Structuring, also known as “smurfing”, is the act of executing financial transactions in a way to avoid the creation of certain records and reports that may be required by law. In the United States, the Bank Secrecy Act requires the reporting of deposits or the purchase of negotiable instruments in excess of $10,000.00 cash. The Bank Secrecy Act was originally passed by Congress in 1970 in an effort to prevent money laundering. The Bank Secrecy Act has been amended several times including an amendment in the USA Patriot Act.
Financial institutions are required by law to report any person they suspect is structuring deposits in an attempt to launder money. These financial institutions do not have the discretion to not report. Many financial institutions face heavy penalties for failing to report such structuring activity. These penalties can include heavy fines and/or prison sentences. The financial institutions even face these penalties if they notify an individual that they had to file a report.
Individuals can also be punished for structuring. Under 18 USC §5324, an individual may be punished for a litany of offenses. These offenses range from structuring them self to attempting to prevent a financial institution from reporting the structuring act. The most common form of structuring by individuals is when numerous cash withdrawals of just under $10,000 are made in an effort to avoid the reporting requirements. Individuals can face severe criminal penalties when convicted of this statute. The penalties can be up to five years in prison and fines. Many individuals structure in an attempt to avoid paying taxes.
The Department of Treasury also has the power to pay a reward to informants who provide details on structuring. This comes straight from the Internal Revenue Service’s website. Part 4, Chapter 26, Section 7.8 states, “An individual who provides original information that leads to recovery of a criminal fine, civil penalty, or forfeiture that exceeds $50,000 for a violation of the Bank Secrecy Act may be eligible for a reward, 31 USC 5323 and 31 CFR 103.62.” Section 7.8 goes on further to state, “The reward may not exceed the lesser of $150,000 or 25% of the net amount collected. Generally officers and employees of the United States, state, or local governments are not eligible to collect the reward.” Not only are financial institutions required to report structuring but individuals are rewarded financially for doing so.
If you have been accused or are under investigation for structuring, make sure you have an attorney who has experience in structured transactions on your side. Call the offices of Parkman White, LLP , LLC at 1-855-727-5626 for immediate representation.