What is structuring in AML compliance?

• A. The illegal act of splitting cash deposits or withdrawals into smaller accounts in order to stay under a currency reporting threshold.
• B. The process of moving funds to offshore accounts to avoid taxes.
• C. The legitimate practice of splitting funds to manage cash flow.
• D. The act of consolidating funds into a single deposit.

Answer: (A)

Structuring, often called smurfing, is the illegal practice of splitting large cash deposits or withdrawals into smaller transactions so each one stays under the currency reporting threshold and avoids triggering reporting or AML scrutiny. The goal is to disguise the true size and flow of funds, which regulators and banks monitor for signs of illicit activity. Because the pattern can indicate an attempt to evade detection, financial institutions flag these behaviors and may filing Suspicious Activity Reports when they see multiple under-threshold transactions linked to the same source or purpose. It’s different from legitimate cash management, where splitting funds is done for a clear, lawful business reason and not to dodge reporting. It also isn’t about moving funds offshore to dodge taxes or simply consolidating funds into a single deposit, both of which involve different considerations and do not describe the concealment under the reporting threshold that defines structuring.