Wednesday, March 12, 2008
Add one more colorful detail to thecase of New York Gov. Eliot L. Spitzer: Structuring a transaction -- the financial crime for which he is under investigation -- is also known in the prosecutorial world as "smurfing."
Federal law requires banks to report to the government cash transactions of more than $10,000. It is a crime for someone to try to avoid the reporting requirement by breaking up one large transaction -- "structuring" it -- into multiple ones, each under the $10,000 threshold.
When these smaller transactions point to a single recipient and reach or exceed $10,000, they can trigger bank suspicions of illegal activity.
Structuring transactions became known as smurfing because, like the sky-blue cartoon characters made famous in the 1980s NBC series "The Smurfs," the transactions resemble one another, are small and call attention to themselves through their multiplicity.
Banks are also required to file a Suspicious Activity Report for transactions involving amounts totaling $5,000 that seem unusual or for which there is no apparent explanation.
-- Garance Franke-Ruta