Structuring
Also called smurfing, transaction splitting
Structuring is splitting a large sum of cash into smaller deposits, withdrawals or transfers so that each one stays below a reporting or checking threshold. It is also called smurfing when several people make the deposits. In the US structuring is a crime in its own right, even when the money is clean.
How it works
A person with a large amount of cash breaks it into amounts just under a threshold, such as the US $10,000 currency transaction report limit. The deposits are spread across days, branches, accounts or people, often called smurfs. Each transaction looks unremarkable, so no report is triggered. The same method is used to avoid identity checks on occasional transactions, money remitter limits and national caps on cash payments.
Firms detect structuring by linking transactions rather than reviewing them one at a time. Monitoring rules look for repeated amounts just under a threshold, cash deposits at several branches on the same day, and many depositors paying into one account. Rules on linked transactions mean the firm must add related payments together. When the pattern is unexplained, the firm files a suspicious activity report and reviews the customer's risk rating.
The rules
Makes it a crime to structure transactions to evade currency reporting, with up to 5 years in prison, or 10 years where over $100,000 is involved in 12 months.
Any person dealing with US financial institutions or moving monetary instruments across the borderRequires customer due diligence on occasional transactions of £12,000 or more, whether made in a single operation or several operations which appear to be linked.
Banks, payment firms and other relevant persons carrying out occasional transactionsCaps cash payments at EUR 10,000, whether the transaction is carried out in a single operation or in several operations which appear to be linked.
Persons trading in goods or providing services in the EUCommon questions
Is structuring illegal if the money is legal?
In the US, yes. 31 U.S.C. 5324 makes structuring to evade reporting a crime even when the cash comes from a lawful source. In the UK and EU structuring is not a separate offence, but it is a strong red flag and the funds may be criminal property.
What is the difference between structuring and smurfing?
The terms are used interchangeably. Smurfing usually describes structuring carried out by several people, the smurfs, who each deposit small amounts on behalf of one organiser.
How do banks spot structuring?
Transaction monitoring links deposits across accounts, branches and days. Common alerts include repeated cash deposits just below a threshold, round amounts paid in by several people, and quick withdrawals or transfers after the deposits.
