This customer action indicates possible money laundering because it could be a sign of layering, which is the second stage of the money laundering process. Layering involves moving the illicit funds around to create distance and confusion between the source and the destination of the money. Transferring all funds to another bank on the same day of large cash deposits could be an attempt to avoid detection by the bank’s transaction monitoring system or by the authorities. It could also be a way to break the audit trail and obscure the origin of the funds.
The other customer actions are not necessarily indicative of money laundering, although they could raise some red flags depending on the context and the customer profile. Continually making weekly small cash deposits could be a sign of structuring, which is a technique to avoid reporting requirements by depositing amounts below the threshold. However, this could also be a legitimate behavior for a tutor who receives cash payments from students. Periodically initiating wire transfers to another account owned by a relative could be a sign of funneling, which is a technique to move funds between accounts that are not related to the business or personal activities of the customer. However, this could also be a legitimate behavior for a tutor who supports their family members financially. Opening a savings account and making frequent transfers from the checking account could be a sign of commingling, which is a technique to mix illicit funds with legitimate funds from a legal source. However, this could also be a legitimate behavior for a tutor who wants to save money for future expenses.
CAMS Certification Package - 6th Edition | ACAMS, Chapter 2: Money Laundering Risks and Methods, pp. 35-40
CAMS Certifications: How to Get CAMS Certified | ACAMS, CAMS Study Guide, pp. 28-32
ACAMS CAMS Certification Video Training Course - Exam-Labs, Module 2: Money Laundering Risks and Methods, Video 2.2: The Three Stages of Money Laundering
Exam CAMS: Certified Anti-Money Laundering Specialist (the 6th edition), Question 311, Answer C
