Structuring, also known as smurfing in banking industry jargon, is the practice of executing financial transactions (such as the making of bank deposits) in a specific pattern calculated to avoid the creation of certain records and reports required by law, such as the United States's Bank Secrecy Act (BSA) and Internal Revenue Code section 6050I (relating to the requirement to file Form 8300).[1]
Legal restrictions on structuring should not be confused with capital controls, which are statutory or regulatory limits on the money that one can take out of a nation, though they can have some of the same economic effects in some economies, as structuring controls effectively limit the flow of capital by magnitude and duration, and can apply equally to taking money out of a nation as well as putting money into its finance system.
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Structuring includes the act of parceling what would otherwise be a large financial transaction into a series of 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. Miami-based lawyer Gregory Baldwin is said to have coined the term in the 1980s.[2]
Typically each of the smaller transactions is executed in an amount below some statutory limit that normally 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.
The term is also applied to activity associated with controlled substances such as pseudoephedrine[3] In this context the agent will make purchases of small, legal amounts from several drug and grocery stores, with the intent to aggregate the lot for use in the illegal production of methamphetamine.[4]
In the United States, the Bank Secrecy Act requires the filing of a currency transaction report (CTR) for transactions of more than $10,000 in currency (US or foreign). 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.[5]
Canada's legislation on money laundering have been revised recently [1].
The CA$10,000 rule remains.
Capital controls generally regulate how much money can leave a country at any given time. Whereas anti-structuring regulations are more concerned with limiting the size of domestic transactions for individuals and somewhat limiting the outbound foreign currency transfers of firms or company entities.
Exceptions & clarifications
| Jurisdiction | Single Transaction | Notes |
|---|---|---|
| Australia | A$10,000 | Although there are no weekly or monthly limits, any parceling to evade the rules is a criminal offence.[6] |
| Brazil | varies | Depends on transaction type.[7] |
| 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.[8] |
| 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 | |
| Germany | €15,000 | |
| Guyana | USD10,000 | |
| Ireland | €10,000 | |
| India | Rs. 50,000 | |
| Italy | €12,500 | [9] |
| Lithuania | LTL10,000 | |
| Netherlands | €15,000 | [10] |
| New Zealand | NZ$10,000 | Not applicable to the Cook Islands |
| Philippines | PHP500,000 | |
| Portugal | €10,000 | |
| Romania | €10,000 | |
| Spain | €3,000 | |
| Sweden | €10,000 | [11] |
| Thailand | US$58,000 | [12] |
| Turkey | US$50,000 | |
| United States | US$10,000 |