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AML02 Jun 2024

Smurfing vs Structuring in Money Laundering Explained & How to Prevent Them

Emmanuel Agwu

Smurfing and structuring are two widely used techniques in modern money laundering schemes. While they are sometimes mentioned interchangeably, there are key differences between them. This article explores the workings of both structuring and smurfing, highlights their differences, and provides strategies for businesses to prevent these illicit activities and combat money laundering effectively.

What is Smurfing?

Smurfing involves breaking down a large sum of illicit money into smaller, less conspicuous transactions to avoid regulatory scrutiny. Financial institutions are required to report large cash deposits that exceed a certain threshold, which could expose the illegal origins of the funds. To circumvent this, criminals use "smurfs"—individuals who deposit smaller amounts into various bank accounts.


Smurfs are often individuals with low-risk profiles, who may be unaware they are part of a money laundering scheme. By dispersing deposits across multiple accounts and using different identities, it becomes challenging to trace the funds back to the criminals orchestrating the operation. This method creates a complex web of transactions that makes it difficult for authorities to detect and link illegal activities to their source.


For example, a criminal network recruits several individuals to each deposit $9,000 into various bank accounts. These "smurfs" make the deposits on behalf of the criminal, dispersing the funds across a broader range of accounts and locations.

What is Structuring?

Structuring involves dividing large sums of money into smaller transactions to avoid triggering anti-money laundering (AML) and counter-financing of terrorism (CFT) regulatory alerts. Unlike smurfing, which uses multiple individuals, structuring is typically carried out by a single person, making it less complex and also less effective at hiding the illicit origins of the funds.


As a placement technique, structuring is intended to evade regulatory detection, making it illegal. However, it can be risky. Financial institutions trained to spot suspicious activity may notice a series of transactions just below the reporting threshold conducted by the same individual. This pattern can prompt the institution to file a suspicious activity report (SAR) with local regulatory authorities, potentially exposing the money laundering scheme.


For example, a criminal with $100,000 might deposit $9,000 into multiple bank accounts across different institutions. Since each deposit is below the $10,000 threshold that typically requires bank reporting, the transactions go unnoticed by authorities.

Is Structuring and Smurfing Legal?

No, structuring and smurfing are illegal. They are both criminal offences and a red flag that may trigger other investigations. The technique employed for both processes violates AML and CFT regulations and may lead to significant penalties for those involved. This is because no one with good intentions will practice structuring or smurfing to avoid regulatory scrutiny on high-volume transactions they make. It's more likely that only individuals with malicious intent would employ such techniques. 

Differences between Smurfing and Structuring

The primary difference between smurfing and structuring lies in their execution. Both techniques involve breaking down large sums of money into smaller transactions to avoid regulatory scrutiny, but smurfing employs multiple individuals, known as "smurfs," to conduct these transactions, while a single individual typically carries out structuring.


Smurfing aims to complicate the placement process, making it difficult for regulators to link the smurfs and their transactions back to the criminal. By dispersing the deposits across numerous accounts and identities, smurfing effectively conceals the true origin of the funds. In contrast, structuring involves one person making multiple deposits below the reporting threshold, which can be easier to trace and is primarily used to avoid regulatory detection rather than explicitly hiding the illicit source of the money.


Financial institutions detect and prevent these methods differently. Structuring can be identified by monitoring for repeated deposits just below the reporting threshold by the same individual. Smurfing, however, is more challenging to track due to the involvement of multiple smurfs using various identities and accounts. This complexity requires more sophisticated monitoring systems and thorough investigative techniques to uncover the underlying money laundering activities.


Here is a breakdown of their differences:

  • Method of Execution:
    • Structuring: Involves a single entity or individual breaking down large sums into smaller transactions.
    • Smurfing: Involves multiple individuals (smurfs) conducting numerous small transactions.
  • Complexity:
    • Structuring: This can be complex due to the numerous small transactions but it’s usually carried out by one entity.
    • Smurfing: Adds a layer of complexity by involving multiple people, making it harder to trace the source of the funds.
  • Detection:
    • Structuring: Banks may detect patterns of frequent small deposits by a single entity.
    • Smurfing: More challenging to detect as transactions are spread out among many individuals.

How Financial Institutions Can Prevent Structuring and Smurfing

Some of the ways financial institutions can prevent

1. Implement Robust KYC Procedures:

Know Your Customer (KYC) protocols help verify the identity of clients and understand their financial behaviour. This involves verifying customer identity and running AML checks for proper risk assessment. By maintaining detailed records, businesses can spot unusual patterns that suggest structuring or smurfing.

2. Transaction Monitoring Systems:

Use automated systems to monitor transactions for suspicious activities. These systems can flag patterns that resemble structuring or smurfing, such as frequent small deposits just below the reporting threshold.

3. Employee Training:

Train employees to recognise the signs of money laundering techniques. Educated staff are more likely to notice red flags and report suspicious activities.

4. Reporting and Compliance:

Ensure compliance with anti-money laundering (AML) regulations by reporting suspicious transactions. Establish clear protocols for employees to follow when they detect potential structuring or smurfing activities.

5. Advanced Analytics and AI:

Leverage advanced analytics and artificial intelligence to detect complex patterns indicative of money laundering. These technologies can analyse vast amounts of data quickly, identifying anomalies that human oversight might miss.


Smile ID solutions are designed to provide you with comprehensive AML and KYC coverage in 54+ countries across Africa. Financial institutions can easily verify customer identity and run AML checks to assess the risk they pose and put measures in place against smurfing and structuring activities. Our APIs and SDKs are designed for easy integration with and interaction with your existing infrastructure. Book a free demo today to learn more.

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