QUESTION: I have a client who wants to buy some real estate in Costa
Rica. The price is $2 million. He always pays cash for all real
estate. No mortgages. His money is legitimately earned through a US
business. Even though the money is legitimate, he obviously does not
want to trigger an IRS audit due to sending money offshore. He wants
to send the wire in $500,000 increments thinking that will lesson his
chances. He was also told by the Costa Rican attorneys to first wire
money to Panama and then to Costa Rica to buy the house.

I told him to just do one $2 million wire and send it directly to
Costa Rica. Do you have any experience with this sort of transaction?
Are you aware of any reports the client should file with any
government agency?

REPLY: As far as I can determine, the person or company that transfers
money to a foreign account by means of a wire transfer is not required
to file any report about the transaction. However, the U.S. bank may
be required to file a "Suspicious Activity Report" if the person or
company making the transfer does not regularly engage in similar
transactions. For some additional information on that subject see the
following web pages.

http://www.occ.treas.gov/sar.htm
http://www.irs.gov/businesses/small/article/0,,id=154555,00.html
http://nestmannblog.sovereignsociety.com/2007/08/moving-money-pr.html
http://www.articlebeach.com/article6131.html

As for attempting to disguise the amount and destination of the
transfer, I believe that any attempt to disguise the source of funds
can be construed as money laundering and all of the related funds
could be forfeited. Moving the funds through multiple accounts in
different countries could also be construed as an attempt to hide the
source of the funds.

If the funds are transferred to a foreign bank or other financial
account before being paid to the seller of the property, then your
client will need to file a Foreign Bank Account Report (TD F 90-22.1)
between January first and June 30th of the following calendar year.

Vern

Note: The foregoing comments should not be construed to be legal
advice because the author is not a lawyer.