Which of the following are common money laundering red flags? (Select all that apply). (A) Small, regular deposits, consistent with customer activity (B) Large, round amounts transferred without apparent business sense (C) Payments to a credit card account once a month (D) Unexplained, repetitive, or unusual patterns of fund movements
Answer (1)
Money laundering involves concealing the origins of illegally obtained money, typically by passing it through a complex sequence of banking transfers or commercial transactions. Identifying red flags in financial transactions helps in detecting and preventing illegal activities.
Here are common money laundering red flags related to transaction patterns:
(B) Large, round amounts transferred without apparent business sense.
Such transactions can indicate an attempt to break down large sums of illicit money into movements that seem legitimate. If they do not align with normal business operations, they could be suspicious.
(D) Unexplained, repetitive, or unusual patterns of fund movements.
This includes sudden activities that do not match the customer's known financial profile. Unusual patterns might suggest that transactions are fabricated to disguise illegal origin.
On the other hand:
(A) Small, regular deposits, consistent with customer activity.
This is typically normal financial behavior unless these regular deposits increase significantly or begin to escalate inconsistently with previous customer behavior.
(C) Payments to a credit card account once a month.
Monthly payments on a credit card are typical and usually do not raise concerns unless they become irregular or unusually large with no clear justification.
In summary, the red flags in the options provided are (B) and (D), as they suggest inconsistencies and unusual financial activities that may indicate money laundering.
