The Landscaper's Sub-Threshold Cash
Horizon Landscaping LLC has banked with you for six years. Annual revenue reported at account opening was $410,000. Over the last 14 months the business made 23 cash deposits ranging from $8,200 to $9,850, totaling $207,400, at four different branches. Three different individuals - the owner, his brother, and an unidentified man who gave the name 'Carlos' - made the deposits. The owner says the cash comes from residential landscaping jobs and that 'Carlos' is a subcontractor who collects from customers. Payroll records show two employees besides the owner. The business has no cash-intensive license and its tax filings report $380,000 in gross receipts. Two deposits were made 11 minutes apart at branches 6 miles apart. The relationship manager describes the owner as cooperative and says the cash is 'normal for landscaping.'
1. Assess the indicators and decide whether to file a suspicious activity report. Explain the reasoning.
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Conclusion: file a SAR/STR; do not close solely on the relationship manager's assurance.
Indicators:
- 23 deposits between $8,200 and $9,850 are clustered just below the $10,000 reporting threshold, a classic structuring signature even if each deposit is legal in isolation.
- Four branches and 11-minute-apart deposits six miles apart suggest deliberate branch splitting to avoid attention.
- Third-party deposits by an unidentified 'Carlos' create a source-of-funds gap; the bank cannot verify who is depositing or on whose behalf.
- Reported revenue of $410,000 versus $207,400 in cash deposits in 14 months, with only two employees, is inconsistent with a residential landscaping operation of that size.
- The tax filing of $380,000 gross receipts does not explain the cash volume.
Reasoning: The question is not whether landscaping is cash-intensive - it often is - but whether the pattern is explainable by the stated business. Here the deposit size, branch dispersion, third-party actors and revenue mismatch collectively meet the 'reason to suspect' threshold. File within the statutory window and preserve the analysis.
2. What additional information would you obtain before filing, and how would you manage the filing clock and confidentiality?
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Information to obtain (without tipping off the customer):
- Deposit slips and branch CCTV for the three depositors, especially 'Carlos'; identify whether he is on payroll or a vendor.
- Subcontractor agreements, invoices, customer lists and job schedules for the 14-month period.
- Business tax returns and bank statements from other institutions, if obtainable through normal KYC refresh.
- Corporate registry and ownership records; confirm the brother's role.
- Site visit or trade reference if policy permits.
Clock and confidentiality:
- Start the 30-day clock from the date the suspicion crystallised, not from the first deposit. If no subject can be identified, the extension to 60 days may apply, but do not use it as a delay tactic.
- Do not tell the relationship manager the SAR is being filed; the RM's 'cooperative' view is not a reason to wait. Limit knowledge to the investigations team.
- Document why each item was or was not obtainable. A SAR can be filed on the existing record; missing documents do not require you to wait until the clock expires.
3. Should the bank exit the relationship? Set out the factors for and against and the safeguards if it continues.
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Decision framework:
- For exit: unresolved third-party cash deposits, possible structuring, revenue mismatch, and an unidentified depositor are high-risk. If the customer cannot or will not explain 'Carlos' and the cash source, exit is defensible.
- Against immediate exit: de-risking without a clear rationale can create financial exclusion and does not remove the reporting obligation. If the customer cooperates and the activity is explained by verifiable subcontractor collections, enhanced monitoring may be proportionate.
If continuing:
- Restrict cash deposits to branch-only with named depositors, require identification for all third-party deposits, and set a lower review threshold.
- Conduct 90-day enhanced monitoring with a documented exit trigger.
- Do not disclose the SAR; give a neutral business rationale if exiting.
Reasoning: Exit is a separate risk decision from filing. Filing is mandatory; exit is discretionary. Document both decisions independently.