AML Compliance

AML Terms Explained: Smurfing vs Structuring

The terms smurfing and structuring both refer to money laundering techniques deployed by financial criminals. The two terms are often used interchangeably, but there are subtle differences. Smurfing is highly illegal, goes even further than structuring, and can be even harder to detect. Financial institutions have a duty to familiarize themselves with the inner workings of a smurf to protect their reputation and their clientele.

Thorsten J Gorny
May 17, 2022

What Is a Smurf?

The term “smurf” has been associated with Colombian drug cartels and IT hackers, and cybercriminals, but to banking and financial institutions, it’s used to describe low-level money handlers or runners as well as their transactions. Smurfs are recruited to evade currency transaction reporting requirements by structuring large, illegally-acquired cash amounts into smaller amounts before depositing the funds.

What Is Smurfing?

Smurfing is a colloquial banking term for a money launderer who attempts to evade detection by government authorities. Criminals attempt to circumvent these reporting requirements by splitting illegally obtained cash into multiple smaller deposits or transactions, handled by runners or smurfs, between a number of geographically dispersed accounts. The source of the funds is also often concealed via bookkeeping tricks and complex transactions.

This process is what distinguishes smurfing from structuring: the use of smurfs, the movement of the money and the fact that the source of the money is purely illegal. 

Like many forms of money laundering, smurfing takes place in three distinct phases: placement, layering and integration. 

  • Placement: A smurf may take cash physically from one country in order to place it in the legal financial system by purchasing foreign currency, gambling, or other means.
  • Layering:  The smurf moves funds digitally from one country to another, then divides them into smaller amounts or investments to break the audit trail and sever the link to the original crime. This can be done by dividing the money into a series of deposits or acquiring investments.
  • Integration: The smurf purchases valuables, including property, artwork, precious metals or cars, which are passed to the criminal. As the funds appear to come from a legitimate source, they can often evade detection by authorities this way.

Examples of Smurfing

Financial institutions need to be especially wary of a method of smurfing called “cuckoo smurfing” that may involve or implicate their own employees. For example, Criminal A in the US owes Criminal B in the UK $5000. Coincidentally, London Merchant A in the UK owes Vendor B in the US $5000. The London merchant deposits the funds owing in their UK bank account, with instructions to pay the vendor in the US. The UK banker works with the US criminals and asks them to pay $5000 into vendor B’s account before transferring $5000 from Merchant A’s account to Criminal B’s account. Vendor B and Merchant A do not know that the money was not directly transferred, and the illicit money seems to have a legitimate source. 

Money transfer companies, fintech businesses, banks and financial institutions should keep a close watch over activities, including cash deposits that seem inconsistent or otherwise outside the norm of expected activity of an account holder. This can include multiple cash deposits made on the same day, across multiple branches or ATMs, in amounts below the $10,000 threshold, to spot cuckoo surfing.

What Is Structuring?

Structuring is a criminal technique whereby a money launderer breaks up large transactions into a series of smaller transactions that are below reporting thresholds, usually across multiple financial institutions and banks. In countries like the US and Canada, a currency transaction report is filed by financial institutions handling transactions that exceed a cash amount of $10,000. By splitting the amount into smaller deposits, reporting requirements are circumvented.

How To Detect Smurfing In Your Business

Smurfing has become a widespread problem across the globe. Understanding smurfing techniques and adopting a robust framework for detecting money laundering within your business is your best defense. 

Make sure that you adopt stringent Know-Your-Customer (KYC) guidelines in line with your industry’s best practices to verify the identity, suitability and risks involved with your clients before they are onboarded, as well as during your evolving relationship. If necessary, implement anti-money laundering tools and detection algorithms to assist you with your AML effort. These advanced solutions eliminate the expense and the proliferation of human errors associated with manual review workflows and assign risk scores to help teams make more accurate risk assessments.


Smurfing involves offshore and cross-border transacting. Criminals will often target financial businesses and money transfer operators to facilitate their schemes, which is why financial institutions have to protect their businesses and the industry at large against smurfing and structuring - not only to protect their reputation but also to avoid possible penalties and legal investigations by regulatory bodies. can help protect businesses against money laundering through automation and intelligent sanctions screening technologies. Sign up for a free 7-day trial or get in touch to speak to our Customer Support Team.

New Sanctions Screening Guide
Download our FREE Sanctions Screening Guide and learn how to set up an effective sanctions screening process in your organization.
Thorsten J Gorny
Thorsten is Co-founder & CEO of He has worked for more than 15 years in the tech industry with focus on bringing ideas to life, and building great teams and products. At he is mainly responsible for Business Development, Growth and Strategy.
Enjoyed this read?

Subscribe to our Newsletter right now and never miss again any new Articles, Guides and more useful content for your AML and Sanctions compilance.

Success! Your email has been successfully registered for our newsletter.
Oops! Something went wrong while submitting the form.