A customer brings $15,000 worth of chips into a casino and plays various games. The customer redeems all the remaining chips and requests a wire transfer of the proceeds to an unrelated third party.
What are two red flags that indicate money laundering? (Choose two.)
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A. B. C. D.AD
In this scenario, there are several actions that may raise red flags for potential money laundering. However, the question asks for two specific red flags. The two red flags that indicate money laundering in this scenario are:
Requesting a wire transfer to an unrelated third party (Option D) When a customer requests a wire transfer to an unrelated third party, it could be an indication of layering, which is the process of separating the illegal funds from their source by creating layers of transactions to make it difficult to trace the funds. This is a common technique used in money laundering, where the ultimate goal is to disguise the proceeds of illegal activities as legitimate. Therefore, requesting a wire transfer to an unrelated third party is a red flag for potential money laundering.
Bringing $15,000 worth of chips into the casino (Option C) Casinos are required to report any transactions over a certain threshold to the Financial Crimes Enforcement Network (FinCEN) under the Bank Secrecy Act (BSA). In this case, the customer bringing $15,000 worth of chips into the casino may trigger a Currency Transaction Report (CTR) filing by the casino. Money launderers may try to avoid detection by breaking up large transactions into smaller ones to avoid reporting requirements. Therefore, bringing a large amount of chips into the casino could be a red flag for potential money laundering.
Playing various games before cashing out (Option B) and redeeming all remaining chips (Option A) are not necessarily red flags for potential money laundering on their own. However, they may be indicative of an attempt to conceal the source of funds or create the appearance of legitimate gambling activity. It is important to consider all the relevant factors when assessing potential money laundering risks.