Everything is about money and financial resources, banks had been playing a vital role in the materialistic world. In fact, you cannot do away with banks especially if you are engaging yourself to business transactions. It is an institution that cannot be ignored when it comes to financial resources and flow of money. Bank is considered that is in between whenever there are financial transactions that are being made.
In the banking industry, it has the capacity to mediate individual types of financial transactions. It has developed some financial jargons such as Financial Structuring.
This is a financial transaction wherein a sizeable or large financial investment will be broken down into smaller investment in order to avoid the government’s keen eyes scrutiny for laundering.
Financial Structuring is a bank’s jargon and also known as smurfing. You might have already come across with the Smurfs, the small beautiful and happy creatures in the comic books and became a film about small and sociable creature.
The idea behind structuring is to be broken down into smaller transactions the large investment that is being made. It is a way will be able to get away from the possible laundering cases. Smurfing was believed to have been coined by a Miami based lawyer, Gregory Baldwin in 1980’s, and since then it has been used to refer to having a large group of various entities.
In this way, the small transactions will be below the amount of which the law would require that the bank should make a report. In Financial Structuring, the large amount of the transaction will be broken down to a series of small transactions that will be done by the so called Smurfs or agents. The amount of the transaction being done by the Smurf is below the amount set by law that will require the bank to make a report to the government.
With Financial Structuring, it is designed to avoid the rigidity of the law of which the bank is required to submit several documents and reports whenever there is a huge amount of deposit or transaction.
It will try to get away from the firm grasp of the law especially the United States Bank Secrecy Act and Internal Revenue Code 60501. These are the legal provisions that regulate the financial transactions being made with the bank.
If the amount deposited or the transaction involves a large amount which already exceeded the amount set by law for a single transaction, it will be the duty of the bank to make the requisite report and submit pertinent documents to the government authorities in order for the government’s arm to make a check on the said transaction.
This will be able to put the money into a question if the same is a possible act of laundering.
With Financial Structuring, it can get away from the government authorities with ease by simply breaking down the enormous amount into smaller transactions involving amounts that are not within the ambit of the amount set by law. This way, the bank will not be required to submit a report and documents involving the said transaction.
Free Download - Amazing Powerpoint Slides on Fundamentals of HR Management and HR Scorecard
Thank you for subscribing.