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Structuring definition and meaning | AML glossary

What is structuring in money laundering? Definition and AML compliance meaning.

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Structuring definition: What it means in AML compliance.

Structuring, also known as smurfing, is a money laundering technique where large financial transactions are broken down into smaller amounts to evade detection and avoid triggering regulatory reporting thresholds. Criminals use this method to move illicit funds through financial institutions without raising suspicion, making it a significant risk for compliance teams and AML professionals.

How structuring works.

Structuring typically involves depositing or withdrawing funds in increments just below the reporting limits set by regulators. In the UK, for example, large cash transactions may require reporting under AML regulations and the Proceeds of Crime Act 2002 (POCA). Criminals attempt to bypass these requirements by using multiple accounts, different locations, or third parties to make transactions appear legitimate.

Common signs of structuring.

  • Frequent transactions just below reporting thresholds
  • Multiple deposits or withdrawals across different branches or accounts
  • Unusual patterns in transaction frequency or amounts
  • Use of multiple individuals (smurfs) to conduct transactions on behalf of one entity

Detecting structuring.

Regulated firms must implement ongoing monitoring and transaction analysis to detect structuring attempts. Automated screening tools can flag unusual patterns, while customer due diligence (CDD) and enhanced due diligence (EDD) help assess the legitimacy of transactions. Compliance teams should also have clear procedures for filing Suspicious Activity Reports (SARs) when structuring is suspected.

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