empt to avoid reporting requirements in order to transfer the funds to an offshore location, especially if the owner of the funds is not a resident of the United States. On the other hand, a launderer may abide by the reporting requirements but attempt to disguise the source of the funds as legitimate. Other launderers will attempt to both avoid the reporting requirements and disguise the source of the funds if the funds are to be invested in the United States.
Launderers have developed several methods for avoiding the reporting requirements of the Bank Secrecy Act; one of the first methods was the use of "smurfs." Smurfs are individuals who make large numbers of cash transactions (each involving less than $10,000), usually purchasing either money orders or bank drafts from different banks, which are then deposited in a single foreign bank account. "Smurfing," a favored technique of narcotics dealers, has declined in recent years as a result of law enforcement programs aimed at identifying narcotics traffickers through patterns of bank transactions. The first, Operation Greenback, was initiated in Florida in July of 1980 after the Treasury Department noticed an unusual surplus of currency in Florida financial institutions.
A launderer may also hide behind a legitimate cash business which is exempt from the reporting requirements under the regulations. Cash businesses deal with cash in their normal operations, usually selling goods or services to consumers who normally pay in small denominations (such as retail businesses and restaurants). Such businesses frequently make large deposits of cash; requiring financial institutions to make currency transactions reports on these deposits would be burdensome on the banks and normally serve little purpose. Consequently, retail businesses and restaurants make ideal fronts for criminal organizations taking in a lot of cash composed of small bills.
One such example was the "Pizza Connectio...