What is structuring in AML compliance?

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 is the illegal act of splitting large cash deposits or withdrawals into smaller amounts to stay under the reporting threshold. In AML programs, this behavior is watched because it hides the true size and source of funds and aims to avoid triggering currency transaction reporting (for example, not letting a single deposit exceed the reporting limit). The practice is often called smurfing and signals an intent to evade scrutiny, which is why it’s treated as a red flag and potentially a basis for a suspicious activity report. Legitimate cash management might involve multiple deposits for convenience, but structuring specifically involves deliberate fragmentation to defeat reporting and oversight.