What is an example of a red flag for potential money laundering?

A customer frequently wire transferring large sums to foreign accounts represents a significant red flag for potential money laundering due to several factors. Such behavior often indicates an attempt to move money quickly and under the radar, potentially to evade detection by financial authorities. Frequent and large wire transfers, especially if they are made to foreign accounts, can raise suspicions about the source of the funds, the legitimacy of the transactions, and the purpose of such actions.

In the context of money laundering, criminals typically use this method to obfuscate the origins of illicitly obtained money by transferring it through various accounts, especially across borders where regulations may differ. Financial institutions are trained to recognize these patterns as they may diverge from typical customer behavior and may warrant further investigation to comply with anti-money laundering regulations.

Other options, while potentially concerning, do not indicate the same level of immediate risk as large, frequent international wire transfers. For example, consistently making small cash deposits might suggest structuring to avoid reporting requirements, but this activity does not carry the same clear risk as high-value international transfers. Requests for increased credit limits or long-standing relationships with banks are not inherently suspicious and can be part of normal banking behavior.