Financial Crime: Structuring Transactions

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Questions and Answers

What is the primary goal of micro-structuring in money laundering schemes?

To maximize the value of individual transactions.

To decrease the frequency of bank account activity.

To increase direct cash withdrawals from accounts.

To complicate transaction patterns and avoid detection. (correct)

Which of the following is NOT a common indicator of micro-structuring?

High cash deposit activity shortly after account opening.

Long-term deposits made consistently at regular intervals. (correct)

Frequent use of new bank accounts for deposits.

Low-volume, high-frequency transactions.

Which scenario exemplifies micro-structuring in money laundering?

Tom making sixty-five small deposits of $200 to $400 over two months. (correct)

Tom withdrawing large cash sums just below reporting thresholds.

Tom making one large cash deposit of $20,000 immediately.

Tom exchanging large bills for smaller denominations at a bank.

What behavior would be a red flag when monitoring business accounts for potential micro-structuring?

Substantial cash deposits by non-cash-intensive businesses. Signup and view all the answers

Why are low-value, high-volume cash transactions particularly concerning for financial institutions?

They are potential attempts to evade bank reporting thresholds. Signup and view all the answers

What might be a typical behavior of individuals attempting to hide their cash deposits?

Withdrawing cash just below reporting limits after deposits. Signup and view all the answers

Which situation would diminish the likelihood of micro-structuring occurring?

Frequent deposits with clear documentation of expenses. Signup and view all the answers

What is the primary purpose of structuring transactions in money laundering?

To deliberately avoid bank reporting and recordkeeping obligations. Signup and view all the answers

Which of the following statements accurately describes Currency Transaction Reports (CTRs)?

CTRs are filed when cash transactions total over $10,000 on a single day. Signup and view all the answers

What differentiates a Currency Transaction Report (CTR) from a Suspicious Activity Report (SAR)?

CTRs report factual transactions, whereas SARs indicate suspicious activity. Signup and view all the answers

In the context of structuring, what might prompt a bank to file a Suspicious Activity Report (SAR)?

Frequent small deposits without any reasonable explanation. Signup and view all the answers

Which of the following examples best illustrates the concept of structuring in financial transactions?

A person splits a $12,000 cash deposit into two separate amounts of $6,000 each. Signup and view all the answers

What amount serves as the threshold that triggers the filing of a Currency Transaction Report?

$10,000 Signup and view all the answers

What is a common tactic that criminals use to avoid detection by banks when processing large amounts of cash?

Structuring transactions into smaller increments. Signup and view all the answers

Which of the following entities must adhere to Currency Transaction Report regulations?

Casinos, money services businesses, and precious metal dealers. Signup and view all the answers

Study Notes

Structuring Transactions: Key Concepts

Structuring involves arranging transactions to avoid reporting requirements, often exceeding $10,000 in the US.
Currency Transaction Reports (CTRs) are filed by financial institutions for cash transactions exceeding $10,000. They are not suspicious activity reports, but factual reports required by law.
Smurfing involves multiple individuals making structured deposits into various accounts to obscure the origin of funds.

Micro-structuring

Micro-structuring involves smaller, more frequent transactions below reporting thresholds, aiming to evade detection by monitoring systems.
Sophisticated money launderers may use micro-structuring to further obfuscate their activities.

Identifying Micro-structuring Patterns

Unusual cash activity immediately after account opening, before Know Your Customer (KYC) research is complete.
High-volume, low-value cash transactions inconsistent with expected activity.
Frequent use of preprinted deposit slips followed by counter slips to disguise patterns.
Immediate cash withdrawals or international transfers after cash deposits.
Cash deposits into business accounts with no apparent connection to the business.

Red Flags Associated with Cash Transactions

Large deposits without knowledge of exact amounts or counting the money.
Deposits of old, wrinkled, or dirty bills indicating potential illicit origins.
Large amounts of cash wrapped in currency bands, suggesting pre-prepared deposits.
Partial withdrawals to remain below reporting thresholds.
Withdrawals just below reporting limits to avoid triggering CTR filings.
Moving cash between accounts to obfuscate financial trails.
Exchanging small bills for larger denominations, a common tactic to avoid detection.
Splitting deposits with others to circumvent reporting requirements.
Opening multiple accounts for structured deposits, increasing the complexity of investigation.
Substantial cash deposits followed by overseas wire transfers.
Cash deposits at one branch and withdrawals at another, to disguise the location of funds.
Large deposits in the night deposit box when not expected for a specific business type.
Large cash deposits in business accounts that are not expected to have high cash flow.
Purchase of monetary instruments using structured cash payments.
High-volume currency exchanges, particularly without concern for fees.

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Description

This quiz covers key concepts related to structuring transactions, including micro-structuring and identifying suspicious patterns. Learn about the implications of Currency Transaction Reports and the techniques used by money launderers to evade detection.