Smurf
Candlefocus EditorIn the past, organized criminal networks have employed identifiable smurfs to handle the financial transactions. They were named “smurfs” due to their similarity to the small, blue cartoon characters that are known for their magical abilities to elude pursuit. In modern times, criminals have become increasingly sophisticated in their money laundering efforts as they seek to exploit loopholes in the global banking and financial system.
The US Patriot Act, enacted in 2001, has broadened the capability of agencies to track and prevent money laundering. The Act set financial reporting limits of $10,000, requiring banks and other financial institutions to report any type of deposit, withdrawal or currency exchange above this amount. The law also gave the government the authority to prosecute individuals who have violated their reporting requirements.
Smurfing is a serious crime which carries fines of up to $500,000 and/or imprisonment of up to 20 years. Prosecuting authorities must demonstrate knowledge of the involvement in criminal activity on the part of the individuals making the deposits or withdrawals. In other words, it is not sufficient for the government to simply prove that a bank customer has deposited or withdrawn an amount of money that is above the reporting threshold.
Smurfing has become an increasingly common tactic in the laundering of illegally obtained money, making it hard for governments and banks to crack down on criminal activities. For this reason, governments have significantly increased their efforts to detect and prosecute this activity. Additionally, banks are now required to inform on suspicious deposits or transfers that could reasonably suggest money laundering. This additional reporting requirement has made it more difficult for criminals to take part in smurfing.