What term describes the practice of structuring transactions to avoid reporting thresholds?

The practice of structuring transactions to avoid reporting thresholds is referred to as "smurfing." Smurfing involves breaking down large amounts of money into smaller, less suspicious amounts that fall below regulatory reporting requirements. This technique is often used by individuals trying to evade detection by authorities when moving illicitly obtained funds.

Smurfing is a fundamental tactic in the money laundering process, particularly during the placement stage, where the goal is to introduce illegal gains into the financial system without raising red flags. It allows the individuals conducting these transactions to remain under the radar, as smaller transactions are less likely to trigger reporting obligations that would normally apply to larger sums. The term highlights the strategy of dispersing activities among multiple smaller transactions, akin to a group of "smurfs" working in concert to achieve a common goal without attracting attention.

In contrast, layering and integration are subsequent phases in the money laundering process that involve concealing the origins of the laundered funds and integrating them back into the economy, respectively.