Which action should be considered a possible red flag, indicating to a bank that the activity might warrant further investigation?

Making multiple cash deposits just under the reporting threshold is a classic money laundering technique known as "structuring" or "smurfing." This activity is intentionally designed to circumvent regulatory requirements, such as Currency Transaction Reports (CTRs), which are automatically triggered by transactions exceeding a specific amount. Financial institutions view structuring as a significant red flag because it strongly indicates a deliberate attempt to conceal the size and origin of funds, thereby evading detection. This pattern of behavior almost always warrants further investigation to rule out illicit activity.

B. Adding a new beneficial owner is a common business event. While it requires updated due diligence, it is not inherently a red flag without other suspicious indicators.
C. A customer may have legitimate reasons for not having a local utility bill, such as recent relocation or living arrangements. It is a point for verification, not a primary red flag.
D. Sending remittances to family from a known and legitimate source of income is a normal and expected financial activity for many customers and is not considered suspicious.

1. ACAMS Certified Know Your Customer Associate (CKYCA) Study Guide. (2022). Chapter 3: Red Flag Indicators. The guide explicitly identifies structuring as a primary red flag for money laundering. It defines structuring as the act of breaking down large transactions into smaller ones to fall below reporting thresholds (e.g.

US$10

000) and notes that such patterns are highly indicative of suspicious activity requiring investigation.

2. Financial Action Task Force (FATF). (2012). Financial Flows Linked to the Production and Trafficking of Afghan Opiates. FATF

Paris

France. p. 28. This report lists "Structuring of cash deposits in amounts under the reporting threshold" as a key money laundering indicator associated with drug trafficking proceeds.

3. Financial Crimes Enforcement Network (FinCEN). (April 2017). Advisory to Financial Institutions on Cyber-Events and Cyber-Enabled Crime. FIN-2017-A001. p. 8. The advisory lists "Structuring transactions in a manner that is designed to evade recordkeeping and reporting requirements (e.g.

making multiple deposits to an account at various branches of the same institution on the same day)" as a financial red flag.