Bankers and regulators say that crooks can easily launder small amounts of money through the banking system without being detected.

But to launder massive amounts of cash -- say hundreds of thousands or millions of dollars -- crooks must either dupe the bank or find compliant banks or employes.

Money launderers want to convert ill-gotten cash -- say from the sale of narcotics -- into bank deposits. Not only are bank accounts easier to maintain than boxes of cash, but also it is far easier to transfer them to other banks or back to cash, and they are safer.

For more than a decade, the Treasury Department has required banks to report any cash transactions -- withdrawals or deposits -- that exceed $10,000. The hope was to make it difficult for drug traffickers and other launderers to convert undetected the cash they accumulate from the sale of narcotics into easily transferable bank deposits.

Once the cash gets into the banking system, it becomes difficult to trace. There are millions, if not billions, of transactions every day at the nation's 14,700 banks and several thousand savings and loan associations.

The issue of money laundering has been in the spotlight recently because of large unreported cash transactions the First National Bank of Boston has failed to report in recent years.

Several weeks ago, the bank was fined $500,000 for failing to report about $1.2 billion of currency transfers between itself and nine Swiss banks over a four-year period ended last September. It also is under scrutiny because one of its branches permitted two allegedly Mafia-related real estate companies to make about $2 million in cash transactions over a two-year period, none of which was reported.

In the Swiss bank case, the bank said it was administrative oversight and ignorance that kept the bank from making the reports. Initially, transactions between banks were exempt from reporting -- although that was changed in 1980.

The bank said that it mistakenly continued giving a reporting exemption to the real estate companies, even though the Treasury had sharply circumscribed the types of companies that could receive exemptions -- and real estate companies were not among them.

Bankers are reluctant to discuss the currency transfers. They say it is common for foreign banks that accumulate large amounts of dollars -- especially in small denominations -- to ship those dollars to their U.S. correspondent bank to be deposited in accounts they maintain. But they say the amounts the Bank of Boston transferred were large and that they find the reverse side of the transaction curious -- that the Bank of Boston was shipping large-denomination currency units back to the Swiss banks.

The U.S. government is investigating the Boston bank to determine its culpability in failing to report the real estate company transactions.

Bankers said that when large-scale transactions are involved -- as they apparently were at the Boston bank -- either bank ignorance or employe complicity or a combination of both is responsible.

But when smaller amounts of money are laundered, practically no standard bank or regulatory safeguard works, they said.

The easiest way to launder money, according to one Florida bank official, is to run a business that generates cash or to find an accomplice that runs such a business. Even the most diligent bank with conscientious employes can be duped into laundering thousands of dollars a week deposited in increments well below the $10,000 reporting ceiling.

Florida, because of the heavy influx of drug money, has been a major target of scrutiny by the Treasury and by bank examiners from the Comptroller of the Currency, the Federal Deposit Insurance Corp. and the Federal Reserve. Bank examiners have been charged with watching for unusual cash transactions in institutions they audit.

But the Florida bank official said that neither examiners nor bankers, in the absence of some other information, would find cause to question sizeable cash deposits -- say on the order of $1,000 a day, from innumerable types of business establishments.

"If that firm sets accounts at several different banks -- or even different branches of the same bank -- it can make believable deposits each one. Only a lot of those deposits are laundered money," the banker said.

Many firms legitimately generate large amounts of cash receipts every day: restaurants and bars, car washes, food stores, dry cleaners, drug stores, even newsstands.

If a launderer is careful and patient, the banker said, he or she can increase the amount of cash laundered by slowly and steadily increasing the size of the deposit, which gives the appearance of an establishment that is merely increasing business.

"If a new customer tried to open up a checking account with $9,500 in cash, you can be sure we'd be tough," even though the amount is technically below the Treasury's reporting requirements. "The key to stopping laundering is knowing your customer," the banker said.

But if a launderer opens up an account in a normal manner and makes withdrawals and deposits that appear normal, he or she is likely to fool both the banker and the examiner, the banker said.

Regulators said that if a bank or some of its employes are laundering cash, finding the evidence is "like trying to find a needle in a haystack. Bank regulators -- the Comptroller of the Currency, the Federal Deposit Insurance Corp. and the Federal Reserve Board -- are responsible for making sure that banks comply with the Treasury reporting requirements.

Regulators have a two-stage process in searching for violations of the reporting requirements. The first stage, or module, as regulators call it, is designed for banks that do not move large amounts of currency. The second module is aimed at banks that regularly move a lot of currency and situations in which the first tier examination turns up something odd or in which investigators have been alerted to potential irregularities, according to a regulator.

In a level one examination, regulators generally try to determine whether there is compliance by looking at the bank's internal systems and procedures and a cursory review of the bank's exempt list (a limited number of establishments such as big grocery chains are allowed to make big cash deposits without filling out forms) filled-out forms.

The regulator said the examiners regularly find inadvertent violations -- forms filled out incompletely or incorrectly by tellers, who are the first line of enforcement -- but seldom in the smaller banks do they find large-scale money laundering schemes.

The level two examination involves a 10-day to two-week look at all teller transactions. Large deposits or withdrawals are identified, then examiners follow the "paper trail" to determine whether the transactions were in cash and, if so, whether they were reported.

The detailed examination might fail to come up with irregularities even when they exist, the regulator said. "We're in most banks for a couple of weeks every three years," he said. "Detecting a money-laundering scheme that occurred over a three-year period by taking a two-week slice" is difficult, if not impossible -- especially in a bank where someone is "actively trying to contravene" the law.