What is structuring and how do I detect it in client transactions?

Structuring — also called 'smurfing' — is a classic money laundering technique. By keeping individual transactions below the $10,000 cash reporting threshold, a person can avoid triggering a Threshold Transaction Report (TTR) to AUSTRAC. The cumulative effect is that large amounts of cash are moved without generating the regulatory visibility that a single large transaction would produce.

The legal position

Section 142 of the AML/CTF Act makes it a criminal offence to conduct a transaction, or cause a transaction to be conducted, for the purpose of avoiding a reporting obligation. The offence is committed by the person structuring the transaction — and by any person who knowingly assists them. As a reporting entity, if you are aware that a client is structuring and you continue to facilitate their transactions, you may be criminally liable.

How to detect structuring

Structuring is detected by looking at patterns across multiple transactions, not at individual ones. Key indicators:

• Multiple cash deposits or payments of $9,000–$9,900 by the same client within days of each other
• A client who asks you to split a payment into several parts without a legitimate business reason
• Multiple transactions on the same day that individually fall below $10,000 but aggregate above it
• Transactions that cluster just below the threshold with unusual regularity
• A client who displays knowledge of the $10,000 threshold and references it in conversation

The threshold transaction report (TTR)

A TTR must be filed whenever a client deposits, withdraws, or exchanges $10,000 or more in physical currency in a single transaction. TTRs are filed within 10 business days of the transaction. There is no discretion — if the transaction involves physical currency at or above the threshold, a TTR is mandatory regardless of who the client is or how low-risk they appear.

It is important to note that the $10,000 threshold applies to physical currency only. Electronic fund transfers of any amount do not require a TTR (though they may require an IFTI if international, or trigger an SMR if suspicious).

What to do when you detect structuring

If you identify a structuring pattern, you must file an SMR. Do not alert the client — the tipping-off prohibition applies. Document your analysis and the basis for your suspicion, lodge the SMR promptly, and consider whether the relationship should continue.