Money laundering is a financial threat that targets an economy’s stability and exploits its organizational operations. These exploitative financial practices led to 638 cases of money laundering instances in 2020 in Poland specifically. Money launderers usually extract funds from illicit sources and introduce them into financial institutions to conduct their operations. They usually do this by smurfing and structuring, breaking down large financial funds into smaller amounts. Several examples of structuring in money laundering are available that show the different tactics implemented by imposters for illegal activities. In this blog, an investigation of structuring is important to understand its influence on money laundering.
Understand Structuring in Anti-Money Laundering
Structuring in money laundering is the practice of breaking down large sums of funds into smaller and non-recognizable sums. Examples of structuring are prominently observed in the 3 stages of money laundering. Imposters structure exponential amounts of funds and use these smaller amounts to deposit them into legitimate financial structures.
This process is used by the imposters to introduce illicitly acquired funds into the legitimate financial structure. Structuring in money laundering is an attempt by imposters to avoid regulatory practices. The small and minute transactional operations carried out through structured monetary operations reduce the chances of being identified for illicit practices.
The various examples of structuring make them an illegal crime due to their facilitation of illicit operations in financial institutions. Oftentimes, these activities help the imposters avoid tax requirements and regulatory scrutiny as well. Therefore, a detailed analysis of critical transactional operations is necessary to identify and combat their influence.
Structuring and Smurfing – Identify the Critical Difference
Structuring and smurfing are interrelated in terms of positioning in money laundering operations but are conducted differently. Structuring refers to the splitting of large monetary funds into smaller amounts that are facilitated in a single transaction. Examples of structuring are the frequently recurring minute transactions with one entity.
However, smurfing involves the integration of multiple employees through which multiple small transactions are carried out. This involves transaction facilitation across multiple bank accounts worldwide. The entities involved in smurfing, known as smurfs, conceal their illicit money laundering, bribery, and embezzlement operations through illicit operations.
Examples of Structuring – A Detailed Investigation of Illicit Financial Practices
Structuring is an exploitative phenomenon that negatively impacts various financial and economic operations. Some of the common examples of structuring are briefly examined below:
Case-Based Money Laundering Structuring
It is the process of breaking down complex and extensive monetary funds into smaller amounts that are just below the defined threshold rates. These operations are often conducted across various transactional accounts and channels. Additionally, imposters use various cash-based businesses, including restaurants and retailers, to launder money illicitly.
Non-Cash Based Money Laundering Structuring
Non-cash money laundering operations revolve around the breaking of wire transfers into lesser-known and non-prominent transactions. Furthermore, imposters conduct multiple credit card transactions to conceal their illicit and unauthorized financial practices.
Repercussions of Structuring on Financial Institutions
The above-mentioned examples of structuring reveal the different tactics that are difficult to measure and identify during transactional monitoring operations. For instance, the proceeds from casino monetary sums are often broken down into smaller amounts to reduce the suspicions of money laundering structuring operations.
These examples of structuring raise the occurrence of suspicious activities, causing businesses to face several data privacy and security concerns. Additionally, structured funds create a level of increased complexity in transactional tracking and organizational practices. Moreover, the evolution of technologically advanced techniques helps the imposters disguise illegal financial activities while reducing their vulnerability to being detected by the examiners and financial administrators in real-time.
Structuring in AML – The Impact of Anti-Money Laundering Regulations in Financial Stability
Structuring can be extremely destructive in many instances. As mentioned in the above examples of structuring, money laundering operations complicate the screening and identification of illicit monetary transactions. Therefore, an enhanced and effective anti-money laundering solution is critical to overcoming and combating the structuring practices.
This involves the incorporation of additional names, sanctions, watchlists, and PEP screening operations, which evaluate the involvement of all the potential customers in money laundering and related financial crimes. Moreover, financial and non-financial institutions can integrate this operation to flag the illicit and unauthorized entities during the onboarding and registration process. Not only these operations enhance the financial operations, but they also boost the productivity and functionality of the employees operating in different business modules and operations.
Concluding Remarks
Examples of structuring are becoming prominent in today’s digital and exposed financial environment. These operations entail the division of large monetary funds into smaller portions to finance illicit and unauthorized activities. Structuring is a very important component of the placement stage of money laundering. Through these operations, the imposters introduce illicitly acquired funds into the financial system
