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

'Structuring,' also commonly referred to as 'smurfing,' specifically describes the practice of breaking up large amounts of cash into smaller transactions or deposits. This is done to avoid detection and bypass reporting thresholds that financial institutions and regulatory bodies have in place for large transfers. By dividing a significant sum into smaller, more manageable amounts, money launderers attempt to obscure the origins of illicit funds and evade scrutiny from authorities.

The rationale behind this practice lies in its effectiveness at circumventing monitoring systems that are designed to flag unusual activity. Financial institutions are often required to report large cash transactions, so by structuring deposits, individuals can make their activities appear more innocuous. This process is a common tactic among those seeking to launder money, as it minimizes the risk of drawing attention to their financial dealings.