Structured Cash Deposits and a Higher-Risk Transfer
A relationship manager at a wealth firm manages a retired teacher's account for nine years. Over five weeks, the client deposits £15,000 cash three times at different branches, each below the firm's £16,000 cash threshold, and then instructs a £44,000 transfer to a newly opened account in a jurisdiction the firm classifies as higher risk. The client says the cash came from selling a car and inherited jewellery, but cannot produce a bill of sale and becomes irritated when asked for source-of-funds evidence. The client also asks, 'If I answer your questions, will this be reported to the authorities?' and says a friend told him to split deposits to avoid 'paperwork'. The firm has an automated monitoring alert but no SAR has been filed. The RM wants to complete the transfer because the client has a long-standing relationship and the amount is modest.
1. Identify the suspicious indicators and decide whether the RM should complete the £44,000 transfer.
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The indicators point strongly toward structuring and possible money laundering: three cash deposits of £15,000 just below the £16,000 threshold, use of different branches, a sudden higher-risk jurisdiction transfer, a new recipient account, inconsistent source-of-funds explanations, missing evidence, irritation at questions, an explicit question about reporting, and a friend's advice to split deposits to avoid paperwork. The long relationship and the modest size of the transfer do not neutralise these facts. The RM should not complete the transfer until enhanced due diligence is done and the matter is escalated to the MLRO or financial crime team. The firm should consider whether to pause or reject the instruction, gather independent evidence of the car sale and inheritance, and review the client's risk rating. If suspicion remains, a suspicious activity report should be considered promptly. The reasoning is that the pattern matters more than any single deposit, and the firm cannot rely on the client's explanation without verification.
2. What should the RM say and do when the client asks whether the matter will be reported, and what are the tipping-off risks?
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The RM must not confirm or deny that a report has been or will be made. A neutral response is appropriate: the firm must complete standard checks and cannot discuss internal reporting. The RM should continue the scripted customer-due-diligence process, avoid hints such as 'this may go to the authorities', and escalate the question to the MLRO. Tipping off can occur even through informal comments or delays that alert the client to an investigation. The RM should document the client's question, the response given, and the client's reaction. If the client withdraws the instruction, the firm should still consider whether a report is needed. The reasoning is that the reporting obligation is confidential; protecting the integrity of any investigation outweighs the client's curiosity, and the RM should not improvise.
3. What governance and monitoring actions should follow after the alert?
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The firm should review the automated alert, aggregate the three cash deposits, and assess the branch pattern. It should complete enhanced due diligence, update the client's risk rating if justified, and decide whether to file a suspicious activity report. It should consider enhanced monitoring or exit if the source of funds cannot be established. The compliance team should check whether the £16,000 threshold is being used appropriately and whether staff understand that splitting deposits is itself a red flag. Training, branch-level monitoring, and record retention should be reviewed. The reasoning is that a single alert may reveal a control weakness; the response should address both the individual client relationship and the firm's broader detection and reporting process.