What is an indicator of suspicious activity?

The correct answer is C. Large and frequent credit balances on a credit card resulting in request for refunds. Large and frequent credit balances on a credit card resulting in request for refunds is an indicator of suspicious activity because it may suggest that the cardholder is using the credit card to launder money or to conceal the source of funds. This is also known as credit card…

Risks and Methods of Money Laundering and Terrorist Financing

Question

Options

AA customer who pay back a late loan all at once after collecting on a bad debt
BA convenience store that brings in $20s and $10s and requests small bills and change
CLarge and frequent credit balances on a credit card resulting in request for refunds
DAn online retailer that uses a third-party payment processor to facilitate its transactions

How the community answered

(22 responses)

A
5% (1)
B
5% (1)
C
77% (17)
D
14% (3)

Explanation

Large and frequent credit balances on a credit card resulting in request for refunds is an indicator of suspicious activity because it may suggest that the cardholder is using the credit card to launder money or to conceal the source of funds. This is also known as credit card refund fraud or credit card laundering. The cardholder may make purchases with the credit card using illicit funds, then request refunds to another account or in cash, thus transferring the funds to a legitimate or less traceable channel. This activity may also be used to evade currency reporting requirements or to avoid detection by law enforcement or financial institutions.

Topics

#suspicious activity indicators#red flags#credit card refund scheme#money laundering typologies

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