Structured Deposit

1. Structured Deposit
2. Structured Deposit Accounting Treatment
3. Structured Deposit Meaning

1. Structured deposits are sophisticated financial instruments and you should speak to your sales before investing. Structured deposits are not traditional deposits. They aren't covered by deposit insurance (CDIC). If you redeem a structured deposit before the fixed-term ends, you could get back less than you originally invested.
2. Structured deposits are cash based, fixed term deposits where the return of capital at maturity is not dependent on the performance of the underlying(s). Please take a look at our current range of deposit solutions which are open for subscription.
3. Structured solutions help you to grow your money without the risk of traditional investments. The deposit has capital-protection. over the fixed term.

Structured deposits are based on indices of the financial or commodity market, such as FX rates, share prices, values of exchange indices, prices of commodities or baskets of those variables, evolution of which may determine the end interest rate on the structured deposit.

Investment involves risks. You should not invest in Structured Investments based on this page alone. You should read and understand the Bank's Conditions for Services and all of the offering documents including the relevant term sheet, Important Facts Statement and the Structured Investments Application Form, before deciding whether to invest in this product.

Key Product Features

• 100% principal protection – Principal Protected Structured Investments provides 100% protection at maturity.
• Various Linked Assets – provides you with an opportunity to gain a higher potential return via various linked assets such as interest rates or currency exchange rates.
• Flexible Investment Choices – You can choose HKD, USD, CNY or other designated currencies as the Investment Currency. The minimum investment amount is as low as HK$50,000 or its equivalent in other currencies. A wide range of investment periods are available for selection.
• Trading Channels – You can trade via designated branches and Internet Banking. Service hours: Mondays to Fridays, 9:00 a.m. – 5:00 p.m., except public holidays.

For details, please visit any of BOCHK branches or call Personal Customer Service Hotline at +852 3988 2388.

Key Product Features

• Partial principal protection – Non-Principal Protected Structured Investments offers higher potential return but you have limited principal protection at maturity.
• Various Linked Assets – provides you with an opportunity to gain a higher potential return via various linked assets such as interest rates or currency exchange rates.
• Flexible Investment Choices – You can choose HKD, USD, CNY or other designated currencies as the Investment Currency. The minimum investment amount is as low as HK$50,000 or its equivalent in other currencies. A wide range of investment periods are available for selection.
• Trading Channels – You can trade via designated branches and Internet Banking. Service hours: Mondays to Fridays, 9:00 a.m. – 5:00 p.m., except public holidays.

For details, please visit any of BOCHK branches or call Personal Customer Service Hotline at +852 3988 2388.

Important Notice

The following risk disclosure statements cannot disclose all the risks involved. Prior to trading or investment, you should collect and study the information required for your investment. You should take your own independent review and seek independent professional advice, if necessary, on whether this product is suitable for you in light of your risk appetite, financial situation, investment experience, investment objectives and investment horizon. If you are uncertain of or have not understood any aspect of the following risk disclosure statements or the nature and risks involved in trading or investment, you should seek independent advice.

Risk Disclosure Statement

Principal Protected Structured Investments and Non-Principal Protected Structured Investments (“Structured Investments”)

• Not a time deposit - Structured Investments is NOT equivalent to, nor should it be treated as a substitute for, time deposit. It is NOT a protected deposit and is NOT protected by the Deposit Protection Scheme in Hong Kong.
• Derivatives risk - Structured Investments is embedded with a European digital currency option which can only be exercised on the final fixing date if the specified condition for exercise is satisfied, in which case you may either receive the interest amount calculated at a higher interest rate, or otherwise, you will receive the interest amount calculated at a lower interest rate. The interest amount is therefore unknown in advance.
• Limited potential gain - The maximum potential gain is limited to the interest amount calculated at the higher interest rate as prescribed in the term sheet of this product.
• Principal protection at maturity only (only applicable to Principal Protected Structured Investments - Target Rate Investment) - The principal protection feature is only applicable if the Target Rate Investment is held to maturity.
• Not necessarily principal protection (only applicable to Non-Principal Protected Structured Investments - Non-Principal Protected Target Rate Investment) - Subject to the movements in the exchange rate of the currency pair, you may have only limited principal protection even if the Non-Principal Protected Target Rate Investment is held to maturity. You could lose part of your principal amount.
• Not the same as buying any currency of the currency pair - Investing in Structured Investments is not the same as buying any currency of the currency pair directly.
• Market risk - The return on Structured Investments is dependent on movements in the exchange rate of the currency pair. Currency exchange rates may move rapidly and are affected by a number of factors including, national and international financial, economic, political and other conditions and events and may also be subject to intervention by central banks and other bodies.
• Liquidity risk - Structured Investments is designed to be held till maturity. Once the transaction for this product is confirmed, you will not be allowed to early withdraw or terminate or transfer any or all of your investment before maturity.
• Credit risk of the Bank - Structured Investments is not secured by any collateral. If you invest in this product, you will be taking the credit risk of the Bank. If the Bank becomes insolvent or defaults on its obligations under this product, you can only claim as an unsecured creditor of the Bank. In the worst case, you could suffer a total loss of your principal amount and the potential interest amount.
• Currency risk - If the investment currency is not your home currency, and you choose to convert it back to your home currency upon maturity, you should note that exchange rate fluctuations may have an adverse impact on, and the potential loss may offset (or even exceed), the potential return of the product.
• RMB Conversion Limitation Risk - RMB investments are subject to exchange rate fluctuations which may provide both opportunities and risks. The fluctuation in the exchange rate of RMB may result in losses in the event that the customer converts RMB into HKD or other foreign currencies.
  (Only applicable to Individual Customers) RMB is currently not fully freely convertible. Individual customers can be offered CNH rate to conduct conversion of RMB through bank accounts and may occasionally not be able to do so fully or immediately, for which it is subject to the RMB position of the banks and their commercial decisions at that moment. Customers should consider and understand the possible impact on their liquidity of RMB funds in advance.
  (Only applicable to Corporate Customers) RMB is currently not fully freely convertible. Corporate customers that intend to conduct conversion of RMB through banks may occasionally not be able to do so fully or immediately, for which it is subject to the RMB position of the banks and their commercial decisions at that moment. Customers should consider and understand the possible impact on their liquidity of RMB funds in advance.
• No secondary market - Structured Investments is not a listed security. There is no secondary market for you to sell the Structured Investments prior to its maturity.
• Not covered by Investor Compensation Fund - Structured Investments is not covered by the Hong Kong Investor Compensation Fund.

This page is issued by Bank of China (Hong Kong) Limited. Its contents have not been reviewed by any regulatory authority in Hong Kong.

Quick Link

Structuring, also known as smurfing in bankingjargon, is the practice of executing financial transactions such as making bank deposits in a specific pattern, calculated to avoid triggering financial institutions to file reports required by law, such as the United States' Bank Secrecy Act (BSA) and Internal Revenue Code section 6050I (relating to the requirement to file Form 8300). Structuring may be done in the context of money laundering, fraud, and other financial crimes. Legal restrictions on structuring are concerned with limiting the size of domestic transactions for individuals.

Definition[edit]

Structuring is the act of parceling what would otherwise be a large financial transaction into a series of smaller transactions to avoid scrutiny by regulators and law enforcement.^[1] Typically each of the smaller transactions is executed in an amount below some statutory limit that normally does not require a financial institution to file a report with a government agency. Criminal enterprises may employ several agents ('smurfs') to make the transaction. Structuring appears in federal indictments related to money laundering, fraud, and other financial crimes.

The term 'smurfing' is derived from the image of the comic book characters, the Smurfs, having a large group of many small entities. Miami-based lawyer Gregory Baldwin is said to have coined the term in the 1980s.^[2]

Regulations[edit]

United States[edit]

In the United States, the Bank Secrecy Act requires currency transaction reports (CTRs) to be filed for transactions valued at more than $10,000; it applies to both U.S. and foreign currencies.^[3] Financial institutions suspecting deposit structuring with intent to avoid the law are required to file a suspicious activity report (SAR).^[4] In 1986, the U.S. Congress enacted section 5324 of Title 31 of the United States Code,^[5] which provides (in part):

No person shall, for the purpose of evading the reporting requirements of section 5313 (a) or 5325 or any regulation prescribed under any such section, the reporting or record keeping requirements imposed by any order issued under section 5326, or the record keeping requirements imposed by any regulation prescribed under section 21 of the Federal Deposit Insurance Act or section 123 of Public Law 91–508—[...](3) structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more domestic financial institutions.

Section 5324 further provides that a violation of this provision may be punished by a fine or up to five years in prison, or both.^[6] The filing of Form 8300 is required under Internal Revenue Code section 6050I.^[7]

Sums of money resulting from deposits of less than $10,000 may be seized after a warrant is issued based on a suspicious activity report. Legal proceedings, which may cost in the vicinity of $20,000 or more, may be required for an innocent party to retrieve his or her money. Reports in October 2014 by The New York Times of arbitrary seizures resulted in modification of Internal Revenue Service (IRS) practice to focus on investigations that 'closely align' with IRS 'mission and key priorities'. Banks are not permitted to warn or advise customers unless the customer asks, but sometimes bank tellers will informally warn customers.^[8]

Outside the United States[edit]

Other uses[edit]

Structured Deposit

The term 'smurfing' is also applied to activity associated with controlled substances such as pseudoephedrine.^[18] In this context, the agent will make purchases of small, legal amounts from several drug and grocery stores, with the intent to aggregate the lot for use in the illegal production of methamphetamine.^[18] Also, since the monthly pseudoephedrine purchase limits in US are too low for mass meth production, this practice often involves using multiple 'smurfs'.

As Robert Pennal of the Fresno Meth Task Force explains:

Then we started seeing 'smurfing.' Remember how the smurfs were little gatherers? We started getting calls from different retail stores that people were buying two or three packs—that's the most you can buy—and they went to one store, they bought three, they went to another store, bought three. We're seeing blister packs everywhere because they're sitting in the car, they're punching the pills out of the blister packs, they're putting them in the freezer bags and they're turning them over to chemical brokers.^[19]

See also[edit]

References[edit]

1. ^Linn, Courtney J. (2010). 'Redefining the Bank Secrecy Act: Currency Reporting and the Crime of Structuring'. Santa Clara Law Review. 50 (2): 407–513.
2. ^Gross, Samantha; Barrett, Devlin (11 March 2008). 'Spitzer Tripped Up on Laws He Enforced'. Fox News. Archived from the original on 22 March 2008. Retrieved 14 March 2008.
3. ^See generally 31 U.S.C.§ 5313, 31 U.S.C.§ 5324, 31 C.F.R. sec. 1010.311, and 31 C.F.R. sec. 1010.314.
4. ^See generally 31 C.F.R. sec. 1010.320.
5. ^See section 1354(a) of the Anti-Drug Abuse Act of 1986, Public Law No. 99-570, 100 Stat. 3207, at 3207-22 (27 October 1986).
6. ^See 31 USC section 5324(d)(1).
7. ^Internal Revenue Service (1 June 2006). 'Part IV Examining Process; Chapter 26 Bank Secrecy Act; Section 13 Structuring'. Internal Revenue Manual. Washington, D.C.: US Treasury Department. OCLC37305546. Retrieved 11 March 2008.
8. ^'Law Lets I.R.S. Seize Accounts on Suspicion, No Crime Required' article by Sahaila Dewan in The New York Times 25 October 2014
9. ^Australian Transaction Reports and Analysis Centre (September 2002). 'AUSTRAC Guideline No. 1: Suspect Transaction Reporting'(.PDF). Financial Transaction Reports Act 1988. Government of Australia. Retrieved 12 March 2008.
10. ^Conselho de Controle de Atividades Financeiras. 'Lavagem de Dinheiro' (in Portuguese). Ministério da Fazenda. Archived from the original on 3 July 2007. Retrieved 12 March 2008.
11. ^'Guideline 9: Alternative to Large Cash Transaction Reports to FINTRAC'. fintrac.gc.ca.
12. ^'§ 10 GwG - Einzelnorm'. www.gesetze-im-internet.de. Retrieved 26 May 2019.
13. ^http://www.antimoneylaundering.gov.ie/website/aml/amlcuweb.nsf/0/B75E0654ED35762480257F230043F9FE/$File/2014%20Report.pdf
14. ^Dipartimento del Tesoro. 'Antiriciclaggio' (in Italian). Ministero dell'Economia e delle Finanze. Archived from the original on 15 March 2008. Retrieved 12 March 2008.
15. ^FIU-Nederland. 'Meldingen Ongebruikelijke Transacties' (in Dutch). Ministerie van Justitie. Retrieved 12 March 2008.
16. ^Europa Taxation & Customs Union (21 December 2007). 'Cash controls'. European Commission. Retrieved 12 March 2008.
17. ^Netipoom Maysakun. 'MONEY LAUNDERING IN THAILAND'(PDF). The United Nations Asia and Far East Institute for the Prevention of Crime and the Treatment of Offenders. Retrieved 15 September 2008.
18. ^ ^ab'DEA'(PDF). Justice.gov. p. 16. Archived from the original(PDF) on 17 October 2010.
19. ^'Transcript – The Meth Epidemic'. Frontline – PBS.

External links[edit]

Structured Deposit Accounting Treatment

Structured Deposit Meaning