A bank security primer on 'structuring'

March 14, 2008
New form of money laundering seeks to stay under traditional federal oversights

NEW YORK – March 12, 2008 – A commonly-used form of money laundering called “structuring” has recently emerged in the news.

According to Dr. Michael Recce, chief scientist at Fortent, a New York company focused on risk, compliance and information technology, “Structuring is a favorite method used by money launderers to attempt to avoid detection."

“Due to the Bank Secrecy Act and the USA PATRIOT Act regulations, banks are required to report customer transactions of $10,000 or more to federal authorities," said Recce. "So in order to get around these requirements, an individual could ‘structure’ or divide payments into a set of transactions where each individual transaction is below this $10,000 threshold. This maneuver increases the chances that the individual would fly under the radar of banks’ compliance departments.

“Divided transactions raise suspicion levels, and banks have systems in place to detect just this sort of criminal behavior.”

Common signs of structuring, said Recce, include:

1. Movement of cash in multiple transactions under $10,000 – “Obviously, not every transaction of under $10,000 is suspect, but if banks see a pattern of cash movement to the same account when it doesn’t seem to make sense, this raises red flags.”

2. Attempts to take the sender’s name off wire transfers – “If you have nothing to hide, why would you try to conceal your transactions?”

3. Large cash deposits made to ATMs – “Most people deposit checks, not cash, into ATMs, so banks’ systems tend to raise red flags for these types of transactions.”

“To detect structuring,” says Dr. Recce, “anti-money laundering systems, such as Fortent’s, look for situations in which multiple transactions of slightly under $10,000 are performed within short periods of time, possibly at multiple branches or locations of a bank.”