Structuring and smurfing

What structuring means

Structuring can involve splitting transactions to avoid threshold reporting. Section 142 of the AML/CTF Act covers two or more non-reportable transactions. Its test considers their form, context and the person’s explanation.

The sole or dominant purpose must be avoiding, or attempting to avoid, a threshold transaction that required reporting. Section 142 also provides a defence where the defendant proves that this was not the sole or dominant purpose.

Sources: Federal Register of Legislation: Section 142, including subsection (2); section 5 threshold transaction; AUSTRAC: Threshold transaction reporting; Structuring; AUSTRAC: Definition; AUSTRAC: Overview; AUSTRAC: Money laundering methodologies: structuring.

Transaction facts
Record amounts, dates and the person’s explanation.
Avoidance purpose
Section 142 concerns the sole or dominant purpose of avoiding required threshold reporting.
Reporting decision
Apply the separate TTR and SMR requirements.

Separate the payment amount from the avoidance purpose

Several small payments alone do not establish structuring. The offence and each reporting duty have their own conditions.

Separate evidence questions. An answer to one does not settle the others.

A threshold is not a suspicion test

The general TTR threshold is $10,000 or more in physical currency, including the foreign-currency equivalent. Designated-service conditions and exemptions still apply. Electronic payments are not physical currency.

A smaller transaction can still raise an SMR question. Several small payments can also have a lawful explanation. Examine the facts and reporting requirements separately.

How smurfing is used

Smurfing is a term used for structuring in some AML material. Usage varies. Describe the actual pattern instead of relying on the label.

Cuckoo smurfing is a more specific pattern. It can exploit an account whose holder expects a legitimate payment. The holder may be unaware that criminal proceeds have reached the account.

Example: a pattern needing explanation

A fictional customer makes several cash payments that do not fit their stated activity. The reviewer records the dates, amounts and explanation. A repeated pattern prompts review, not an automatic criminal conclusion.

If the business forms the relevant suspicion on reasonable grounds, it follows the SMR requirements. It does not wait for a criminal finding. The example does not prescribe a monitoring rule or permit continued service.