A large cash deposit most likely reflects money laundering when it is 1. from a customer who has never conducted a transaction in cash before. 2. transacted in segments smaller than the reporting…

Question

Options

• A1, 2, and 3 only
• B1, 2, and 4 only
• C1, 3, and 4 only
• D2, 3, and 4 only

• A
  73% (49)
• B
  16% (11)
• C
  7% (5)
• D
  3% (2)

Explanation

A large cash deposit is a red flag for money laundering when it is inconsistent with the customer's profile, behavior, or business activity. A customer who has never conducted a transaction in cash before may be trying to avoid detection or conceal the source of the funds. A customer who transacts in segments smaller than the reporting thresholds at various times during the day may be engaging in structuring or smurfing, which are techniques to evade currency transaction reporting requirements. A customer who follows a large cash deposit with an immediate wire transfer to an offshore secrecy haven may be attempting to layer or move the funds to a jurisdiction with weak anti-money laundering controls or high confidentiality. These scenarios indicate a high risk of money laundering and warrant further investigation and reporting. A customer who operates a cash-based business may have a legitimate reason to make a large cash deposit, depending on the nature and scale of the business. However, this does not mean that the customer is exempt from scrutiny or monitoring, as cash-based businesses are also vulnerable to money laundering abuse. The bank should verify the source and purpose of the funds, and compare the deposit with the customer's expected activity and turnover.

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