Under which circumstance is it appropriate to flag a customer's activity as a red flag and possibly file a SAR?

• A. When there is no legitimate business reason for the transactions and funds pass through
• B. When a customer makes a routine salary deposit
• C. When a customer pays a small bill with cash
• D. When a customer makes a single purchase with a check

Answer: (A)

When there is no legitimate business reason for the transactions and funds pass through the account, it signals a potential money-laundering pattern. This lack of a plausible economic purpose, combined with funds moving through the customer’s accounts without a clear, legitimate source or destination, makes the activity suspicious enough to flag and consider filing a Suspicious Activity Report (SAR).

Routine salary deposits, paying a small bill with cash, or a single purchase with a check can be normal parts of everyday life and do not by themselves indicate illicit activity. They may be legitimate; only when paired with other red flags or a broader pattern would they raise concern. Always evaluate in the context of the customer’s profile, known business, and any additional indicators before escalating.