amin AML is a common method that most individuals use to launder money, allowing them to evade the reporting of large cash transactions. The bottom line behind structuring is breaking down huge cash into small transactions over time. This transaction manipulation is done to avoid government monitoring. Laws, such as the Bank Secrecy Act, require banks to report all deposits above $10,000 to regulatory authorities. Structuring goes around this through smurfing or cyclical activity, amongst others. The intent is to make illegally obtained money appear legitimate. The article expresses how structuring in AML works and the purpose behind the technique.
What is Structuring in AML?
Structuring in AML is the act of depositing, withdrawing, or transferring cash in a structured pattern that avoids triggering reporting requirements of laws aimed at preventing structuring under anti-money laundering.
Breaking down large cash transactions into several small ones with the view to avoiding the limit on structuring transactions of $10,000, triggers the reporting requirement.
Hiding the sources of illegal money and integrating it with legal financial flows. Structuring is the most important technique for laundering proceeds from criminal activities like drug trafficking, fraud, corruption, etc.
The Purpose of Structuring for Money Launderers
Structuring in money laundering is designed to cover up the fact that money is criminal entained by circulating it in the economy as legal.
Launderers employ structuring and smurfing with a view of attempting to mix their bad monies into the banking system without raising suspicion over structuring under the AML reporting regime.
In so doing, this enables them to further integrate dirty money into the formal economy or to transfer it for future criminal use. Structuring may open up new opportunities for criminal networks to use illegal wealth.
Common Structuring Techniques like Smurfing
Two common methods of structuring include smurfing and cyclic deposit activity, like repetitive sub-$10,000 deposits over some period, both of which are attempts at evading anti-money laundering regulation and scrutiny for structuring.
Both methods have the element of attempting to break down illicit cash below thresholds set up by regulators.
Smurfing takes the tasks of transactions and divides them among multiple untraceable ‘smurfs’.
Bonus: Keep your organization informed about the requirements on reporting, and train employees on how to recognize the red flags of structuring to avoid penalties and protect your business against money laundering risks.
Examples of Structuring Deposit Activity
Examples of Structuring may involve structuring in the form of daily deposits of $9,500 or weekly withdrawals of $9,000. Seasoned launderers know how to structure transactions strategically as a method of structuring in money laundering to introduce dirty money into the system undetected. Activities are carefully planned to avoid detection by financial institutions and regulators. With practice, techniques are perfected to discretely integrate ill-gotten gains.
Detecting Structuring Through Transaction Monitoring
Advanced transaction monitoring systems enabled by AI and machine learning allow financial institutions to identify structuring, such as repeated transactions just below AML reporting thresholds.
With the projection that the AML software market will reach $5.8 billion by 2027, these solutions will become very instrumental in the analysis of customer activities and the detection of attempts to avoid reporting. Structured transactions are revealed by continuous and consistent screening.
Reporting Requirements for Suspected Structuring
Banks are supposed to report any such transaction that the bank believes is structured to avoid reporting. Structuring management would form an essential part of an AML program. Timely reporting is key to allowing the investigative arms of the government to do effective follow-up on possible financial crimes. It is this fast service that lends the base for reporting in support of anti-corruption, and counterterrorism, and in the avoidance of risks linked to money laundering and other financial crimes.
Avoiding Accidental Structuring Violations
It’s essential that businesses, including banks, take a role in helping employees understand structuring in money laundering risks to avoid unintentional conduct in violation of structuring laws. Careful training will significantly cut down on compliance issues and legal liability. Training must, therefore, stress how innocent activities could still constitute structuring without proper precautions.
The Consequences of Engaging in Structuring
Willful structuring can also be subjected to serious criminal and civil penalties for individuals and businesses under the relevant structuring in anti-money laundering laws. Intentional violations of anti-money laundering regulations are rightly considered a grave offense. The punishment for structuring mainly involves strict fines and imprisonment, which is possible just to avoid this method of laundering.
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