Name an indicator of a potentially suspicious transaction.

Name an indicator of a potentially suspicious transaction.

• A. Frequent small wire transfers
• B. Large cash deposits inconsistent with a customer’s known business activities
• C. Investments in government bonds
• D. Recurring monthly payments

Answer: (B)

A potentially suspicious transaction is often indicated by behavior that deviates from a customer's usual financial patterns or that raises concerns about the legitimacy of the funds involved. Large cash deposits that are inconsistent with a customer’s known business activities serve as a significant red flag. Such deposits could suggest that the funds are being derived from illegal activities or that there is an intention to obscure the source of the money. In the context of anti-money laundering practices, monitoring for unusual patterns in cash transactions is critical. Large cash deposits, especially if they do not align with an individual or business’s normal income streams or activities, warrant further examination to ensure compliance with financial regulations and to mitigate the risk of handling illicit funds. This vital aspect of identifying suspicious transactions helps financial institutions and regulatory bodies detect and prevent money laundering effectively. In contrast, frequent small wire transfers may not inherently be suspicious if they align with regular financial behavior, investments in government bonds are generally seen as a legitimate financial practice, and recurring monthly payments can be typical for various common obligations such as subscriptions or bills. Therefore, these options may not necessarily trigger the same level of scrutiny as large, inconsistent cash deposits.

A potentially suspicious transaction is often indicated by behavior that deviates from a customer's usual financial patterns or that raises concerns about the legitimacy of the funds involved. Large cash deposits that are inconsistent with a customer’s known business activities serve as a significant red flag. Such deposits could suggest that the funds are being derived from illegal activities or that there is an intention to obscure the source of the money.

In the context of anti-money laundering practices, monitoring for unusual patterns in cash transactions is critical. Large cash deposits, especially if they do not align with an individual or business’s normal income streams or activities, warrant further examination to ensure compliance with financial regulations and to mitigate the risk of handling illicit funds. This vital aspect of identifying suspicious transactions helps financial institutions and regulatory bodies detect and prevent money laundering effectively.

In contrast, frequent small wire transfers may not inherently be suspicious if they align with regular financial behavior, investments in government bonds are generally seen as a legitimate financial practice, and recurring monthly payments can be typical for various common obligations such as subscriptions or bills. Therefore, these options may not necessarily trigger the same level of scrutiny as large, inconsistent cash deposits.