Cuckoo Smurfing is a way for criminals to move money from one country to another, usually. Sometimes it is used to move money from one bank to another within a country but with so many ways to move money these days, intra-country movements don’t requires an elaborate procedure.
The term comes from two things. First is cuckoo, which is a sneaky bird. When a bird of a similar or slight smaller build lays eggs and leaves the nest to find food, a cuckoo will push off some of those eggs and lay its own. What happens is that the cuckoo eggs will be taken care of by the unsuspecting bird. The bird will take care of it after it is hatched and because cuckoo chicks tend to grow more quickly than other bird, it will compete better when asking for food, causing other chicks to be malnourished and often die. Second is Smurfing, which is a verb created by the creators of The Smurfs, a Belgian television show from the 1960s that became very popular all over the world. The smurfs often replaced verbs with the word smurf. So, a smurf might say, I feel like smurfing some bread, replacing “eating” with “smurfing.” Combined, Cuckoo Smurfing is discretely replacing funds to take care of a transaction that criminals needed done to begin with.
It is important to note, in order for cuckoo smurfing to work, a money remitter must be knowledgeably involved.
Here’s how it works:
- NY Criminal (NC) has a need to pay London Criminal (LC) $10,000.
- A London Merchant (LM) has a need to pay NY Supplier (NL) $10,000.
- LM goes to the London Bank (or any money service that can make this transaction), and provides $10K with instructions to have it transferred to NL to the New York Bank.
- Banker at London Bank is part of this cuckoo smurfing operation. He instructs NC to deposit $10,000 to NL’s New York Bank account. Then he gives LC $10,000.
Neither LM nor NL know that the fund was never transferred because what matters to them is that LM paid $10,000 and NL received $10,000. But doing this transaction this way, NC has successfully paid LC the $10K he owed.
There are many places that describe this on the internet but what almost all of them fail to describe the procedure in any meaningful way. They fail for two reasons. They do not:
- start by what criminal need creates the need to make the transfer to begin with, and
- explain the significance of having performed this transaction this way.
I hope I was able to describe it in a way that is more enlightening. I may do a video about this transaction since there doesn’t seem to be one that exists.
UPDATE Feb. 18/2016: There is now a video explaining Cuckoo Smurfing.
Marcus Maltempo is a Certified Anti-Money Laundering Specialist and a Certified Fraud Examiner with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.