Financial crimes, particularly smurfing and structuring, are frequent in the financial service sector. They come in a variety of shapes and sizes, depending on whether they are local or international. Smurfing and structuring are two of the most prevailing forms of financial crimes in banking and cross-border payment violations. Both phrases are frequently used interchangeably and are similar in several ways.
What Exactly Is a Smurf?
A smurf is a colloquial word for a money launderer who attempts to avoid regulatory inspection by dividing major transactions into a series of smaller transactions that each fall below the reporting brink. Smurfing is a criminal offense with significant repercussions.
What is Smurfing?
Smurfing is a financial term that refers to the practice of evading regulatory attention by separating a large quantity of money into several smaller transactions, which are often separated into multiple distinct accounts. Smurfing is a popular placement method. Cash obtained illegally is distributed among 'deposit experts' or 'smurfs,' who make several deposits into many accounts (sometimes under different identities) at a variety of financial institutions. Money enters the financial system in this manner and is then accessible for layering. Suspicion is frequently avoided since it is difficult to establish a link between the smurfs, deposits, and accounts.
Countries such as the United States require a currency transaction report to be submitted by any financial institution processing any cash transaction exceeding $10,000 in order to prevent money laundering by criminals engaging in illicit activities such as narcotics and extortion.
To avoid these reporting requirements, criminal organizations may seek to hide their assets by breaking their funds into several smaller deposits and spreading them among a number of geographically scattered accounts. This is a method of arranging transactions in order to evade regulatory scrutiny.
What is Structuring?
Structuring is breaking transactions into different sums in order to avoid the regulations and AML/CTF transaction reporting requirements. Many money launderers rely on this placement approach since it allows them to make several deposits without triggering the cash reporting requirements. It can, however, backfire if a watchful banking institution observes a trend of deposits just below the reportable level. As a result, such behavior may be reported to local regulators under the suspicious activity provisions of these instruments. Structuring is both a criminal offense and a signal of further possibly unlawful activities.
Comply with Sanction Scanner
Because smurfing typically includes offshore transactions or cross-border transfers, criminals may seek to use money transfer providers to transit their funds. They can do this by routing a series of remittance transactions to single or numerous recipients via an operator. As the owner of a money service firm, it is your responsibility to defend your company from smurfing and structuring actions, which can result in serious fines if legal investigations involve your company. Ignorance of these illegal actions is typically a poor defense in court, as the judge might determine that you are associated with criminals.
Integrating remittance software with robust Anti-Money Laundering protections via cutting-edge technology is a smart method to secure your organization. This automates checks for money laundering in your business operations, giving you more time to focus on operating your firm. If you're earnest about defending your money service firm from the risks of financial crimes, you'll need modern AML technology integrated into your system. If you wish to learn more about Sanction Scanner's AML solution, please get in touch with us and request a demo of our comprehensive AML software.