Money Laundering: Transaction Structuring

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.