Anti-Money Laundering — Transaction Monitoring

A Longtime Client Has Started Making Multiple Cash Deposits Just Under $10,000. This has happened six times this month. The Account Manager Says They’ve Never Had Problems. Is There an Obligation to Act?

A real AML compliance scenario — with three decision options and the right answer.

The Situation

A compliance analyst at a regional bank reviews the transaction monitoring alerts for the week and notices something unusual for one of the bank’s longest-standing business customers—a small retail business that has banked with the institution for 11 years. Over the past 23 days, the customer has made 6 separate cash deposits ranging from $8,400 to $9,800. Prior to this month, the customer typically made 1 or 2 cash deposits per month, averaging $3,000 to $5,000.

The account manager says the customer is “one of our best” and suggests the increased deposits probably reflect a good sales month. The alert was system-generated. No one has spoken to the customer yet.

Choice AClose the alert with a note that the account manager vouches for the customer and the deposits likely reflect normal business activity. The eleven-year relationship is sufficient context to dismiss the pattern.

Choice BEscalate to the BSA Officer with a full transaction summary. The pattern — six deposits in 23 days all below $10,000, representing a significant departure from historical activity — meets the threshold for SAR consideration regardless of the account manager’s assessment of the customer.

Choice CContact the customer directly and ask them to explain the recent deposit pattern before deciding whether to escalate.

The Right Call

Choice B — Escalate to the BSA Officer immediately.

Choice A relies too heavily on the customer’s eleven-year relationship with the bank. While the account manager’s assessment provides useful context, it does not adequately explain the unusual pattern of six cash deposits just below the reporting threshold.

Choice C is premature. Contacting a customer to obtain information about unusual transactions is not automatically prohibited, provided the communication does not disclose a SAR or reveal its existence. However, the analyst should first escalate the alert and follow the bank’s established investigation procedures. The BSA Officer can determine whether additional customer inquiries are appropriate.

The BSA Officer evaluates the available evidence and determines whether the activity meets the institution’s SAR filing requirements. The analyst is responsible for recognizing warning signs, documenting the pattern, and escalating the concern.

Structuring is illegal even when the underlying money is legitimate.

This surprises many people. The crime of structuring exists because breaking up transactions to avoid CTR reporting is itself an attempt to evade a legal requirement — regardless of where the money came from. A small business owner who genuinely had a good sales month but deliberately deposits the proceeds in sub-$10,000 increments to “avoid the paperwork” has committed a federal crime. The legitimacy of the funds is not a complete defense once structuring intent is established.

SAR confidentiality must be protected during an investigation.

Financial institutions must protect the confidentiality of Suspicious Activity Reports and information that would reveal their existence. Employees may conduct legitimate customer inquiries about transactions, business activities, or account information when authorized under the institution’s procedures.

However, employees must not tell customers that a SAR has been filed or disclose information that would reveal its existence.

When employees identify suspicious activity, they should follow established escalation procedures and coordinate any necessary customer communication with the appropriate compliance personnel.

Eleven years without problems is not grounds to close a structuring alert.

Transaction monitoring alerts are evaluated based on the pattern — not the relationship history. A sudden departure from established transaction behavior is suspicious precisely because it is unusual for that customer. The length of the relationship is context for the BSA Officer’s assessment — it is not a reason for the compliance analyst to close the alert without escalation.

What is the difference between a Currency Transaction Report and a Suspicious Activity Report?

A Currency Transaction Report (CTR) is generally required when a financial institution conducts cash transactions involving more than $10,000 in a single business day, including multiple transactions that must be aggregated under applicable rules. A CTR is a reporting requirement, not an accusation of wrongdoing.

A Suspicious Activity Report (SAR) is required when a financial institution identifies activity meeting applicable suspicious activity reporting criteria and monetary thresholds. For banks, certain suspicious transactions involving or aggregating at least $5,000 require reporting when the institution knows, suspects, or has reason to suspect money laundering, structuring, or other qualifying activity. SARs are confidential, and their existence generally cannot be disclosed to the subject.

What is the “tipping off” prohibition and who does it apply to?

Under 31 U.S.C. § 5318(g)(2) and implementing regulations, financial institutions and their employees generally may not disclose a Suspicious Activity Report (SAR) or information that would reveal its existence to the person involved in the suspicious transaction or other unauthorized parties.

The prohibition does not automatically prevent employees from discussing underlying transactions or requesting customer information as part of legitimate due diligence. Such communications must follow institutional procedures and must not reveal the existence of a SAR. Unauthorized SAR disclosures can result in significant legal penalties.

What is the SAR filing deadline once a suspicious pattern is identified?

Banks generally must file a required Suspicious Activity Report (SAR) within 30 calendar days after initially detecting facts that may constitute a basis for filing. If no suspect has been identified, an additional 30 days may be permitted to identify a suspect, but filing generally cannot be delayed beyond 60 calendar days.

For violations requiring immediate attention, such as an ongoing money laundering scheme, the institution must immediately notify appropriate law enforcement and supervisory authorities as required, in addition to filing a timely SAR.

Institutions should conduct investigations promptly and follow their established SAR procedures and applicable regulatory requirements.

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