Money Laundering: Transaction Structuring

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Questions and Answers

What is the primary goal of implementing rigorous surveillance and reporting systems in banks and financial institutions?

To identify and mitigate the risks associated with structuring transactions (correct)

To improve customer service and reduce wait times

To monitor and report suspicious transactions in non-banking sectors

To detect and prevent micro-structuring

What is the main difference between structuring and micro-structuring?

The amount of money involved in each transaction

The level of sophistication and complexity of the scheme (correct)

The frequency of transactions in a given time period

The number of accounts used to facilitate the transactions

What is the role of unscrupulous international money brokers in money laundering schemes?

To transfer illegal funds abroad (correct)

To facilitate transactions between banks and non-banking institutions

To provide authentication for transactions

To report suspicious transactions to regulatory authorities

What is the significance of using counter deposit slips instead of preprinted slips in micro-structuring schemes?

It is a indicator of micro-structuring Signup and view all the answers

What is the primary reason for implementing CTR protocols in non-banking institutions?

To comply with regulatory requirements Signup and view all the answers

What is the common method employed by money launderers to transfer illegal funds abroad?

Using unscrupulous international money brokers Signup and view all the answers

What is the significance of frequent counter visits involving small cash deposits in micro-structuring schemes?

It is a indicator of micro-structuring Signup and view all the answers

What is the primary challenge in detecting micro-structuring schemes?

The small amounts involved in each transaction Signup and view all the answers

What is the primary purpose of transaction structuring?

To evade detection by financial institutions' systems Signup and view all the answers

Which of the following is an example of transaction structuring?

Transferring significant sums abroad through multiple, inconspicuous transfers Signup and view all the answers

What is the purpose of Currency Transaction Reports (CTRs)?

To monitor and report suspicious transactions Signup and view all the answers

What is 'smurfing' in the context of transaction structuring?

A tactic where a large group of individuals carry out numerous small transactions to avoid detection Signup and view all the answers

Why do criminal elements avoid submitting their personal information to government bodies?

To avoid detection and scrutiny by law enforcement agencies Signup and view all the answers

What is the primary advantage of using Interactive Deposit Machines (IDMs) for structuring purposes?

IDMs replicate the physical banking experience, making them ideal for structuring Signup and view all the answers

Study Notes

Transaction Structuring

Transaction structuring involves breaking down large cash transactions into multiple smaller ones to evade detection by financial institutions.
This technique is often associated with money launderers and is a significant indicator of illicit activities.

Examples of Structuring

Breaking down a substantial cash sum into multiple smaller transactions.
Allowing different individuals to perform smaller parts of a larger transaction.
Transferring significant sums abroad through multiple, inconspicuous transfers.

Unpacking Structuring Techniques

In the US, banks must submit Currency Transaction Reports (CTRs) for cash transactions over $10,000 from a single source on the same date.
Criminals manipulate transactions to stay below this limit by distributing them across multiple banks and accounts.
"Smurfing" involves a large group of individuals carrying out numerous small transactions to avoid detection.
Interactive Deposit Machines (IDMs) are increasingly used for structuring purposes, allowing criminals to conduct deposits and withdrawals without scrutiny.

Structuring Beyond Banks

Structuring is not limited to banking sectors alone, but also occurs in casinos, precious metal dealers, Money Services Businesses (MSBs), currency exchanges, and pawnshops.
Criminals use unscrupulous international money brokers to transfer illegal funds abroad.
These brokers establish multiple accounts in Country A with authentic or invented identities, making modest deposits, and then forwarding checks to a broker in Country B.

Micro-Structuring

Micro-structuring involves numerous transactions that, while minor individually, total a significant amount, avoiding detection.
Examples include dividing 18,000intotwenty18,000 into twenty 18,000intotwenty900 deposits, masking the illegal source.
Financial institutions are enhancing surveillance systems to identify indicators of micro-structuring, such as:
- Customers quickly using up their initial set of deposit slips, or engaging in a high frequency of small transactions soon after opening an account.
- Successive deposits followed by a large ATM withdrawal or international wire transfer.
- Warning signs of micro-structuring schemes include:
  - Using counter deposit slips instead of preprinted ones.
  - Newly opened accounts exhibiting high transaction volumes, initiated with minimum documentation.
  - Frequent counter visits involving small cash deposits, diverging from typical banking practices.
  - Cash deposits swiftly succeeded by withdrawals at ATMs outside the country.
  - Business accounts receiving third-party cash deposits, notably in industries that are not cash intensive.

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Description

Understand the technique of breaking down large cash transactions into smaller ones to evade financial institution detection systems. Learn about its association with money laundering and its role as an indicator for bank systems.