Structuring

China Product


Background

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. Miami-based lawyer Gregory Baldwin is said to have coined the term in the 1980s.

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 otherwise legal business practices can be considered a crime, as detailed recently by an article in Forbes magazine. 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 cash" if you apply the structuring method knowingly. xerox docutech 135

The term is also applied to activity associated with controlled substances such as pseudoephedrine[citation needed]. 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.[citation needed] sharp copier parts

Structuring in everyday life ricoh copier parts

This section may contain original research. Please improve it by verifying the claims made and adding references. Statements consisting only of original research may be removed. More details may be available on the talk page. (February 2010)

Structuring need not be illegal. It is quite common for people to split transactions for legitimate reasons.

In a gambling market bets may be placed at different times with the aim of getting better odds. A very large bet may tip off the house and, even if there is in fact no insider knowledge, likely reduce the odds. Spreading the bets around can disguise this. The bets themselves may be perfectly legal; the aim is to get the best odds.

In the United Kingdom and in some other countries, over-the-counter drugs such as paracetemol and codeine may only be bought in small quantities. If one wishes to buy more, one simply exits the store and returns (or even just goes to another counter).

Discount stores often have loss leaders with "maximum purchase 10" (for example). Again, anyone wanting more than 10 simply buys 10 and returns to buy more.

Of course, in all these cases, just as with financial transactions, suspicion can still be raised if the point is pushed too far; and the same remedies apply: have someone else buy the goods, leave time between the transactions, and so on.

United States practice

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 91508 [...] (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.

Regulatory Table

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 monthly limits, any parceling to evade the rules is a criminal offence.

Brazil

varies

Depends on transaction type.

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.

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

Lithuania

LTL10,000

Netherlands

15,000

New Zealand

NZ$10,000

Philippines

PHP500,000

Portugal

10,000

Romania

10,000

Spain

3,000

Sweden

10,000

Thailand

US$58,000

Turkey

US$50,000

United States

US$10,000

See Also

Money Laundering Control Act

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. http://www.irs.gov/irm/part4/ch25s17.html. Retrieved 2008-03-11. 

^ Gross, Samantha; Barrett, Devlin (11 March 2008). "Spitzer Tripped Up on Laws He Enforced". Fox News. http://www.foxnews.com/wires/2008Mar11/0,4670,SpitzerTheMoneyTrail,00.html. Retrieved 2008-03-14. 

^ Novack, Janet (7 April 2008). "My Big Fat IRS case". Forbes. http://www.forbes.com/business/forbes/2008/0407/038.html. Retrieved 2008-03-30. 

^ 31 U.S.C.  5324(d)(1).

^ Australian Transaction Reports and Analysis Centre (September 2002). "AUSTRAC Guideline No. 1: Suspect Transaction Reporting" (.PDF). Financial Transaction Reports Act 1988. Government of Australia. http://www.austrac.gov.au/files/2003_guideline_1_suspect_transaction_reporting.pdf. Retrieved 2008-03-12. 

^ Conselho de Controle de Atividades Financeiras. "Lavagem de Dinheiro" (in Portuguese). Ministrio da Fazenda. http://www.coaf.fazenda.gov.br/conteudo/publicacoes. Retrieved 2008-03-12. 

^ Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)

^ Dipartimento del Tesoro. "Antiriciclaggio" (in Italian). Ministero dell'Economia e delle Finanze. http://www.dt.tesoro.it/Aree-Docum/Prevenzion/Antiriciclaggio/index.htm. Retrieved 2008-03-12. 

^ FIU-Nederland. "Meldingen Ongebruikelijke Transacties" (in Dutch). Ministerie van Justitie. http://www.justitie.nl/mot/. Retrieved 2008-03-12. 

^ Europa Taxation and Customs Union (21 December 2007). "Cash controls". European Commission. http://ec.europa.eu/taxation_customs/customs/customs_controls/cash_controls/index_en.htm. Retrieved 2008-03-12. 

^ Netipoom Maysakun. "MONEY LAUNDERING IN THAILAND" (PDF). The United Nations Asia and Far East Institute for the Prevention of Crime and the Treatment of Offenders. http://www.unafei.or.jp/english/pdf/PDF_rms/no73/12_p86-p94.pdf. Retrieved 2008-09-15. 

External links

Financial Crimes Enforcement Network ruling on structuring

Categories: Banking terms and equipment | Commercial crimes | Tax evasionHidden categories: All articles with unsourced statements | Articles with unsourced statements from June 2009 | Articles that may contain original research from February 2010 | All articles that may contain original research | Articles needing additional references from March 2008 | All articles needing additional references