The Structuring Pattern at a Regional Credit Union
A compliance analyst at a regional credit union reviews a member, Mr. Okafor, who opened a personal checking account 14 months ago. Over the last 9 weeks he has made 11 cash deposits, each between $8,200 and $9,700, at four different branches and two ATMs that accept cash. Total deposits are $98,400. His stated occupation is 'self-employed contractor,' and his account profile lists expected monthly cash activity of $3,000. He has no prior SARs and no negative news hits. When a teller at the main branch asked about the source of funds, he said it was 'payment from clients for renovation work' and became visibly irritated. He has also made three outgoing wires of $9,800 each to an account in another state held by an individual, not a business. The branch manager wants to close the account and move on; the analyst thinks a SAR is needed but is unsure whether filing is premature because no single deposit crossed $10,000.
1. Should the analyst file a SAR? Identify the specific red flags and explain the legal reasoning that resolves the '$10,000 threshold' confusion.
Read the worked answer
Yes - file. The $10,000 figure is the currency transaction reporting (CTR) threshold, not the SAR threshold. Under the BSA, a financial institution must file a SAR for suspicious transactions of $5,000 or more where it knows, suspects, or has reason to suspect the transaction involves funds from illegal activity, is designed to evade BSA requirements, or has no apparent lawful purpose.
Red flags here:
- Structuring pattern: 11 deposits just under $10,000, spread across branches and ATMs - the classic 'smurfing' signature designed to stay below CTR triggers.
- Profile mismatch: $98,400 in 9 weeks vs. $3,000 expected monthly cash - a 10x+ deviation requiring explanation.
- Multiple channels: use of different branches and ATMs suggests deliberate avoidance of a single relationship manager.
- Evasion behavior: irritation at source-of-funds questioning is a soft indicator, not dispositive on its own.
- Layering signal: three wires of $9,800 to a person, not a business, mirroring the deposit size - consistent with moving funds out in matched tranches.
The analyst should not wait for a single transaction over $10,000. Structuring itself is the suspicious activity. File the SAR within 30 days of initial detection (extendable to 60 if no suspect is identified), check the appropriate box for 'structuring,' and continue monitoring. Account closure is a business decision and does not substitute for the SAR obligation.
2. The branch manager wants to close the account immediately and tell Mr. Okafor why. What are the risks of that approach, and what should the analyst recommend instead?
Read the worked answer
Closing the account is permissible as a risk decision, but telling the customer the reason is a serious problem. BSA rules prohibit disclosing that a SAR was filed or that suspicious activity was reported. A statement like 'we're closing you because of suspicious cash deposits' risks tipping off the subject and could expose the institution and individuals to liability.
Recommended sequence:
- File the SAR first (or in parallel), documenting the decision.
- If exiting the relationship, use neutral language ('business decision,' 'risk appetite') with no reference to the SAR or to law enforcement interest.
- Escalate internally through the BSA officer, not the branch manager alone - the BSA officer owns the filing decision.
- Consider whether the matched wires warrant a follow-up or continuing-activity review; if the wires continue after filing, a continuing SAR may be needed.
- Document the rationale for exit and preserve records per retention requirements (generally 5 years from filing).
The key judgment: exit ≠ report, and exit ≠ explain. The institution can end the relationship while preserving confidentiality and its reporting obligations.