What are best practices to combat structuring risk in your AML program?
Best practices include risk-based monitoring rules, cross-channel transaction analysis, consistent investigator training, and strong documentation procedures. Automated alerting and centralized case management improve oversight. AML software for banks and credit unions supports scalable, regulator-ready monitoring programs.
The following are examples of four different reviews of activity related to structuring cash transactions and their disposition.
When cash deposits near the CTR threshold may be reasonable
A small convenience store makes daily cash deposits, some of which approach but do not surpass the reporting threshold. Given the nature of the business, these deposits simply reflect daily business proceeds, with larger transactions occurring on Mondays after weekend business. The account is further credited with credit/debit card processing, and the incoming funds are used for everyday business expenses such as vendor and tax payments. As long as there are no red flags in the additional activity, this could generally be interpreted as reasonable activity for the customer.
When repeated cash withdrawals warrant further investigation
A large produce company performs $9,000 cash withdrawals daily, stating the funds are for payroll as laborers are paid daily in cash during harvest season. Every couple of months, they perform a much larger withdrawal ($15,000 to $40,000), claiming the funds are for purchasing equipment. The cash is all sourced from incoming wires from an external account held by the client. Although the larger transactions are reported, most of the funds withdrawn are not. During a three-month review period, the customer withdrew $627,000, with only $56,000 included in two CTR filings. Given the pattern of regular withdrawals just below the reporting threshold and the unknown ultimate source of funds, this customer requires further investigation.
When transaction context explains isolated cash withdrawals
A self-employed residential roofer withdrew $8,000 on a Friday and another $5,000 the following Tuesday. The withdrawals were funded with a $15,000 check from Jane Doe referencing “roof.” Other activities included incoming checks from ABC Homes LLC, credit card, loan and tax payments, and debit card purchases. A review of the debit card activity placed the customer near Jane Doe’s neighborhood on Saturday and Wednesday following the alerting withdrawals. Other activity found purchases with a home improvement center near a residential development owned by ABC Homes LLC on the remaining days of the week.
The cash withdrawals did not reflect an ongoing pattern of large cash and appeared to be isolated. It is reasonable to assume the customer took the funds to purchase materials and pay for day labor for Jane Doe’s roof. Although the activity may initially indicate structured cash transactions, upon further review, the customer took the funds as needed to complete the roofing project at Jane Doe’s home and the customer's actions can be considered reasonable.
When cash payments align with the customer’s business model
A customer owning a small “buy here/pay here” used car lot established an unsecured line of credit to purchase inventory. Every few weeks, the customer makes a cash payment to the line of credit just under the reporting threshold. Regular, smaller cash deposits are made to the customer’s business checking account. Conversation with the customer found they deposit daily proceeds from car payments to the checking account. When a vehicle is sold outright for cash, they immediately make a larger payment to the line of credit with the proceeds. A review of the customer's website found used cars with prices ranging from $6,500 to $9,500. The customer’s explanation is deemed reasonable as it is commensurate with the account activity and internet research.
From cash structuring reviews to FinCEN-ready filings
Once an investigation is complete, the next step is determining whether the activity requires regulatory reporting. A CTR and a SAR serve different purposes: A CTR reports qualifying currency transactions, while a SAR may be appropriate when the institution knows, suspects, or has reason to suspect that activity is designed to evade Bank Secrecy Act reporting requirements.
For AML/CFT teams, an efficient workflow should connect the investigation to any required filing. That can include:
- Documenting the activity and investigative findings
- Determining whether a SAR, CTR, or other action is appropriate
- Completing required review and approval steps
- Preparing the regulatory report
- Filing and retaining the appropriate documentation
AML software can help centralize those steps. Abrigo BAM+, for example, combines transaction monitoring, investigations, case management, and direct filing of CTR and SAR batches to FinCEN on one platform.
Connecting monitoring, investigation, and filing can reduce manual handoffs while giving BSA officers and investigators a clearer record of how the institution moved from an alert to a final filing decision.
