16 at 18:17
  • @vsz And that would be - not money laundering. What I said in the first place. – Agent_L Sep 27 '16 at 13:19
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    "Let's do something perfectly legal in the most suspicious way possible, ensure it gets reported to the government, and leave ourselves with no way to show that it was perfectly legitimate. And let's do it for absolutely no apparent reason." – David Schwartz Nov 04 '16 at 23:56

3 Answers3

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I would respond to your friend this way: "Either you are planning to do something illegal, in which case I don't want to be involved, or you are planning to do something legal, in which case you don't need me."

Here's Why: What your friend proposes is completely pointless because if the money is legally his to give to you, then it's perfectly legal for your friend to withdraw the $40K from his own bank account and take it out of the country without your involvement at all. As long as he files the appropriate paperwork, he can take as much money out of the country as he pleases. He should be prepared to answer why he's travelling with that much money, but he would have to do that anyway even if you went through with his plan. Note that if you declare the money you are fine, but if you don't declare it and get caught, you will get in trouble, so always declare it!

You are correct to say no to this. The fact that he wants to involve you (or anyone) makes it seem extremely shady.

TTT
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    Note for reference that your friend may need to declare the cash to his destination country, and possibly any countries he passes through on the way there. – Zach Lipton Sep 22 '16 at 20:38
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    The first paragraph is the perfect answer to so many questions on this site! – Stig Hemmer Sep 23 '16 at 08:26
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    The account the money is to be sent from might not even belong to the "friend". The credentials might have been gotten by a phishing attack, and the OP will be the mule who withdraws the stolen money in cash. The cash disappears without a trace, and the OP will be arrested when the real owner of the account notices the missing money, and the police tracks down the account it was sent to. – vsz Sep 23 '16 at 20:51
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There is no "reason why this cannot be done", but you can tell your friend that these actions are officially shady in the eyes of the US government. Any bank transactions with a value of $10,000 or more are automatically reported to the government as a way to prevent money laundering, tax evasion, and other criminal shenanigans. "Structuring" bank deposits to avoid this monetary limit is a crime in and of itself.

https://en.wikipedia.org/wiki/Currency_transaction_report

David
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    Also, as the OP is a non-resident, it will increase the chances of being seen as suspicious when receiving and immediately extracting such a large sum. We can assume the "friend" will not give any receipt for the money, so in a "my word against your word" case the OP will likely have disadvantages. – vsz Sep 24 '16 at 07:49
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    vsz, things that are "seen as suspicious" but aren't, are best dealt with in the clear under full transparency. The friend can easily withdraw the money himself while in the US, and fill out the paperwork with no trouble. It isn't corrupt places where bribes are needed. The fact that he's looking for workarounds to not look suspicious, is far more suspicious.
    However what is being proposed is a well known wire fraud scam. Once the cash is received, everything else will fall though. Leaving this guy on the hook as the patsy who agreed to it (no recourse).     – mist42nz Sep 25 '16 at 06:38
  • The government can even charge with intent to structure even without meeting the daily limit. Many people have been screwed by this. – shawnt00 Apr 28 '18 at 21:41
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Here's what's going to happen:

At the last minute, he's going to "discover" that for some reason first you must send him $10,000. He'll tell you not to worry, as he's still going to send you $40,000... now $50,000. In fact, he's going to tell you that he'll send you $60,000 and tell you to keep the $10,000 as a "finders fee".

Then you will send him, $10,000 and he will walk away with your $10,000. You'll never hear from him again.

This is a very common scam.

The best way to avoid it is not to tell him you won't do it for IRS reasons. The best thing to do is to stop accepting email from him and (optionally) report him to law enforcement.

TomOnTime
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