Which practice is a common indicator of money laundering in banking?

• A. Structuring cash transactions to avoid reporting thresholds
• B. Small, consistent deposits under thresholds
• C. Regular payroll tax payments
• D. Donations to charity

Answer: (A)

Structuring cash transactions to avoid reporting thresholds is a classic money-laundering pattern. Banks must file reports when cash transactions exceed a regulatory limit, so laundering attempts often split large amounts into smaller deposits to stay under that ceiling. The telltale sign is a pattern: multiple deposits that individually look innocuous but, taken together, aim to conceal the true source and amount of funds. This intentional fragmentation makes it harder for regulators to detect illicit activity, which is why it’s a primary red flag in AML monitoring.

Regular payroll payments and charity donations are routine and typically legitimate, and small, consistent deposits under the threshold can have ordinary explanations. The critical distinction is purposefully avoiding reporting and masking funds, which is what structuring is designed to do.