What Is Smurfing?—The Full Guide (2025)

Smurfing might sound like something out of a cartoon, but the term has very different meanings depending on the context. Let’s explore what smurfing means across different industries, ways to prevent it, and more.

Smurfing in video gaming

Smurfing was coined in the late 1990s by two highly-skilled Warcraft II players. Since they were so good at the game, other players avoided them as soon as they saw their usernames. So, they made new accounts called “PapaSmurf” and “Smurfette” to hide their identities and compete anonymously. Since then, the term “smurfing” has been used to describe duplicate, ‘noob’ accounts made by high-skilled players to gain a matchmaking advantage. 

In competitive and ranked settings, smurfing can disrupt the game balance, undermining the integrity of matchmaking systems. As such, video gaming companies consider smurfing to be a form of cheating, increasingly employing detection systems and penalties to disrupt the practice.

Check out this guide to learn what multi-accounting is: Multi-Accounting: What Industries are Under Threat and How to Stop It (2024). 

You can also check out our Global Guide to AML Compliance in Gambling, Gaming, and Betting (2024)

Smurfing in banking and finance

In banking and finance, smurfing refers to a money laundering technique known as  structuring. This involves dividing a large amount of money into smaller transactions to avoid detection by financial institutions by bypassing legal reporting thresholds for “large” financial transactions. The individuals carrying out these transactions—the ‘smurfs’—deposit funds across multiple accounts, financial institutions, locations, or instruments (i.e. prepaid cards), making it challenging to trace the origin of funds. 

Smurfing is often conducted through money service businesses, which make it easier to mask the illicit nature of the funds and integrate the money into legitimate financial systems later on.

Smurfing vs structuring: What’s the difference?

The process of money laundering involves three stages: placement, structuring (or layering), and integration.

Smurfing is often used interchangeably with structuring which, according to FINCEN, is “where financial transactions are broken down into amounts below reporting requirements”. More specifically,  it involves employing online accounts—or ‘smurfs’—to deposit these amounts of money. A smurf can either work alone as a part of a criminal organization, or within a network of smurfs that deposit money across various bank accounts.

Learn about the three stages of money laundering, how it affects businesses, and how a business can protect itself in this guide: The Three Stages of Money Laundering and How It Impacts Business.

Money muling vs smurfing

Smurfing is usually closely related to and confused with money muling. Smurfs, like money mules, inject illicit money into the financial system. However, smurfing is specifically related to breaking down large transactions into sums below certain thresholds—whereas money muling does not necessarily involve breaking down large transactions into smaller sums. Money muling more relates to the transfer of funds using seemingly ‘clean’ identities and financial accounts.   

It’s easy to confuse smurfs and money mules, but there are differences between the two concepts. Smurfs are active participants who knowingly help place money into the financial system by conducting structured transactions. Money mules are sometimes often unaware intermediaries used to transfer or obscure the flow of illicit funds after placement, aiding in the layering stage.

Suggested read: What’s Money Muling? Understanding Red Flags and Why Businesses Should Be Concerned 

Cuckoo smurfing

Cuckoo smurfing is a money laundering technique that often involves the manipulation of international remittances and money service businesses (MSBs). 

For example, a family needs to send tuition money of $8,000 to their child in the US. They deposit the money with a money service business, expecting the amount to reach their child. The MSB, unbeknownst to the family, has been infiltrated by a money laundering network, and the  child receives an equivalent amount of illicit money—whereas the initial deposit made by the parents is transferred to  criminals. The outcome is that the child in the US receives the full $8,000 as expected, without realizing the source of the funds was illicit, while criminals receive  ‘clean’ funds.

How do regulations combat smurfing and related financial crimes?

Global policy making bodies, such as the Financial Action Task Force (FATF) recommend that countries adopt laws requiring financial institutions to:

• Implement reporting thresholds and monitoring rules and alerts. Many countries require financial institutions to report transactions exceeding a specified amount (e.g., $10,000 in the US) to deter smurfing
• Submit Suspicious Activity Reports (SARs) when applicable
• Implement KYC / Customer Due Diligence (CDD) processes to verify clients’ identities
• Conduct ongoing transaction and activity monitoring
• Auditing as part of AML compliance program
• Regularly train staff to identify and report smurfing patterns, such as frequent transactions under reporting thresholds or deposits made across multiple branches.

Most jurisdictions, especially members of FATF, base their AML regulations on the above FATF recommendations.

How to prevent smurfing in banking and finance

A risk-based approach is the best way to prevent smurfing in banking and finance. This involves continuous monitoring to ensure that the risk of smurfing remains minimal, such as:

1. Strong KYC and CDD measures

Robust Know Your Customer (KYC) and Customer Due Diligence (CDD) procedures are key to preventing smurfing. Verifying customer identities, investigating their background to detect criminal history, and understanding the purpose of their accounts helps identify unusual or suspicious activity early.

2. Using automated transaction monitoring 

Many financial institutions rely on AI-driven tools to monitor transactions in real-time. These systems can detect unusual patterns that indicate smurfing, such as frequent small deposits across multiple accounts or transactions below reporting thresholds.

3. Customer risk profiling

Good risk assessment includes being able to identify the risk levels of customers. For example, high-risk customers such as those from high-risk regions or PEPs (politically exposed persons) will require an additional level of assessment, such as EDD (Enhanced Due Diligence) to mitigate possible risks.

Dynamic risk scoring is a good way to reduce the risk levels. It assesses applicants and their activity in real-time based on applicant events, such as transactions, sign up, login, and so on. The score helps companies decide whether to investigate their users further, apply additional checks, or reject them.

4. Conducting risk assessment training

Compliance teams should undergo regular training to stay updated on the latest smurfing tactics and regulatory requirements. Money Laundering awareness helps employees to spot and react to red flags more effectively. Staff should also be trained to file SARs (Suspicious Activity Reports) when transactions seem deliberately structured to avoid detection.

5. Use AI-powered fraud detection solutions

AI-enhanced technologies for transaction monitoring, risk-based scoring, and KYC/AML screening can help prevent smurfs. These tools can detect irregularities in transactions and identify suspicious patterns that can indicate smurfing. Real-time monitoring ensures timely interventions, reducing the risk of laundering activities slipping through unnoticed.

FAQ

• What is an example of smurfing?

  Imagine a criminal organization with $500,000 in illicit cash that wants to avoid detection by breaking it into smaller amounts. They recruit “smurfs,” who each deposit $10,000 or less into multiple bank accounts across different branches, staying below reporting thresholds (reporting threshold is  $10,000). Over time, the funds are moved through transfers, cryptocurrencies, or purchases, making the money harder to trace.

• What is a smurf account?

  In finance, a smurf account refers to a bank account used as part of a smurfing scheme in money laundering. By breaking down transactions below reporting thresholds across multiple smurf accounts, money launderers disguise the origins of illicit funds and reduce the risk of detection by financial institutions. In video gaming, smurf accounts are alternate accounts created by an experienced player to compete at lower skill levels or rankings. Though not illegal, it’s often looked down upon by game developers and platforms, since it disrupts the balance of games and frustrates newer players.

• Why do money launderers often use smurfs?

  Money launderers use smurfs as a tactic to avoid detection by financial institutions and regulatory authorities. Smurfs help break large sums of illicit money into smaller and less noticeable transactions below reporting thresholds. In many jurisdictions, this amount is typically $10,000.

• What is the difference between smurfing and money muling?

  Smurfs and money mules are often confused, but they serve different roles. Smurfs actively and knowingly assist in placing funds into the financial system through structured transactions. In contrast, money mules are intermediaries who help transfer or conceal illicit funds during the layering stage.