Structuring remains one of the most frequently used money-laundering techniques worldwide. By understanding how criminals split large amounts into smaller, less-suspicious transactions, financial institutions can better protect the integrity of the banking system.
Structuring is the deliberate act of breaking a large transaction into multiple smaller ones to evade triggering mandatory reporting or recordkeeping requirements. It is often called “smurfing.” This technique allows launderers to introduce illicit funds into the financial system without raising red flags that would prompt a Currency Transaction Report (CTR) or other report.
Core Techniques and Mechanisms
Criminals employ a variety of simple yet effective methods to carry out structuring. Below is a list of key AML Structuring Techniques commonly seen in banking sectors.
- Fragmented Cash Deposits — A large cash sum is divided into multiple deposits at one or more branches. For example, depositing USD 18,000 as three separate USD 6,000 deposits keeps each below the USD 10,000 CTR threshold. Launderers may use tellers who are accomplices, drive-through windows, or machines like Intelligent Deposit Machines (IDMs) that accept many bills without immediate scrutiny.
- Multiple Agents (“Smurfs” or “Runners”) — Criminals recruit individuals to make small deposits or money-transfer transactions on their behalf. Each transaction stays under the reporting threshold. These agents often travel between different bank locations or institutions, avoiding links between transactions.
- Purchasing Monetary Instruments — Instead of depositing cash directly, criminals buy money orders, cashier’s checks, or traveler’s checks in amounts below the reporting threshold. These instruments are then cashed or deposited at another time and place, hiding the origin of the cash.
- Cross-Border and Third-Party Channels — Foreign money brokers open multiple accounts using real or fictitious identities. Once accounts are funded with small initial deposits, signed blank checks are carried abroad and used to pay for trade transactions, allowing large volumes of funds to flow through seemingly legitimate commerce.
Money Laundering Structuring Example
Let’s imagine Robert has USD 18,000 in cash but knows that any single cash deposit of USD 10,000 or more triggers a CTR in his country. To evade detection, he visits three separate bank branches on the same day and deposits USD 6,000 at each. By keeping each deposit below the reporting threshold, he successfully introduces all USD 18,000 into the banking system without alerting regulators. What Robert did was successfully perform “placing” — the first money laundering step.
Structuring Case Study: Commonwealth Bank of Australia
Let’s take a closer look at Intelligent Deposit Machines AML risk. Between 2012 and 2015, Commonwealth Bank of Australia (CBA) deployed IDMs that allowed anonymous cash deposits of up to AUD 20,000 in a single transaction (200 bills × AUD 100). Since Australian law requires a Threshold Transaction Report (TTR) for cash deposits of AUD 10,000 or more within 10 business days, criminals exploited these IDMs to launder funds using structuring.
Over this period, more than AUD 1 billion passed through CBA’s IDMs in deposits just below AUD 10,000 — often without triggering alerts. CBA did not limit daily transactions or require users to present their own CBA cards. Any third-party card could fund an IDM deposit, effectively anonymizing the source. Despite internal alerts, CBA failed to conduct Enhanced Due Diligence (EDD) or file over 53,000 TTRs.
In June 2018, CBA agreed to pay a record AUD 700 million penalty for these AML/CFT breaches — the largest corporate fine in Australian history at that time.
Microstructuring AML
Microstructuring in AML is a more granular form of splitting illicit cash. Instead of two or three medium-sized deposits, criminals make dozens of very small deposits — for example, 20 deposits of USD 900 each. This method makes pattern-based detection much harder.
For instance, a Colombian drug cartel deposited proceeds of U.S. drug sales into New York accounts via linked ATM cards. Associates in Colombia withdrew each small deposit immediately, funneling funds back to leadership. In one case, law enforcement trailed an individual across Manhattan banks and seized USD 165,000 in cash due to repeated small deposits.
“Structuring is the art of hiding large sums in plain sight — each small deposit looks innocent on its own.”
Red Flags and Detection Indicators
How banks detect structuring? Financial institutions can implement monitoring rules to spot structuring at early stages. Compliance and AML staff can look for patterns such as:
- Repeated Deposits Just Below Threshold — Multiple cash deposits of amounts like USD 9,800 within days.
- Multiple Branch/Channel Use — A customer making sub-threshold deposits at different branches, ATMs, or IDMs on the same day.
- Unusual Account Activity — New accounts receiving small initial deposits followed quickly by withdrawals or inter-account transfers.
- Counter Deposit Slip Usage — Insistence on using counter deposit slips instead of preprinted slips, hiding the source of funds.
- Cash-In/ATM-Out Patterns — Frequent small cash deposits immediately followed by ATM withdrawals, especially to high-risk jurisdictions.
- Multiple Agents — Unrelated individuals making deposits to the same beneficiary or account within a short window.
Control Measures
Preventing structuring requires a balanced mix of technology, policy, and training. Key steps include:
- Transaction Monitoring & Limits — Set velocity rules to flag cumulative deposits approaching reporting limits (e.g., three deposits of USD 3,333 each within 24 hours). Limit the number of bills per IDM/ATM transaction and restrict the number of cash transactions per day per customer.
- Risk Assessments for New Channels — Conduct thorough AML/CFT risk assessments before launching new deposit or transfer methods like mobile wallets or online banking. Review periodically to capture evolving structuring tactics.
- Enhanced Due Diligence — When structuring is suspected, immediately escalate for EDD. Verify the source of funds against the customer’s business profile. For corporate clients, identify all beneficial owners. Scrutinize documentation for fake IDs or use of deceased person identities.
- Staff Training & Awareness — Train frontline staff to recognize structuring red flags: small repetitive cash deposits, use of multiple tellers or ATMs. Establish clear escalation procedures — suspicious patterns should trigger a fund hold and AML team review.
- Regulatory Reporting & Governance — Ensure automated systems generate timely CTR/TTR and SAR filings whenever structuring is suspected. Maintain a documented AML/CFT program with board-level oversight, routine internal audits, and regular policy updates.
Structuring — and its even sneakier sibling, microstructuring — remains one of the biggest headaches in money laundering precisely because it stays just below reporting thresholds. With criminals now using cryptocurrency mixers, peer-to-peer platforms, and e-wallets, banks and other institutions can’t rely on old-school methods alone.
Smarter, real-time monitoring powered by machine learning can spot hidden patterns across different channels. Regulators will likely respond by lowering reporting limits or adding “behavioral” alarms. Fighting structuring ultimately takes the right tech, well-trained staff, and a compliance culture where every deposit or withdrawal is checked against what we know about the customer.
Leave a Reply