Structuring
From Wikipedia, the free encyclopedia
Structuring is the legal term used in the United States to describe the issue of transactions structured to avoid certain record keeping and reporting requirements of that country's Bank Secrecy Act (BSA) and/or 26 USC 6050I (Form 8300).[1]
Contents |
[edit] Background
Sometimes referenced as smurfing in banking industry jargon, structuring includes the act of parceling large financial transactions into smaller transactions to avoid scrutiny by regulators or law enforcement. Structuring often appears in federal indictments related to money laundering, fraud, and other financial crimes. The term "smurfing" is derived from the image of the cartoon characters, The Smurfs, having a large group of many small entities. The coining of the term is attributed to Miami-based lawyer, Gregory Baldwin in the 1980s. [2]
Typically each of the smaller transaction is below some statutory limit, that does not require a financial institution to file a report with a government agency. Criminal enterprises often employ several agents (smurfs) to make the transaction. However, even business practices can cause scrutiny with dire results, as detailed recently by an article in Forbes magazine. [3] The article reports that even if "the money is from a legal source, the government can charge you with a crime and/or demand you forfeit case" if you apply the structuring method knowingly.
The term is also applied to activity associated with controlled substances such as pseudoephedrine. In this context the agent will make purchases of small, legal amounts from several drug and grocery stores intent to aggregate the lot for use in the illegal production of methamphetamine.
[edit] United States practice
In the United States, the Bank Secrecy Act requires the filing of a currency transaction report (CTR) for transactions of US$10,000.01 or more. Financial institutions suspecting deposit structuring with intent to avoid the law are required to file a suspicious activity report.
Title 31 of the United States Code, section 5324, provides (in part):
No person shall, for the purpose of evading the reporting requirements of section 5313 (a) or 5325 or any regulation prescribed under any such section, the reporting or record keeping requirements imposed by any order issued under section 5326, or the record keeping requirements imposed by any regulation prescribed under section 21 of the Federal Deposit Insurance Act or section 123 of Public Law 91–508— [...] (3) structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more domestic financial institutions.
Section 5324 further provides that a violation of this provision may be punished by a fine or up to five years in prison, or both.[4]
[edit] Regulatory Table
 |
This article needs additional citations for verification. Please help improve this article by adding reliable references. Unsourced material may be challenged and removed. (March 2008) |
| Jurisdiction | Single Transaction | Notes |
|---|---|---|
| Australia | AU$10,000 | Although there are no weekly or monthy limits, any parceling to evade the rules is a criminal offence.[5] |
| Brazil | varies | Depends on transaction type.[6] |
| Canada | CA$10,000 | All transactions totaling CA$10,000 within a 24 hour period are subject to reporting. Certain businesses may qualify for Alternative to Large Cash Transaction (ALCT) reporting.[7] |
| Fiji | FJ$1,100 | Individuals are subject to FJ$7,700 in a given week. Businesses engaged as investor tourism operators have no limit. |
| France | €3,000 | |
| Guyana | US$10,000 | |
| Ireland | €10,000 | |
| India | Rs. 50,000 | |
| Italy | €12,500 | [8] |
| Lithuania | LTL10,000 | |
| Netherlands | €15,000 | [9] |
| New Zealand | NZ$10,000 | |
| Philippines | PhP50,000 | |
| Romania | €10,000 | |
| Spain | €3,000 | |
| Sweden | €10,000 | [10] |
| Turkey | US$50,000 | |
| United States | US$10,000 |
[edit] References
- ^ Internal Revenue Service (2006-06-01). "Part IV Examining Process; Chapter 26 Bank Secrecy Act; Section 13 Structuring", Internal Revenue Manual. Washington, D.C.: US Treasury Department. OCLC 37305546. Retrieved on 2008-03-11.
- ^ Gross, Samantha; Barrett, Devlin. "Spitzer Tripped Up on Laws He Enforced", Fox News, 11 March 2008. Retrieved on 2008-03-14.
- ^ Novack, Janet. "My Big Fat IRS case", Forbes, 7 April 2008. Retrieved on 2008-03-30.
- ^ .
- ^ Australian Transaction Reports and Analysis Centre (September 2002). AUSTRAC Guideline No. 1: Suspect Transaction Reporting (.PDF). Financial Transaction Reports Act 1988. Government of Australia. Retrieved on 2008-03-12.
- ^ Conselho de Controle de Atividades Financeiras. Lavagem de Dinheiro (Portuguese). Ministério da Fazenda. Retrieved on 2008-03-12.
- ^ Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)
- ^ Dipartimento del Tesoro. Antiriciclaggio (Italian). Ministero dell'Economia e delle Finanze. Retrieved on 2008-03-12.
- ^ FIU-Nederland. Meldingen Ongebruikelijke Transacties (Niederländisch). Ministerie van Justitie. Retrieved on 2008-03-12.
- ^ Europa Taxation and Customs Union (21 December 2007). Cash controls. European Commission. Retrieved on 2008-03-12.
