By structuring in money laundering, it means that it refers to a misleading practice used to evade financial reporting requirements by breaking down large sums of money into smaller transactions. The process aims to avoid detection by regulatory authorities and conceal the illicit origins of funds. Likely, the structuring method includes conducting multiple transactions in amounts below the threshold for compulsory reporting, allowing perpetrators to circumvent scrutiny while facilitating the integration of illicit proceeds into the legitimate financial system. It is very important to know what is structuring in money laundering and about the variations of structuring and simultaneously implement productive regulatory measures to protect the integrity of businesses and financial institutions and also prevent them from illicit financial activities.
What is Structuring in Money Laundering?
Structuring is a method adopted by individuals to avoid financial reporting requirements by breaking down a large sum of money into smaller transactions. These transactions are assembled in such a way as to avoid detection by authorities. In the context of money laundering, structuring involves depositing or withdrawing funds in amounts that are below the threshold for mandatory reporting, thus concealing the illicit origin of the funds.
How Structuring and Smurfing Differ from Each Other?
While structuring and smurfing are used interchangeably, there is a very thin line between the two terms. The term structuring refers to breaking down large sums of money into smaller amounts to avoid detection by regulatory authorities which may also increase the risk for criminals of getting caught. Smurfing, on the other hand, refers to using ‘smurfs’ or multiple individuals to make these transactions on behalf of the perpetrator. Both the terms come under Money laundering and are the most illegal key components of money laundering schemes. Anti-money laundering ( AML) measures are implemented by the financial institutions or regulatory authorities to detect and prevent such activities.
Money Laundering Structuring Examples
Structuring is one of the schemes applied for doing money laundering which is a severe issue faced worldwide. Here are some money laundering structuring examples showing structuring in money laundering-
For instance, in 2019, a major international bank was fined $700 million for failing to prevent money laundering through structuring. Additionally, statistics from the Financial Action Task Force (FATF) reveal that structuring accounts for a significant portion of suspicious activity reported by financial institutions globally.
Consider a scenario where an individual possesses $80,000 in cash. To evade reporting obligations, they might opt to divide this sum into ten transactions of $8,000 each. This practice exemplifies structuring money laundering, yet it’s imperative to note that engaging in such transactional maneuvers is unlawful.
This highlights the importance of robust AML measures to combat such illicit activities effectively.
Report of Suspicious Activities
Under the Bank Secrecy Act in the United States, any cash transaction surpassing $10,000 necessitates the filing of a currency transaction report (CTR). As a fundamental aspect of a bank’s anti-money laundering obligations, these reports mandate identity verification, including social security numbers, for individuals attempting significant transactions, regardless of their banking relationship.
In contemporary banking practices, transactions exceeding $10,000 prompt automated CTR generation by most banking software, facilitating tax and customer data completion.
Banks aren’t required to proactively disclose the $10,000 reporting threshold unless specifically inquired by the customer. Upon notification, customers may opt to cancel or reduce the transaction below the threshold. Should the transaction be canceled, a suspicious activity report (SAR) should be promptly filed.
Benefits of Anti-Money Laundering Services
It should be mandatory for financial institutions and businesses to impose Anti money laundering services in high-risk sectors. These services help in mitigating risk to illicit financial activities, including AML structuring. Here are some more benefits of anti money laundering services-
Regulatory Compliance
Compliance with AML regulations is mandatory for financial institutions and businesses operating in various sectors. AML services ensure the adherence to regulatory requirements by promoting thorough customer due diligence (CDD), monitoring transactions and reporting any unusual activity to the regulatory authority.
Enhanced Security
Applying AML services enhances the overall security of financial institutions and businesses by detecting and preventing financial crime like identity theft, cybercrime and terrorist financing.
Preservation of Reputation
Businesses should maintain their reputation to attract customers, partners and investors. Businesses try to maintain their credibility in the market by investing in AML services, they showcase their commitment towards regulatory compliance.
Reach us out at IDMERIT UK
Businesses have started seeking AML solutions to protect themselves from schemes of money laundering like structuring and smurfing. AML solution providers play an important role in detecting and preventing businesses for these illegal activities. With advanced technologies and innovative minds, IDMERIT UK has been successful in providing secure and reliable AML solutions and also offers customized services to cater specific regulatory requirements. By partnering with IDMERIT UK financial institutions and businesses can access the tools and insights needed to navigate the complex landscape of financial crimes and safeguard their operations against illicit activities. Reach out to IDMERIT UK to know more about our AML services and the ability to protect businesses from money laundering risks.
