The Structuring Signal
You are the money laundering reporting officer (MLRO) at a UK e-money institution. Transaction monitoring has alerted on a customer operating three convenience stores: 14 cash deposits between £9,200 and £9,700 over six weeks, totalling £132,000, each just below the £10,000 threshold. The customer's stated annual turnover is £1.8m. The relationship manager says this is normal for cash-heavy retail and asks you to close the alert. The customer is also in final talks for a £2m merchant-acquiring contract. Legal counsel advises "wait for more evidence", noting that a suspicious activity report could damage the deal and that the FCA supervisory visit is in three weeks. The alert breaches its internal service level in 48 hours. There is no adverse media. The customer has been with the firm for four years and has never been exited.
1. Is this suspicious activity? What are your obligations and by when?
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Yes, the pattern is suspicious. Fourteen deposits in six weeks, each just below £10,000, is a textbook structuring indicator. The legal threshold is not the definition of suspicion; deliberately staying under a reporting threshold is itself a red flag. The customer's stated turnover does not explain the precise clustering, and "cash-heavy retail" is an explanation to test, not a reason to close the alert.
As MLRO, your obligation is to submit a suspicious activity report to the National Crime Agency promptly, and to consider whether a defence against the principal money laundering offences requires a consent request. "Promptly" is not defined by the internal 48-hour service level, but the SLA is a useful backstop; missing it does not excuse delay and should be recorded. You should also consider whether to freeze, restrict, or exit the relationship pending the outcome, based on your risk assessment.
Do not close the alert because the pattern has a plausible business explanation. Document the analysis: why the deposits are unusual, what checks you performed, what the customer said if asked, and why suspicion remains. Tipping off is a criminal offence, so do not tell the relationship manager or the customer that a report has been or may be made. Need-to-know only.
2. How should you handle the relationship manager's and legal counsel's positions?
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The relationship manager's view is commercially understandable but legally irrelevant. The presence of a £2m acquiring deal increases the incentive to explain away the alert; it does not reduce the suspicion. Thank the RM for the context, ask for the underlying business explanation and supporting records, and keep the SAR decision independent.
Legal counsel's "wait for more evidence" advice is more serious because it may create a misleading impression of caution. Waiting can itself be a breach if you already have reasonable grounds to suspect. Legal advice should be sought and considered, but the MLRO makes the reporting decision. Ask counsel to put the advice in writing and to identify the legal basis. If the advice appears to be influenced by the supervisory visit or the commercial deal, escalate to the board or audit committee.
Do not disclose the SAR to either the RM or counsel outside the permitted circle. If counsel is advising on the SAR, they should be within the confidentiality perimeter. Document the disagreement, your reasons, and the decision. A regulator will look far more critically at a suppressed SAR than at a defensible report based on a genuine risk assessment.
3. What control and governance improvements should follow this case?
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Treat this as a control-learning event even if the SAR is filed. First, review the monitoring scenarios: threshold-anchored rules can be gamed, so add behaviour-based typologies such as repeated deposits just below reporting thresholds, deposit timing, and mismatch with declared turnover. Second, review alert closure quality: the RM's "normal for retail" explanation should not be sufficient without evidence. Third, review SAR quality and timeliness, including how SLAs interact with legal deadlines.
Governance matters too. The MLRO should have a documented right of escalation to the board when commercial or legal pressure is applied. Board MI should show alert volumes, closure reasons, SAR conversion rates, and overdue alerts, not just a clean dashboard. Training should cover tipping-off and the fact that the reporting threshold is not a safe harbour.
Finally, consider the customer relationship: a pattern of structuring may justify enhanced monitoring, restrictions, or exit even without a criminal conviction. Record the decision and the rationale. The aim is not to report every cash business but to make sure that a plausible story is tested against data rather than accepted because a deal is at stake.