Intentional Structuring of Transactions

Question 1

Intentional structuring of transactions can be explained as the process of deliberately hindering or arranging of transactions to avoid some kind of policies. In most cases, intentional structuring is conducted by people who try to avoid engaging in transactions that involve illegal activities such as drug trafficking. Hence, financial institution which these people conduct the transactions may decide to report or take legal action against them. However, the financial decision taken by the institution concerning the intentional structuring of transactions can have many ethical implications. For example, the institution is able to give the authorities details of the people involved in the suspicious transactions such as their names, home and business address, account numbers, where the suspicious transactions took place, or even their social security numbers.

However, the institution reporting should have specifications of the offence that the institution believes has been committed, and what led to the financial institution to be suspicious. The agency the report is been reported can ask the institution to fill a certain form for further analysis. The information conveyed helps and facilitates in curbing of many illegal businesses and activities that take place without been noticed. Criminals who conduct business within or outside a country without being noticed can be identified during their process of structuring transactions. The information provided to the authority should be treated confidentially and not at any moment should it leak since the criminals are usually life threatening.

In return, the institution gains a reward from the custom for behaving accordingly and ethically. This is because not all organizations reports suspicious behavior among its clients. Instead, some organizations try to come into terms with the suspicious individuals where the institutions receive huge amount of money and in return lets the transactions take place. If it is in a bank, the teller should be guaranteed of safety and that the data will be highly secured.

However, institutions can be accused of helping in the transaction of illegal activities by being involved in the structured transactions. According to Levy (2011), people involved can face penalties such as imprisonment, fines and punishments while suspected parties can be fined up to twice the amount involved or property and a jail term of twenty years. According to Levy (2011), a civil penalty of around $10,000 is fined or the value of the property and this is not avoidable despite a penalty been charged.

Question 2

In general business management planning and decision making, intentional structuring of transactions affects the business decisions. In planning, business formulates strategies to follow but if intentional structuring occurs, it is highly likely that the strategies and objectives are violated. For example, if a person, let us call him Mark, gave David cash, which is legal to its business accounts to pay for his debt without knowing that David was involved in ‘dirty debts’, and with time, Mark needs the money back since its required by the management team during their budget planning. So David gives Mark a card to cash the money required by Mark from different places. Without knowing, Mark decided to follow the simple rules but in the process, Davidis reported for structuring transactions. Since the process now becomes a case, Mark’s business budget planning comes to a standstill since no decision can be made when Mark, who is the chief finance officer, faces a trial.

Intentional structuring affects the general business management planning. If transaction occurs during this period and it is recorded in the financial statements of a business, many problems arise such as fraud, because the business cannot record transaction at the time it is undergoing pressure. Fraud is likely to be committed and false data recorded in the statements. According to Frecka (2008), since intentional structuring leads to evasion of lawful acts, such as taxation, recording transaction end up with bias information. So during decision making and planning, usually based on the financial statements, the organization makes decisions based on unscrupulous information. With financial statements being expected to be fair, true and just, there is a call for transparency during financial reporting.

Intentional structuring of transactions has great impact on business and is up to organizations to ensure that these transactions do not occur frequently or at all. During management planning, businesses try to makes decisions on how to meet their demands and needs with the limited resources. So, if intentional structuring occurs and people evade paying of taxes, it is highly likely that the businesses encounter hard times trying to meet their needs. The businesses can be reported for operating against the acceptable policies and it can end up enduring losses because of the dishonesty employees or members, who evade the law. With intentional structuring of transactions being against the law, many people who perform the transactions, especially within business organizations, usually are aware of the consequences they are likely to endure if caught. Thus, business should ensure that all employees behave ethically and that financial reporting is done according to the acceptable protocols.


Frecka, J.T (2008). Ethical Issues in Financial Reporting: Is Intentional Structuring of Lease Contracts to Avoid Capitalization Unethical? Journal of Business Ethics 80, 45–59. DOI 10.1007/s10551-007-9436-y. Retrieved from

Levy, M. S (2011). Federal Money Laundering Regulation: Banking, Corporate, and Securities Compliance. Aspen Publishers Online.


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