Structuring

Structuring is “the breaking up of transactions for the purpose of evading the Bank Secrecy Act reporting and recordkeeping requirements.”  See FinCen Ruling 2005-6 – Suspicious Activity Reporting (Structuring).    A member might try to deposit funds over a period of days or go to multiple branches of the credit union to try to hide the total amount of the transaction.  The member might also enlist the help of friends to make multiple deposits to the member’s account (smurfing).  For credit unions, structuring can pose unusual problems for bank secrecy reporting.

When a credit union member deposits cash in such a way to attempt to prevent the triggering of Currency Transaction Report (CTR) filing on the part of the credit union, the member is actually committing a crime.  It is illegal to structure.  See 31 USCS § 5324 and 31 CFR 103.63.  Courts have held that in order to prove structuring, the government must show that the defendant knew of relevant reporting requirements, that he structured his transaction for the purpose of evading those reporting requirements, and that he acted with knowledge that his conduct was unlawful.  See United States v. Gabel (1997, CA 7 Ill) 85 F3d 1217.  The penalties for structuring are significant:  up to five years in prison and substantial fines.

When a member attempts an illegal act at the credit union, a credit union needs to file a Suspicious Activity Report (SAR) when the amount is $5,000.00 or more.  Thus, in trying to avoid a CTR filing, the member will instead trigger a SAR filing.

Thus it is very important that credit unions be able to identify structuring transactions and perform manual transaction monitoring to police for structuring.  This is not always easy.  For example, in shared branching transactions, sometimes reports are aggregated and it is difficult to separate out cash and non-cash transactions.  Non-cash transactions do not trigger CTR filings.  A credit union needs to be able to separate out cash and non-cash transactions to properly identify structuring attempts.

Sadly, this is easier said than done.  With any luck, new advances in data processing will help in this regard.  Otherwise, this reporting requirement can hinder shared branching and other credit union remote cash services.

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