Structuring

Structuring is the practice of deliberately breaking a financial transaction into several smaller ones so that each falls below a reporting or recordkeeping threshold and no report is filed. In the United States, structuring transactions to evade the $10,000 Currency Transaction Report (CTR) requirement is a federal crime in its own right, whether or not the money involved comes from criminal activity.

Structuring is closely associated with money laundering, especially at the placement stage of the money laundering stages, and the use of multiple people to make small deposits is often called "smurfing". Other countries have similar offenses or treat the behavior as a strong indicator of laundering.

The Bank Secrecy Act requires financial institutions to report cash transactions of more than $10,000 in a business day to FinCEN. Multiple cash transactions by or for the same person that together exceed $10,000 in one business day must be aggregated. The anti-structuring statute, 31 U.S.C. § 5324, makes it an offense to structure, or attempt to structure, a transaction with one or more domestic financial institutions for the purpose of evading those reporting requirements, or to cause an institution to fail to file a report.

In Ratzlaf v. United States (1994), the Supreme Court held that the government had to prove the defendant knew structuring was unlawful. Congress responded the same year by amending the law so that only the intent to evade the reporting requirement is needed. Knowledge that structuring itself is illegal is not required.

Penalties

A violation is punishable by up to five years in prison and fines, and by up to ten years where it occurs alongside another federal offense or as part of a pattern of illegal activity involving more than $100,000 in a twelve-month period. Funds involved can be seized and forfeited. After criticism that forfeiture was being used against small businesses with lawful income, the IRS announced in 2014 that it would generally pursue structuring seizures only where the funds were linked to other crimes, and the Clyde-Hirsch-Sowers RESPECT Act of 2019 added procedural protections for owners.

A person with $27,000 in cash might deposit $9,000 at three branches of the same bank on the same day, or $9,500 on three consecutive days. A group might spread deposits across many accounts and people. Structuring can also involve purchases of money orders, cashier's checks or prepaid access products just below thresholds, or splitting transfers at a money services business to avoid the $3,000 recordkeeping rule for funds transfers and monetary instruments.

Banks and MSBs are expected to detect structuring through transaction monitoring and front-line staff training. Common red flags include:

• repeated cash deposits or withdrawals just under $10,000;
• a customer who reduces a transaction after learning that a report will be filed;
• several people depositing cash into the same account at different branches;
• frequent purchases of monetary instruments in round amounts just below thresholds.

Suspected structuring must be reported on a Suspicious Activity Report (SAR), and it is one of the most frequently cited categories in SAR filings. An institution cannot advise a customer on how to avoid a CTR, and staff who help a customer structure may themselves be liable. A weak AML program that misses structuring patterns is a common finding in enforcement actions.

Many countries set cash or transaction thresholds for reporting, and splitting transactions to avoid them is treated as suspicious. In Canada, FINTRAC requires reports of large cash transactions of C$10,000 or more, including multiple transactions within 24 hours that total that amount. The FATF lists structuring among standard money laundering typologies. The same idea also appears with crypto-assets, where transfers may be split to stay under exchange or Travel Rule thresholds, and in trade-based money laundering, where shipments are invoiced in small lots.