In anti-money laundering practices, what does 'structuring' refer to?

'Structuring,' often referred to as layering in the context of money laundering, specifically involves breaking up large amounts of money into smaller deposits. This practice is employed to avoid detection and reporting thresholds that financial institutions and regulatory bodies have in place to monitor large transactions. By dispersing large sums into multiple smaller ones, an individual can sidestep scrutiny and prevent triggering regulations designed to identify suspicious financial activity.

This method is a common tactic among those looking to launder money, as it makes it harder for authorities to trace the source of the funds. The ultimate goal of structuring is to obscure the money's origin, allowing the individual to reintroduce it into the financial system without raising red flags.

Understanding this concept is essential, as it highlights one of the many techniques used by criminals to facilitate money laundering. Other choices present tactics that do not directly relate to the specific act of structuring, making them less relevant in the context of anti-money laundering practices.