What is smurfing in banking?

| by Max Soni

Thanks for visiting Spodek Law Group – a second-generation law firm managed by Todd Spodek. We’ve been handling complex federal criminal defense cases for over 40 years of combined experience. You know us from high-profile cases – the Anna Delvey Netflix series that captivated millions, the Ghislaine Maxwell juror misconduct case, and countless federal prosecutions where other firms said we couldn’t win. If you’re reading this article, you’re probably facing questions about structuring, smurfing, or someone mentioned these terms in connection with a federal investigation.

Smurfing in banking is a money laundering technique where criminals break large cash transactions into smaller amounts – usually under $10,000 – to avoid federal reporting requirements. The name comes from the cartoon characters because it involves multiple people (smurfs) making small deposits across different banks, different accounts, different days. Banks must report cash transactions over $10,000 to the federal government through Currency Transaction Reports, or CTRs. Smurfing is designed to fly under that radar.

Federal prosecutors treat smurfing as a serious crime under 31 U.S.C. § 5324, the anti-structuring law. You’re looking at up to 5 years in federal prison for basic violations, up to 10 years if prosecutors tie it to another federal crime or a pattern involving more than $100,000 in a year. The fines can reach millions depending on the amounts involved. These aren’t state charges – this is the federal government prosecuting you, and federal sentencing guidelines are unforgiving.

What makes smurfing different from regular structuring? Structuring typically involves one person making multiple deposits into their own account to avoid the $10,000 threshold. Smurfing involves recruiting other people – the smurfs – to make deposits across multiple accounts at multiple institutions. Your friend deposits $7,000 at Chase, your cousin deposits $8,500 at Wells Fargo, your employee deposits $9,000 at Bank of America. Same criminal activity, different execution.

Banks aren’t stupid. Their compliance systems flag patterns even when individual transactions stay under $10,000. If your account suddenly sees five deposits of $9,800 over two weeks when you’ve never deposited more than $2,000 before, that’s a red flag. If multiple people are depositing structured amounts into your account, that’s a bigger red flag. The Bank Secrecy Act requires banks to file Suspicious Activity Reports – SARs – when they detect potential structuring. You won’t know they filed one. The bank won’t tell you. Federal agents will show up months later with indictments.

Here’s what people don’t understand – smurfing is illegal whether the underlying money is legal or illegal. You could be structuring deposits from a completely legitimate business, and if prosecutors prove you intentionally avoided the reporting requirement, you’ve violated federal law. The government doesn’t need to prove the money came from drug trafficking or fraud. They only need to prove you deliberately structured transactions to evade CTR filing. That’s the crime.

Federal prosecutors in 2025 are using AI-driven transaction monitoring and sophisticated pattern analysis to catch smurfing schemes. They’re looking at fintech apps, digital wallets, peer-to-peer payment platforms – not just traditional banks. Criminals thought they could use Venmo, Cash App, or crypto exchanges to avoid detection. Wrong. FinCEN has expanded reporting requirements across these platforms, and federal task forces are trained specifically on digital smurfing operations.

The typical smurfing case starts with a SAR filing. The bank’s compliance officer notices the pattern, files the report with FinCEN, and federal investigators start building a case. They’ll subpoena your bank records going back years. They’ll interview your smurfs – and yes, those people will cooperate when federal agents show up at their door explaining they’re facing 5 years in prison. They’ll trace every deposit, every withdrawal, every wire transfer. By the time they indict you, they’ve built an overwhelming case with documentary evidence spanning months or years.

Some defendants think they can explain it away. “I didn’t know about the $10,000 rule.” Prosecutors will show the jury evidence you Googled CTR requirements. “I was just helping a friend deposit money.” Prosecutors will show you received compensation or benefits. “These were all legitimate business transactions.” Prosecutors will show the deliberate pattern designed to avoid reporting. Federal juries convict on structuring charges when the evidence shows intentional evasion – and the evidence almost always shows that.

What should you do if you’re under investigation for smurfing? Stop talking to federal agents without a lawyer. Immediately. Federal prosecutors use your statements against you, and anything you say to agents gets introduced at trial. They’ll tell you cooperation helps – and it might, but only if you have a federal criminal defense attorney negotiating the terms. Unrepresented cooperation usually means you’re building the government’s case against yourself while getting nothing in return.

We’ve handled smurfing cases where clients faced decades in prison because prosecutors stacked charges – money laundering, structuring, conspiracy, tax evasion. The sentencing calculations in federal court multiply quickly. A $500,000 smurfing operation might calculate to an offense level that produces a 10-15 year guideline range before any cooperation or mitigation. You need attorneys who understand how to challenge the loss calculations, how to negotiate cooperation agreements that actually reduce your exposure, how to present mitigation that changes the outcome.

Todd Spodek and our team have worked on federal cases involving structured transactions tied to everything from cash-intensive businesses to international wire transfers. We know how federal prosecutors build these cases because we have former prosecutors on our team who built these cases from the other side. That perspective matters when we’re fighting your charges – we know their playbook, their evidence standards, their negotiation patterns.

The worst thing you can do is ignore the investigation. If your bank closed your accounts, if you received a letter from FinCEN, if federal agents contacted you or people who made deposits for you – you’re already in serious trouble. These investigations don’t go away. They escalate. Prosecutors file charges when they’re ready, not when you’re ready, and by that point your options have narrowed significantly.

At Spodek Law Group – we focus on getting you the best possible outcome whether that means negotiating a cooperation agreement, challenging the government’s evidence, filing motions to suppress illegally obtained bank records, or taking your case to trial. We’ve handled cases others called unwinnable because we understand federal criminal procedure at a level that comes from decades of practice and hundreds of federal cases.

Federal sentencing for smurfing depends on multiple factors – the amount involved, whether you obstructed the investigation, your criminal history, whether the structured funds came from illegal activity, whether you filed false tax returns related to the structured income. Judges calculate these factors using the federal sentencing guidelines, but the guidelines are advisory after United States v. Booker. Skilled federal defense attorneys can argue for variances and departures that reduce your sentence below the calculated range – but only if you have attorneys who know how to make those arguments effectively.

If you’re worried about smurfing charges or you’re already under federal investigation, call us immediately. We’re available 24/7 because federal investigations don’t wait for business hours. The sooner you have experienced federal criminal defense attorneys protecting your interests, the more options we have to minimize the damage. Don’t let this destroy your life when we can help you fight back.