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Understanding Disclosure Requirements for Cash Deposits Over $10,000
Post on October 29th, 2024

Attorneys accept payments from clients in various forms: checks, debit and credit cards, cash, and others. Cash deposits of $10,000 or more are subject to specific disclosure requirements under federal law. This article outlines these requirements and provides guidance on how to comply with them.

Background

Currency Transaction Reports are filed by financial institutions reporting currency (cash) transactions over $10,000. IRS Forms 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business are required to be filed by a person in a trade or business who receives more than $10,000 in cash in a single transaction. Attorneys and law firms should discuss large cash transactions with their CPAs and tax professionals. 

Under Ohio Rule of Professional Conduct 1.6(b)(6), a lawyer may reveal information related to the representation of a client if it is necessary to comply with other laws or a court order. Historically, attorneys would redact or refuse to disclose such information unless subpoenaed or court-ordered, citing attorney-client privilege. However, the landscape changed after the ruling in U.S. v. Ritchie, 15 F. 3d 592 (6th Cir. 1994), where it was determined that client identity and payment of fees are not privileged information.  Ritchie held, in part:

“…virtually every court to consider the issue has concluded that client identity and payment of fees is not privileged information. See, e.g., In re Grand Jury Proceedings (Damore),689 F.2d 1351, 1352 (11th Cir. 1982).” (Emphasis added.)

This ruling led to the withdrawal of Advisory Opinion 1990-4 by the Ohio Board of Professional Conduct.

Current Best Practices

Following the Ritchie ruling, the Alaska Bar issued Opinion 93-3, which aligns with current best practices. According to this opinion:

  1. Disclosure is required to comply with other laws, making it permissible under Rule 1.6(b)(6).
  2. Lawyers should inform their clients about the required disclosure of cash payments of $10,000 or more, giving them the opportunity to change their payment method if desired, while still complying with federal law.

Key Takeaways

  • Disclosure of identities involved in cash deposits over $10,000 is required by law.
  • Attorneys should advise clients about this requirement and offer alternative payment methods.

By adhering to these guidelines, legal professionals can ensure compliance with the law while maintaining transparency with their clients.

Click here for sample forms and letters and visit the OBLIC website for additional resources. As always, if you have comments or questions, please do not hesitate to contact us at OBLIC. We’re here to help! 

Gretchen K. Mote, Esq.
Director of Loss Prevention
Ohio Bar Liability Insurance Co.
Direct:  614.572.0620
[email protected]
Merisa K. Bowers, Esq.
Loss Prevention Counsel
Ohio Bar Liability Insurance Co.
Direct:  614.859.2978
[email protected]

 

This information is made available solely for loss prevention purposes, which may include claim prevention techniques designed to minimize the likelihood of incurring a claim for legal malpractice. This information does not establish, report, or create the standard of care for attorneys. The material is not a complete analysis of the topic and should not be construed as providing legal advice. Please conduct your own appropriate legal research in this area. If you have questions about this email’s content and are an OBLIC policyholder, please contact us using the information above.