Lexplug logoLexplug

United States v. Bank of New England, N.A.

United States Court of Appeals, First Circuit
821 F.2d 844 (1987)
ELI5:

Rule of Law:

A financial institution has a duty to file a Currency Transaction Report (CTR) for a single, lump-sum cash transfer exceeding $10,000, even if the customer uses multiple checks, each for less than $10,000, to obtain the funds. A corporation can be found to have willfully violated this duty based on the collective knowledge of its employees or through its flagrant organizational indifference to its legal obligations.


Facts:

  • Between May 1983 and July 1984, James McDonough was a regular customer at the Prudential Branch of the Bank of New England.
  • On thirty-one separate occasions, McDonough visited the branch to withdraw large sums of cash from a single corporate account.
  • During each visit, he simultaneously presented between two and four counter checks, each individually for an amount under $10,000, to a single bank teller.
  • After processing the multiple checks as separate items, the teller would provide McDonough with a single, lump sum of cash that always totaled more than $10,000.
  • The Bank of New England did not file Currency Transaction Reports (CTRs) for any of these thirty-one transactions at the time they occurred.

Procedural Posture:

  • The Bank of New England was indicted by a federal grand jury on charges including conspiracy and thirty-six counts of willfully failing to file Currency Transaction Reports (CTRs).
  • At the trial in the U.S. District Court, the court directed a verdict of acquittal on the conspiracy count.
  • Five of the CTR counts were dismissed by the court.
  • The jury acquitted co-defendant James McDonough of all charges against him.
  • The jury convicted the Bank of New England on the thirty-one remaining counts of willfully failing to file CTRs.
  • The Bank of New England (appellant) appealed its conviction to the United States Court of Appeals for the First Circuit.

Locked

Premium Content

Subscribe to Lexplug to view the complete brief

You're viewing a preview with Rule of Law, Facts, and Procedural Posture

Issue:

Does a financial institution have a duty under the Currency Transaction Reporting Act to file a report when a customer withdraws more than $10,000 in cash in a single physical transfer, effectuated by simultaneously presenting multiple checks each for an amount under $10,000?


Opinions:

Majority - Bownes, Circuit Judge

Yes. A financial institution has a duty to file a CTR for such a transaction because the regulations define a 'transaction' by the physical transfer of currency, not by the number of instruments used to initiate it. The court reasoned that since McDonough received a single, lump-sum physical transfer of cash exceeding $10,000 from one teller in one visit, it constituted a single, reportable transaction. The language of the regulations provided the Bank with fair warning that this conduct was reportable. The court also held that a corporation's 'willfulness' can be established either by imputing the knowledge and intent of a single employee to the corporation or by demonstrating the corporation's 'collective knowledge'—the sum of what all employees know—and its 'flagrant organizational indifference' to its reporting duties. Finally, the court concluded that each of the thirty-one failures to file could be prosecuted as a separate felony, as the statute punishes each violation that is 'part of a pattern,' rather than the pattern itself as a single offense.



Analysis:

This decision is significant for establishing that substance prevails over form in currency transaction reporting, preventing financial institutions from turning a blind eye to obvious structuring of withdrawals at the teller window. The court's endorsement of the 'collective knowledge' doctrine for corporate criminal liability makes it difficult for large, compartmentalized corporations to plead ignorance by arguing that no single employee possessed all the necessary information to form criminal intent. This precedent strengthens the government's ability to prosecute institutions for systemic compliance failures rather than just rogue employees, holding the organization itself accountable for its overall diligence.

🤖 Gunnerbot:
Query United States v. Bank of New England, N.A. (1987) directly. You can ask questions about any aspect of the case. If it's in the case, Gunnerbot will know.
Locked
Subscribe to Lexplug to chat with the Gunnerbot about this case.

Unlock the full brief for United States v. Bank of New England, N.A.