Have you watched Breaking Bad? It’s the greatest show ever made! Period. Most of us remember Walter White’s metamorphosis from a high school chemistry teacher to a calculating drug lord.
But, what most of us seem to forget is the excellent encapsulated depiction of money laundering in the show. Money laundering, as we all know, in simple words, is the process of converting ‘dirty money’ (or proceeds from criminal activities) into legitimate funds or ‘clean money’. It is an essential part of any illegal enterprise, be it drug trafficking or terrorism.
Watch: Saul Teaches Jesse Money Laundering | Kafkaesque | Breaking Bad
In the show, Walter or should we say Heisenberg uses a method called structuring to launder money. If you’re wondering what structuring in money laundering is, let us explain it to you and also look at how the process of structuring has developed and evolved in the modern world.
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What Is Structuring in Money Laundering?
Structuring is a method of money laundering wherein the criminal breaks up large amounts of cash into smaller transactions so that they do not raise suspicion or trigger reporting requirements from banks, casinos, and retailers. It’s also known as “smurfing” because these transactions are often conducted by many different people (or smurfs).
This method of money laundering has become increasingly popular as it allows criminals to move large sums of money within and across borders, making it difficult for law enforcement agencies to trace the source. Structuring is often used in conjunction with other techniques, such as shell corporations or offshore accounts, to further obfuscate the trail of illicit funds.
A Real-Life Scenario Of Structuring in Money Laundering
Imagine you have about $100,000 in cash that you want to launder. If you make a deposit in one single transaction, then you will trigger a reporting requirement from the bank to the government authorities. This, in most cases, won’t end well.
But, if you split that same deposit into multiple smaller deposits over several days, then it is much easier to avoid triggering any alarms. You can also take the help of your friends, family, associates, and other individuals (smurfs) to deposit the money in portions. Say about $1000 – $5000 each in varying amounts. This way, the transactions look legitimate and usually go under the radar.
Remember how Walter White used his car wash facility to not only clean vehicles but also clean his dirty money in small batches? Yeah, that structuring 101 right there!
Structuring In Money Laundering In The Modern World
Well, with the advent and advancement of technology, structuring money laundering has gone through a massive overhaul. Criminals no longer rely on fake transactions or passing money through a car wash facility.
The use of technology has made it easier to structure and launder money across a variety of platforms, such as cryptocurrencies, online payment portals, stock exchanges, etc. Money launderers can build complex networks with multiple layers which can make the movement of money practically untraceable!
Here’s how structuring money laundering in the modern world works:
1. Online Banking
This process is similar to the real-life scenario mentioned earlier. The only difference is that instead of physically moving cash, criminals use online banking platforms to move illegally obtained funds. They ask Smurfs to do online transfers and give them the equivalent amount in cash.
2. Cryptocurrencies
Using cryptocurrencies as a mechanism of structuring money laundering is quickly gaining popularity among criminal networks due to its anonymous nature and lack of government regulation. Criminals can easily get away with transactions through cryptocurrencies, as it is difficult to track and trace the origin of funds.
3. Fake Identity Creation
Criminals are also creating synthetic identities to use for structuring money laundering. They use a combination of legitimate information of unsuspecting users, along with fake documents, to create a new identity. This new identity allows them to open bank accounts, obtain credit cards, and get loans, in the name of the fake identities, which can then be used for money laundering activities.
4. Email Compromise
While the most talked aspect of email compromise, especially business email compromise (BEC) scams, is the targeted phishing or ransomware attacks, such scams are also used for money laundering. Cybercriminals use email compromise to launder their dirty money, with or without the knowledge of the victim.
5. Art and Luxury Goods
Money launderers may purchase expensive art, jewelry, or luxury goods with illicit funds, making it challenging to trace the funds’ origins. These items can be moved across borders or sold to convert the funds into legitimate assets.
How To Tackle Structuring In Money Laundering In The Modern World
Modern problems require modern solutions! While structuring money laundering in the modern world may seem like a daunting task, several measures can be taken to prevent it.
Financial institutions should have strong Artificial Intelligence and Machine Learning-based KYC and AML solutions in place as well as employee training on recognizing suspicious activity. They should also invest in advanced analytics software to detect patterns associated with structuring activities.
Finally, monitoring of customer activity should be done regularly to detect any potential money laundering activities. Banks should also maintain records of all suspicious transactions and report any they find to the relevant authorities.
In addition to internal measures, governments around the world are taking a more active role in combating money laundering by introducing laws and regulations which make it harder for criminals to move money undetected from one jurisdiction to another.
Wrapping Up
While TV shows like Breaking Bad may depict these practices in a dramatic, entertaining, and attractive manner, the real-world implications are far-reaching and serious. Structuring allows criminals to obfuscate the origin of their funds, and technology is only making the situation worse or better, depending on who you ask.
That being said, technology is also a key part of the solution for fighting structuring money laundering. Artificial intelligence and machine learning-backed algorithmic solutions are helping governments, financial businesses, and law enforcement agencies to detect suspicious transactions more easily than ever before.
Looking forward, these technologies will continue to play an important role in the fight against money laundering activities. We hope to see more organizations leveraging AI and ML shortly to help us stay one step ahead of money laundering criminals.
