What might be considered unusual patterns of transactions that banks must monitor?

Banks are required to monitor unusual patterns of transactions to detect potential suspicious activities, such as money laundering or fraud. Variations in transaction amounts that are significantly different from the account holder’s typical behavior can be red flags.

For instance, if a customer usually makes deposits of a few hundred dollars but suddenly deposits or withdraws an amount in the thousands, this variance can trigger alerts for the bank. Such behavior might indicate that the account is being used for illicit purposes or that the customer is involved in a risky financial activity.

In contrast, consistent monthly deposits, infrequent account activity, and regular savings contributions usually suggest a stable financial behavior, which is not typically considered unusual or indicative of potential compliance issues. Monitoring focuses on deviations from established patterns, and significant variability in transaction amounts is often a key indicator of activities that merit further investigation.