Structuring, also known as smurfing in

banking A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital m ...

jargon Jargon, or technical language, is the specialized terminology associated with a particular field or area of activity. Jargon is normally employed in a particular Context (language use), communicative context and may not be well understood outside ...

, is the practice of executing

financial transaction A financial transaction is an Contract, agreement, or communication, between a buyer and seller to exchange goods, Service (economics), services, or assets for payment. Any transaction involves a change in the status of the finances of two or mo ...

s such as making bank deposits in a specific pattern, calculated to avoid triggering

financial institution A financial institution, sometimes called a banking institution, is a business entity that provides service as an intermediary for different types of financial monetary transactions. Broadly speaking, there are three major types of financial ins ...

s to file reports required by law, such as the United States'

Bank Secrecy Act The Bank Secrecy Act of 1970 (BSA), also known as the Currency and Foreign Transactions Reporting Act, is a U.S. law requiring financial institutions in the United States to assist U.S. government agencies in detecting and preventing money laun ...

(BSA) and

Internal Revenue Code The Internal Revenue Code of 1986 (IRC), is the domestic portion of federal statutory tax law in the United States. It is codified in statute as Title 26 of the United States Code. The IRC is organized topically into subtitles and sections, co ...

section 6050I (relating to the requirement to file Form 8300). Structuring may be done in the context of

money laundering Money laundering is the process of illegally concealing the origin of money obtained from illicit activities (often known as dirty money) such as drug trafficking, sex work, terrorism, corruption, and embezzlement, and converting the funds i ...

fraud In law, fraud is intent (law), intentional deception to deprive a victim of a legal right or to gain from a victim unlawfully or unfairly. Fraud can violate Civil law (common law), civil law (e.g., a fraud victim may sue the fraud perpetrato ...

, and other

financial crime Financial crime is crime committed against property, involving the unlawful conversion of the ownership of property (belonging to one person) to one's own personal use and benefit. Financial crimes may involve fraud (cheque fraud, credit card f ...

s. Legal restrictions on structuring are concerned with limiting the size of domestic transactions for individuals.

Definition

Structuring is the act of parceling what would otherwise be a large financial transaction into a series of smaller transactions to avoid scrutiny by regulators and law enforcement. Typically each of the smaller transactions is executed in an amount below some statutory limit that normally does not require a

to file a report with a government agency. Criminal enterprises may employ several agents ("smurfs") to make the transaction. Structuring appears in federal indictments related to

, and other

s. The term "smurfing" is derived from the image of the comic book characters

the Smurfs ''The Smurfs'' (; ) is a Belgian comic franchise centered on a fictional colony of small, blue, humanoid creatures who live in mushroom-shaped houses in the forest. ''The Smurfs'' was created and introduced as a series of comic characters by ...

having a large group of many small entities. Miami-based lawyer Gregory Baldwin is said to have coined the term in the 1980s.

Regulations

United States

In the

United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

, the

requires currency transaction reports (CTRs) to be filed for cash transactions involving coin or paper money valued at more than $10,000; it applies to both U.S. and foreign currencies. Contrary to popular misunderstanding, it does not apply to checks or electronic transactions. Financial institutions suspecting deposit structuring with intent to avoid the law are required to file a

suspicious activity report In financial regulation, a Suspicious Activity Report (SAR) or Suspicious Transaction Report (STR) is a report made by a financial institution about suspicious or potentially suspicious activity as required under laws designed to counter money lau ...

(SAR). In 1986, the

U.S. Congress The United States Congress is the legislative branch of the federal government of the United States. It is a bicameral legislature, including a lower body, the U.S. House of Representatives, and an upper body, the U.S. Senate. They both ...

enacted section 5324 of Title 31 of the

United States Code The United States Code (formally The Code of Laws of the United States of America) is the official Codification (law), codification of the general and permanent Law of the United States#Federal law, federal statutes of the United States. It ...

, which 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. The filing of Form 8300 is required under

section 6050I. Sums of money resulting from deposits of less than $10,000 may be seized after a warrant is issued based on a

. Legal proceedings, which may cost in the vicinity of $20,000 or more, may be required for an innocent party to retrieve his or her money. Reports in October 2014 by ''

The New York Times ''The New York Times'' (''NYT'') is an American daily newspaper based in New York City. ''The New York Times'' covers domestic, national, and international news, and publishes opinion pieces, investigative reports, and reviews. As one of ...

'' of arbitrary seizures resulted in modification of

Internal Revenue Service The Internal Revenue Service (IRS) is the revenue service for the Federal government of the United States, United States federal government, which is responsible for collecting Taxation in the United States, U.S. federal taxes and administerin ...

(IRS) practice to focus on investigations that "closely align" with IRS "mission and key priorities". Banks are not permitted to warn or advise customers unless the customer asks, but sometimes bank tellers will informally warn customers."Law Lets I.R.S. Seize Accounts on Suspicion, No Crime Required"
article by Sahaila Dewan in ''

'' 25 October 2014

Outside the United States

Other uses

The term "smurfing" is also applied to activity associated with

controlled substance A controlled substance is generally a drug or chemical whose manufacture, possession and use is regulated by a government, such as illicitly used drugs or prescription medications that are designated by law. Some treaties, notably the Sing ...

s such as

pseudoephedrine Pseudoephedrine, sold under the brand name Sudafed among others, is a sympathomimetic medication which is used as a decongestant to treat nasal congestion. It has also been used off-label for certain other indications, like treatment of lo ...

. 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 Methamphetamine (contracted from ) is a potent central nervous system (CNS) stimulant that is mainly used as a recreational drug use, recreational or Performance-enhancing substance, performance-enhancing drug and less commonly as a secon ...

. Also, since the monthly

purchase limits in US are too low for mass meth production, this practice often involves using multiple "smurfs". As Robert Pennal of the Fresno Meth Task Force explains:

Then we started seeing "smurfing." Remember how the smurfs were little gatherers? We started getting calls from different retail stores that people were buying two or three packs—that's the most you can buy—and they went to one store, they bought three, they went to another store, bought three. We're seeing
blister packs A blister pack is any of several types of pre-formed plastic packaging used for small consumer goods, foods, and for pharmaceuticals. The primary component of a blister pack is a cavity or pocket made from a formable web, usually a thermoforme ...
everywhere because they're sitting in the car, they're punching the pills out of the blister packs, they're putting them in the freezer bags and they're turning them over to chemical
broker A broker is a person or entity that arranges transactions between a buyer and a seller. This may be done for a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal. Neither ...
s.

References

External links

Financial Crimes Enforcement Network ruling on structuring
{{Bank regulation in the United States Asset forfeiture Banking terms Commercial crimes Money laundering Tax evasion fr:Blanchiment d'argent#Méthodes de blanchiment