I don't doubt that lots of nasty law enforcement officers (or wannabes) will seize any money they can get their hands on. However, you make it sound as if there's a specific law/regulation that compels them to do so. If so, then please provide the citation; if it exists as a written regulation, then it should be a public document.

On a related note, the war on civil liberties is now called the war on terrorism, instead of the war on drugs -- watch for more and more currency control regulations in the interest of "protecting us from terrorists." They have already lowered the CTR threshold amounts, haven't they?

On another related note, I was reading about an organized crime group that would "hit" its enemies by filing false CTR's on them. Hehe.