Certified Fraud Examiner Practice Exam 2025 – All-in-One Guide to Master Your Certification!

Smurfing, in financial contexts, refers to the practice of breaking down large transactions into smaller ones to avoid detection, particularly in relation to money laundering and financial fraud. This technique is often employed to evade regulatory scrutiny and anti-money laundering measures that are triggered by large deposits or transactions.

When criminals have large sums of illegally obtained money, depositing these amounts directly can raise red flags for financial institutions. By dividing the total amount into smaller, less suspicious figures and making multiple smaller transactions, the individual can more easily circumvent detection systems designed to flag large cash movements. This method effectively obscures the true volume of money being moved and tries to make the transactions appear legitimate or innocuous.

This is a common tactic used in laundering money, as it allows individuals to integrate illicit funds into the financial system without attracting the attention that a single large transaction would. Thus, the primary purpose of smurfing is to facilitate the movement of illegal funds while minimizing the risk of detection by authorities.