Which of the following is a common red flag indicating potential money laundering activity?

Which of the following is a common red flag indicating potential money laundering activity?

• A. Clients frequently inquire about interest rates
• B. Unexplained large cash deposits without a clear source
• C. Regular account balance updates
• D. Timely payments on loan installments

Answer: (B)

Unexplained large cash deposits without a clear source are a significant red flag for potential money laundering activity. This behavior often suggests that the individual or entity is trying to introduce illicitly obtained funds into the financial system without providing a transparent or legitimate source. Money laundering typically involves disguising the origins of money, making cash deposits without a clear explanation is a classic method criminals use to integrate illegal funds into the economy. In contrast, inquiries about interest rates, regular account balance updates, and timely loan payments generally indicate standard banking behavior and do not necessarily signal suspicious activity. They reflect typical customer engagement or responsible financial management rather than indicative of attempts to disguise or integrate illicit funds.

Unexplained large cash deposits without a clear source are a significant red flag for potential money laundering activity. This behavior often suggests that the individual or entity is trying to introduce illicitly obtained funds into the financial system without providing a transparent or legitimate source. Money laundering typically involves disguising the origins of money, making cash deposits without a clear explanation is a classic method criminals use to integrate illegal funds into the economy.

In contrast, inquiries about interest rates, regular account balance updates, and timely loan payments generally indicate standard banking behavior and do not necessarily signal suspicious activity. They reflect typical customer engagement or responsible financial management rather than indicative of attempts to disguise or integrate illicit funds.