AML smurfing is a technique that criminals apply to filter money through the system and make many small transactions instead of large ones. The use of this technique helps them avoid being noticed by the financial institution's scrutiny systems. The 2024 FATF report states that smurfing is used in money laundering in 10-15% of cases, according to the FATF. Smurfing is evolving fast. When working with the numbers, it was found that there was a 20% rise in smurfing suspicious activity reports by the year 2023. If your organization requires appropriate tools and systems, identifying such activities can take time and involve a considerable level of risk. How can your organization recognize these threats to low profits? Preventing AML smurfing is possible, and the identification of smurfing patterns can be easily done with the help of improved monitoring tools. This article will discuss the major directions to Identify Smurfing that help detect and combat smurfing. 1. Frequent Small Transactions An easy indication of smurfing in money laundering is the use of many small amounts or frequent transactions. FinCEN of the USA revealed in 2023 that the compliance regime to identify SARs involving transactions of slightly above $200 but below $10,000 has increased by 20 %. These are smaller structured deposits intended not to be detected and covered by the real economy. It is therefore important to monitor the repetitive small transactions, particularly those incurred daily. Bonus: Find out signs that may lead to AML Smurfing, such as accounts with unusual deposit activity to which organizations must pay special attention. 2. Multiple Accounts People involved in criminal activities tend to use several accounts to facilitate the transfer of the proceeds of their unlawful activities. According to the FATF report for the year 2024, 25% of smurfing operations use one or more accounts to spread the money. What this does is make the activity more challenging to record. Avoid action if you notice people or companies transferring small amounts of money through different accounts. This is often used in smurfing, where the attacker has to ensure that he does not give out his true IP address. The analysis of account connections can help point out unknown affiliations in unlawful operations. 3. Unusual Patterns of Account Activity Abnormal transactions in large quantities or a random manner can also be a pointer to smurfing. The ACAMS 2024 survey found that 30% of the organizations identifying smurfing occurred when the account activity did not correspond with the characteristics of the account holder. An account that usually records less traffic by the number of deposits or withdrawals may be characterized by significantly high traffic as a result of a one-off event. Such types of irregular activity imply the existence of illegal fiscal operations. Such discrepancies can be detected through AML services during the account review process. 4. Inconsistent Geographic Locations Smurfing is most of the time done through several geographical areas, which makes identification more challenging. As highlighted in the 2023 FATF Global Report, the record showed that in smurfing cases that were reported, 20% of them involved cross-border transactions. Criminals tend to attack areas with less demanding AML solutions. Suspicious transactions that occur in areas where your organization does not operate are a sure sign of smurfing. A special risk is considered in those countries that are associated with a high level of financial secrecy. Careful monitoring of international transactions is required to observe the rules and regulations. 5. Frequent Cash Deposits Smurfing in AML is accomplished through the use of cash. In 2023, FinCEN recorded increased suspicious activity reports regarding deposits of money that were withdrawn within a short interval. Cash deposits to the accounts are suspicious and constant in frequency when there is no apparent business need. This activity raises an alert on money laundering operations. Higher monitoring rules for accounts that deal with cash can go a long way toward helping in the early identification of smurfing. 6. Inconsistent or Inadequate Documentation Other problematic symptoms include nonconsecutive transaction records, which may indicate smurfing. The International Compliance Association (ICA) said in its survey conducted in 2024 that 28% of smurfing operations were found because of the disparity in the documentation. For criminals, the transfer of funds is crucial because missing and incomplete information is part of their tactics. It is important to discover tactics such as inconsistencies in documented information while reviewing the documents. Some of the most significant shields that can be looked for are inconsistencies in the record keeping. What Tools Can Help Detect AML Smurfing? To identify AML smurfing, you need some special tools that may involve advanced technologies. They can scan large numbers of transactions in real time and detect suspicious activity that may go unnoticed in manual monitoring and detection. The models can be trained to learn from new patterns of smurfing, enhancing the accuracy of detection compared to manual methods. Special data analysis tools reveal correlations between accounts and transactions that may prove the smurfing scheme. In this way, with the emergence of new and more complicated AML frameworks, your organization will be ready to respond to new challenges.
Tech

How to Identify AML Smurfing Within Your Organization?

AML smurfing is a technique that criminals apply to filter money through the system and make many small transactions instead…

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