Structuring, fraud, and bank security's future

All financial institutions are at risk of money laundering through the use of complex schemes, including the practice of structuring. Find out what structuring involves, the potential penalties, and how technology can stop bad actors.

Financial institutions face a constant battle against money laundering, a crime that uses complex schemes to move illegally obtained funds into the legitimate financial system. One common method is structuring, and as technology evolves, so do the tactics of those who seek to exploit the system. This guide explains what structuring is, how it works, and how emerging fraud trends highlight the urgent need for advanced technological solutions.

What is structuring in money laundering?

Structuring, also known as smurfing, is a technique used to evade regulatory scrutiny. It involves breaking up a large financial transaction into a series of smaller ones. The goal is to keep each transaction just below the legal reporting threshold, which in the United States is $10,000 for cash transactions.

To avoid a Currency Transaction Report (CTR), a money launderer might deposit $50,000 in cash through five separate transactions of $10,000. These deposits can be spread across different days, various bank branches, or even multiple financial institutions to further obscure the activity. While this tactic helps criminals hide their illicit funds, it also puts banks at significant risk.

The rising tide of sophisticated fraud

The methods used in structuring mirror a broader trend in financial crime: a significant increase in sophisticated fraud. The Veriff Fraud Index 2025 reveals a 21% year-on-year increase in online fraud since 2024. This surge is fueled by new technologies, making criminal schemes more complex and harder to detect.

This escalating threat environment means that financial institutions must be more vigilant than ever. The same criminals who use advanced digital tools to commit online fraud are applying similar levels of sophistication to money laundering schemes like structuring.

The growing danger of AI and deepfakes

A major driver of this new wave of fraud is artificial intelligence. The Fraud Index found that nearly 79% of people have been targeted by AI or deepfake-generated fraud at least once in the past year. These technologies allow criminals to create fake identities, forge documents, and bypass traditional security measures with alarming ease.

For banks, this means the risk of fraudulent account openings has skyrocketed. Criminals can use AI-generated identities to create networks of accounts for structuring deposits, making it incredibly difficult to trace the money back to its source. The sophistication of these attacks shows that manual oversight alone is no longer sufficient to protect the financial system.

Consumer demand for stronger security

As fraud becomes more common, consumers are demanding better protection. According to the Veriff Fraud Index, more than 97% of people believe robust security measures are important when signing up for a new financial service. Furthermore, three-quarters of consumers consider a company’s fraud prevention record before opening an account.

This highlights a critical point for financial institutions: investing in security is not just about compliance, but also about building and maintaining customer trust. The data shows a growing willingness among consumers to embrace advanced security, with over two-thirds happy to use identity verification (IDV) and biometric technology for enhanced protection.

How technology can combat structuring

The fight against money laundering schemes like structuring requires a multi-layered, technology-driven approach. Financial institutions can no longer rely solely on tracking transaction amounts. Modern anti-money laundering (AML) solutions must be able to analyze patterns, verify identities, and detect subtle signs of coordination.

Advanced Identity Verification (IDV)

A strong IDV process is the first line of defense. By using AI-powered and biometric verification at the account opening stage, banks can ensure that every customer is who they claim to be. This prevents criminals from creating the mule accounts necessary for structuring and smurfing operations. Veriff’s Fraud Index Report 2025 shows that nearly 70% of consumers feel facial recognition is safer and easier than traditional passwords, indicating a readiness for these advanced measures.

Transaction monitoring and pattern recognition

Beyond initial verification, advanced software can monitor transactions in real time to identify suspicious patterns. This technology goes beyond simple threshold alerts. It uses machine learning to analyze customer behavior, detect anomalies, and flag coordinated activities that suggest structuring. For example, the system can connect a series of sub-threshold deposits made by different individuals into related accounts, even across different branches.

However, it is important to note that Veriff does not detect structuring; it is just one of many solutions that financial institutions (FIs) use to meet their AML obligations, which involve a comprehensive array of different checks. Ultimately, by investing in robust AML screening solutions, businesses can safeguard their operations and contribute to the overall integrity of the financial system.

Maksim Afanasjev Staff Product Manager Veriff

Compliance and Suspicious Activity Reporting (SAR)

Technology streamlines compliance and reporting. When suspicious activity is detected, automated systems can compile the necessary information and generate a Suspicious Activity Report (SAR) for the Financial Crimes Enforcement Network (FinCEN). This ensures timely reporting while reducing the manual workload on compliance officers.

A comprehensive SAR should identify:

Who is conducting the suspicious activity.
What financial instruments are being used.
When and where the activity occurred.
Why the activity is deemed suspicious.

By automating this process, banks can meet their regulatory obligations more efficiently and provide law enforcement with the detailed information needed to investigate and prosecute financial crimes.

Protecting your institution and your customers

Structuring is a persistent threat that evolves alongside technology. As criminals adopt more sophisticated tools like AI, financial institutions must respond with equally advanced defenses. The insights from the Veriff Fraud Index 2025 make it clear that both the threat landscape and consumer expectations have changed.

By investing in robust identity verification, transaction monitoring, and automated reporting systems, banks can effectively mitigate the risks of structuring. Doing so not only protects the integrity of the financial system but also meets the growing customer demand for security, building a foundation of trust in an increasingly complex digital world.

Consequences of money laundering

A violation of 18 U.S.C. §1956 can result in a sentence of up to 20 years in prison. Meanwhile, a violation of 18 U.S.C. §1957 can result in a sentence of up to 10 years in prison. Similarly, people found guilty of structuring can face up to five years in prison.

As with most federal financial crimes, the exact sentence a person will receive is often determined by the amount of money involved in the offense and the number of crimes committed.

However, money laundering also has consequences for businesses and the wider economy as a whole. Studies have shown that money laundering:

Undermines the legitimacy of the private sector
Undermines the integrity of financial markets
Causes economic distortion and instability
Leads to a loss of revenue
Causes huge amounts of reputational risk for businesses

There are also several social consequences of money laundering, including allowing drug traffickers, smugglers, and other criminals to expand operations. Plus, economic power is transferred from the market, government, and citizens to criminals.

As a result, there is a big focus on stopping laundered money from entering the financial system. This is why it’s so important to know what structuring is and how it can be stopped.

Enhancing business integrity

If your company must comply with money laundering regulations, consider using Veriff, a solution for financial institutions to fulfill their AML obligations through various checks.

AML screening, or Anti-Money Laundering screening, is vital for businesses aiming to mitigate risks associated with financial crimes. The key benefits of implementing effective AML screening include enhanced compliance with regulatory requirements, which helps protect organizations from fines and legal repercussions. Additionally, it fosters trust among stakeholders by demonstrating a commitment to ethical practices and customer safety. AML screening also aids in identifying high-risk customers and transactions, allowing for proactive measures to be taken against potential fraudulent activities. However, it is important to note that Veriff does not detect structuring; it is just one of many solutions that financial institutions (FIs) use to meet their AML obligations, which involve a comprehensive array of different checks. Ultimately, by investing in robust AML screening solutions, businesses can safeguard their operations and contribute to the overall integrity of the financial system.

Here at Veriff, we understand that no two companies have the same KYC and fraud prevention needs. This is why our solution can adapt to your requirements while also providing superior accuracy in online identity verification. Take a look at our plans today to see how much an anti-money laundering platform could cost you.