Apart from structuring, the following occurrences also indicate the possibility of transactions being used for money laundering purposes:

Smurfing

Smurfing works closely with structuring, additionally different accounts are used in order to spread the funds across many different individuals. Often money mules are used to act as the "smurfs". The money mules may or may not even know that they are aiding in money laundering. This process makes it significantly more difficult for regulated institutions to identify these mini-transactions as part of a larger money laundering act.

Funnel Accounts

A Funnel Account is a method used to launder money that exploits branch networks of financial institutions. It involves illegal funds deposited into an account at one geographic location that gives criminals immediate access to the money via withdrawals in a different geographic location. The transaction amounts are kept under the AML reporting requirements in an attempt to avoid detection.

According to FinCEN the following red flags may indicate funnel accounts being used to launder illicit funds:

An account opened in one state (typically along the Southwest border) receives multiple cash deposits of less than $10,000 by unidentified persons at branches outside of the geographic region where the account is domiciled. The accounts receiving the out-of-state deposits can be either individual or business accounts.
In the case of a business account, the deposits take place in a different geographic region from where the business operates. For example, the account of a produce company operating locally in Southern California receives small cash deposits, below the currency reporting threshold, at bank branches in Chicago, Indianapolis, and Minneapolis.
If questioned, the individuals opening or making deposits to funnel accounts may have no detailed knowledge about the stated business activity of the account, the account holder (in the case of a depositor), or the source of the cash. This is because criminal organizations sometimes pay individuals outside their organization, such as students, itinerant workers, or the un/under-employed to open or carry out funnel account transactions.
In the case of a business account receiving out-of-state deposits, the debits do not appear to be related to the stated business activity of the account holder. For example, checks drawn on the account of a produce company are made payable to a leather goods business, or funds are wired from the produce company’s account to a textile manufacturer in China.
Checks issued from an account that receives out-of-state cash deposits appear to have different handwriting on the payee and amount lines than the signature line. This may indicate that (i) the checks, originally issued to the account holder, have been pre-signed but the payee and amount lines have been left blank, then (ii) the checks were handed over to a criminal organization, which then (iii) used the checks to pay U.S. or foreign parties by populating the payee and amount fields.
Wire transfers or checks issued from a funnel account are deposited into, or cleared through, the U.S. correspondent account of a Mexican bank. In addition to exhibiting funnel account activity, in some cases, checks issued from the U.S. account name a Mexican bank as payee and the checks are either deposited into the Mexican bank’s U.S. correspondent account or are cleared through said correspondent account by cash letter.

Front Companies

Front companies are businesses established to help make illicit funds and activities appear to be legitimate. Illicit funds are often commingled with legitimate business revenue. Front companies appear to provide a legitimate service and sometimes even do so to a certain extent. However, a lot of illicit cash is being laundered via such front companies.

The following are red flags and indicators that may point to a company being a front company rather than a legitimate business.

The cash deposits do not correspond with the companies':
- other sources of revenue
- services provided
- location of the business
- business expenses
The expenses do not match with the business type
The business purpose is unclear
The business has no or very low expenses
Online research shows little to no results

Conclusion (~7 min.)

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