What is Structuring?

Structuring is the practice of executing financial transactions in such a way that the filing of financial reports to the government is avoided. This usually involves keeping individual bank deposits lower than $10,000. Once the $10,000 threshold is reached, banks are required by the Bank Secrecy Act to file a Currency Transaction Report with the government. To avoid the threshold, someone trying to deposit a large amount of money can break it up into many small deposits, which can be deposited into accounts at several banks. Structuring is commonly used by money launderers to avoid detection.

Characteristics of a Structuring Transaction

The key characteristics of a structuring transaction are as follows:

Fragmentation of transactions. The total transaction amount is deliberately split into smaller sums below the $10,000 reporting threshold (e.g., $9,900 or $9,500) to avoid detection.
Multiple deposits or withdrawals. The smaller transactions are often conducted as multiple cash deposits or withdrawals over a short period or across different branches of the same financial institution.
Use of multiple accounts. Transactions may involve multiple bank accounts, either in the name of the same person or associates, to further obscure the activity.
Transactions conducted at multiple locations. Structuring often involves carrying out transactions at different bank branches or financial institutions to avoid suspicion by a single institution.
Repeated activity. There is often a consistent pattern of deposits, withdrawals, or other financial activities just below the reporting threshold (e.g., daily deposits of $9,900).
Avoidance of identification requirements. Individuals engaging in structuring may use methods designed to avoid requirements for providing identification, such as keeping transaction amounts below certain limits.
Cash-only transactions. Structuring typically involves cash transactions, as these are subject to stricter reporting requirements compared to non-cash transactions.
Use of intermediaries. Third parties (often referred to as "smurfs") may be employed to carry out the smaller transactions on behalf of the main party, making the activity harder to trace.
Attempts to avoid suspicion. The individual may provide vague or inconsistent explanations for the nature or purpose of the transactions to avoid raising suspicion among financial institution staff.
Timing and frequency. Transactions are often timed to avoid detection, such as conducting multiple smaller deposits over several days rather than all at once.
Lack of legitimate business justification. The structured transactions often lack a clear or logical connection to the individual’s or entity’s legitimate business or financial activities.
Concealment of true beneficiary. Structuring may involve attempts to hide the identity of the person who will ultimately benefit from the funds, often by using nominees or shell entities.

Example of Structuring

As an example of structuring, Alice has $200,000 that she does not want to have reported to the government. To avoid this reporting, she divides it into clusters ranging in size from $4,000 to $8,000. She then deposits these amounts at several banks over an extended period of time, using irregular deposit intervals. By taking this approach, she avoids triggering any automated cash reporting systems at the banks.