Structuring, also known as smurfing, occurs when individuals or entities attempt to avoid federal reporting requirements by breaking up large cash transactions into smaller amounts. These smaller amounts are strategically deposited in multiple bank accounts or conducted over several days to avoid triggering the mandatory reporting threshold of $10,000 as outlined in the Bank Secrecy Act (BSA). This illegal method is often used to disguise the proceeds of criminal activities like drug trafficking or tax evasion. Structuring is a federal offense, and penalties can include both civil and criminal consequences.
If individuals knowingly structure their financial transactions to avoid detection, they are committing structuring fraud. This could involve the intentional splitting of cash deposits, withdrawals, or other financial activities to evade the scrutiny of banks and federal regulators.
Structuring Laws
Structuring is governed by several federal statutes, including the Bank Secrecy Act and the USA PATRIOT Act, which require financial institutions to report transactions above $10,000 in cash. Structuring fraud is a serious offense, and penalties for this crime can include large fines, asset forfeiture, and imprisonment.
Structuring Crimes & Charges
Structuring is federally covered under 31 U.S. Code Section 5324 – Structuring transactions to evade reporting requirements. The act of structuring involves knowingly conducting financial transactions in such a way that the financial institution fails to submit a Currency Transaction Report (CTR) to the Financial Crimes Enforcement Network (FinCEN), a division of the U.S. Treasury Department.
Structuring Punishment
Under federal and state statutes, those convicted of structuring can face severe consequences, including imprisonment, large fines, and the forfeiture of assets. Courts may also impose additional civil penalties. Individuals found guilty of structuring face criminal penalties that may result in imprisonment for up to five years. In cases where structuring is related to other criminal activities such as money laundering or drug trafficking, the penalties can be significantly enhanced. Federal law also allows for the forfeiture of assets involved in structuring, even if the money itself was obtained legally but deposited illegally.
Structuring Sentencing Guidelines
Sentencing guidelines for structuring depend on the amount of money involved, the duration of the structuring activity, and whether the activity was linked to other criminal conduct. Additionally, courts will consider the defendant’s prior criminal history. In cases where structuring is tied to larger criminal conspiracies, such as tax evasion or money laundering, the penalties are more severe. Repeat offenders or those engaged in long-term structuring operations may face extended prison sentences and larger fines.
Structuring Statute of Limitations
The statute of limitations for structuring generally aligns with federal guidelines for financial crimes, which is five years from the date the offense was discovered. However, the statute can be tolled (extended) in cases where the offender has fled the country or has taken active steps to conceal their structuring activities.
Structuring Cases
- United States v. Ratzlaf: This landmark Supreme Court case clarified that the government must prove that an individual knew that structuring financial transactions to evade reporting was illegal. The case resulted in the conviction being overturned because the defendant lacked the requisite intent to violate the law knowingly.
- Lorenzo Black Case: Lorenzo Black, a business owner, was convicted of structuring over $500,000 in small cash deposits into several bank accounts to avoid federal reporting requirements. His illegal activities were linked to a broader drug trafficking operation, and he received a 10-year prison sentence, along with the forfeiture of his properties and assets.
- John Doe Business Owner: A successful entrepreneur was convicted of structuring $200,000 over the course of one year. Despite the legality of his business proceeds, his attempt to avoid the reporting requirements through small deposits resulted in asset forfeiture and a two-year prison sentence.
- Lisa Martinez Case: Lisa Martinez, a government contractor, was convicted of structuring her income to evade taxes. She made frequent small deposits to multiple bank accounts to avoid detection. Her scheme was discovered during a tax audit, and she faced severe fines and a five-year prison sentence.
- Federal Agents Sweep: In a large-scale federal operation, agents arrested multiple individuals who were involved in structuring activities across different states. The individuals had collectively deposited millions of dollars into various banks through structured transactions. Most of them received lengthy prison sentences and heavy fines.
Structuring Laws by State
The laws surrounding structuring vary from state to state, with most aligning closely with federal laws. While structuring is primarily prosecuted at the federal level, some states impose additional penalties for structuring linked to local crimes, such as drug distribution or tax fraud.
Under Alabama Code Section 13A-9-110:
- Structuring to evade currency transaction reporting is a felony, punishable by imprisonment for up to five years and fines up to $100,000.
Under Alaska Stat. Section 11.56.820:
- Structuring financial transactions is a felony, with penalties including up to five years in prison and fines up to $250,000.
Under Arizona Revised Statutes Section 13-2317:
- Structuring is a Class 4 felony, punishable by imprisonment for up to five years and fines up to $150,000.
Under Arkansas Code Section 5-10-104:
- Structuring financial transactions is a Class B felony, punishable by imprisonment for up to 10 years and fines up to $10,000.
Under California Penal Code Section 14164:
- Structuring is considered a felony, punishable by up to five years in state prison and fines up to $500,000.
Under Colorado Revised Statutes Section 18-3-104:
- Structuring financial transactions to evade reporting requirements is a Class 4 felony, punishable by up to six years in prison and fines up to $500,000.
Under Connecticut General Statutes Section 53a-119:
- Structuring is considered a Class C felony, with penalties including up to 10 years in prison and fines up to $250,000.
Under Delaware Code Title 11, Section 630:
- Structuring financial transactions is classified as a felony, punishable by imprisonment for up to 10 years and fines up to $100,000.
Under Florida Statutes Section 896.101:
- Structuring is considered a second-degree felony, punishable by up to 15 years in prison and fines up to $500,000.
Under Georgia Code Section 7-1-911:
- Structuring financial transactions is a felony, with penalties including up to 10 years in prison and fines up to $250,000.
Under Hawaii Revised Statutes Section 712-1243:
- Structuring is a Class B felony, punishable by imprisonment for up to 10 years and fines up to $100,000.
Under Idaho Code Section 18-7204:
- Structuring to evade reporting is a felony, punishable by up to five years in prison and fines up to $250,000.
Under Illinois Compiled Statutes 720 ILCS 5/29B-1:
- Structuring is a Class 1 felony, punishable by up to 15 years in prison and fines up to $500,000.
Under Indiana Code Section 35-42-1-4:
- Structuring is a Level 4 felony, punishable by imprisonment for up to 12 years and fines up to $100,000.
Under Iowa Code Section 706A.2:
- Structuring financial transactions is classified as a Class C felony, punishable by up to 10 years in prison and fines up to $100,000.
Under Kansas Statutes Section 21-5832:
- Structuring financial transactions to avoid reporting is a Level 5 felony, punishable by imprisonment for up to 13 years and fines up to $250,000.
Under Kentucky Revised Statutes Section 507.050:
- Structuring is a Class D felony, carrying penalties of one to five years in prison and fines up to $50,000.
Under Louisiana Revised Statutes Section 14:230:
- Structuring financial transactions is a felony, punishable by up to 10 years in prison and fines up to $250,000.
Under Maine Revised Statutes Title 17-A, Section 905:
- Structuring is classified as a Class B felony, carrying penalties of up to 10 years in prison and fines up to $100,000.
Under Maryland Criminal Law Section 8-611:
- Structuring financial transactions is a felony, punishable by up to 10 years in prison and fines up to $250,000.
Under Massachusetts General Laws Chapter 265, Section 37:
- Structuring is considered a felony, with penalties including up to 20 years in prison and fines up to $500,000.
Under Michigan Compiled Laws Section 750.411s:
- Structuring is a felony punishable by up to 15 years in prison and fines up to $250,000.
Under Minnesota Statutes Section 609.631:
- Structuring financial transactions is a felony, punishable by up to 10 years in prison and fines up to $250,000.
Under Mississippi Code Section 97-3-27:
- Structuring is classified as a felony, punishable by imprisonment for up to 10 years and fines up to $100,000.
Under Missouri Revised Statutes Section 576.050:
- Structuring financial transactions to evade reporting requirements is a Class C felony, punishable by up to seven years in prison and fines up to $100,000.
Under Montana Code Annotated Section 45-6-301:
- Structuring financial transactions is a felony, punishable by up to 10 years in prison and fines up to $250,000.
Under Nebraska Revised Statutes Section 28-1354:
- Structuring financial transactions is classified as a felony, punishable by imprisonment for up to 10 years and fines up to $100,000.
Under Nevada Revised Statutes Section 463.722:
- Structuring financial transactions is a felony, punishable by up to six years in prison and fines up to $500,000.
Under New Hampshire Revised Statutes Section 637:3:
- Structuring is classified as a Class B felony, punishable by imprisonment for up to seven years and fines up to $100,000.
Under New Jersey Statutes Section 2C:21-25:
- Structuring financial transactions to avoid reporting is a felony punishable by up to 10 years in prison and fines up to $250,000.
Under New Mexico Statutes Section 30-16-2:
- Structuring is a fourth-degree felony, punishable by up to 18 months in prison and fines up to $5,000.
Under New York Penal Law Section 470.10:
- Structuring financial transactions to avoid reporting requirements is a felony, punishable by up to four years in prison and fines up to $500,000.
Under North Carolina General Statutes Section 14-100:
- Structuring is a Class F felony, punishable by up to 10 years in prison and fines up to $100,000.
Under North Dakota Century Code Section 12.1-23-09:
- Structuring financial transactions is classified as a felony, punishable by up to five years in prison and fines up to $10,000.
Under Ohio Revised Code Section 2903.34:
- Structuring is a third-degree felony, with penalties including up to five years in prison and fines up to $100,000.
Under Oklahoma Statutes Section 21-981:
- Structuring financial transactions is classified as a felony, punishable by up to 15 years in prison and fines up to $250,000.
Under Oregon Revised Statutes Section 163.125:
- Structuring financial transactions to evade reporting requirements is a felony punishable by up to 10 years in prison and fines up to $250,000.
Under Pennsylvania Consolidated Statutes Section 2504:
- Structuring is a second-degree felony, punishable by up to 10 years in prison and fines up to $500,000.
Under Rhode Island General Laws Section 11-41-29:
- Structuring financial transactions is a felony, punishable by up to 10 years in prison and fines up to $100,000.
Under South Carolina Code Section 16-3-60:
- Structuring financial transactions is a felony, punishable by up to 10 years in prison and fines up to $250,000.
Under South Dakota Codified Laws Section 22-30A-10:
- Structuring is a Class 5 felony, punishable by up to five years in prison and fines up to $10,000.
Under Tennessee Code Annotated Section 39-17-432:
- Structuring is a Class E felony, punishable by one to six years in prison and fines up to $50,000.
Under Texas Penal Code Section 19.05:
- Structuring financial transactions to evade reporting requirements is a state jail felony, punishable by up to two years in state jail and fines up to $250,000.
Under Utah Code Section 76-5-206:
- Structuring is a second-degree felony, with penalties including up to 15 years in prison and fines up to $250,000.
Under Vermont Statutes Title 13, Section 2304:
- Structuring financial transactions is classified as a felony, punishable by up to 15 years in prison and fines up to $500,000.
Under Virginia Code Section 18.2-36:
- Structuring to evade currency transaction reporting is a felony, punishable by up to 10 years in prison and fines up to $500,000.
Under Revised Code of Washington Section 9A.32.070:
- Structuring is classified as a felony, with penalties including up to five years in prison and fines up to $250,000.
Under West Virginia Code Section 61-2-5:
- Structuring financial transactions is a felony, punishable by up to 10 years in prison and fines up to $500,000.
Under Wisconsin Statutes Section 940.08:
- Structuring is a felony punishable by up to 10 years in prison and fines up to $250,000.
Under Wyoming Statutes Section 6-2-105:
- Structuring financial transactions is a felony, punishable by up to 20 years in prison and fines up to $500,000.