When is a Referral to AML Investigations Required?

B

In the scenario described, a precious metals dealer has opened a new account with a bank. The question asks which situation would require a referral to AML (Anti-Money Laundering) Investigations for further review. Let's analyze each answer choice:

A. International outgoing wires to diamond dealers that are part of the diamond pipeline: This option involves international outgoing wire transfers made by the precious metals dealer to diamond dealers who are part of the diamond pipeline. The diamond pipeline refers to the global network involved in the production, distribution, and sale of diamonds. While this activity alone may not automatically trigger a referral to AML Investigations, it can potentially raise concerns if there are indications of suspicious or unusual transactions. Factors such as the size and frequency of the transactions, the nature of the relationship between the precious metals dealer and the diamond dealers, and any associated red flags would need to be considered before making a determination. A referral to AML Investigations may be necessary if there are reasonable suspicions of money laundering or illicit activity.

B. Payments received on the account reference unknown companies in the instructions: This option refers to payments received by the precious metals dealer's account where the instructions accompanying the payments mention unfamiliar or unknown companies. This situation can be considered suspicious as it may indicate attempts to disguise the true source of funds or engage in fraudulent activities. Referring this scenario to AML Investigations would be appropriate to assess the legitimacy of these payments, investigate the source of funds, and determine if any illicit activity is taking place.

C. International incoming payments from foreign companies in which the precious metals dealer has an established relationship: This option describes international incoming payments received by the precious metals dealer from foreign companies with which they have an established relationship. While international transactions in themselves are not inherently suspicious, the fact that the dealer has an established relationship with these foreign companies suggests a level of due diligence and familiarity. In this case, a referral to AML Investigations may not be necessary unless there are additional factors or red flags that raise concerns about the legitimacy of the transactions or the associated companies.

D. Multiple daily point of sale transactions from third parties that appear to be individuals: This option pertains to multiple daily point of sale transactions conducted by third parties who appear to be individuals. This situation can be indicative of potential structuring, which involves breaking down larger sums of money into smaller transactions to avoid triggering suspicion or reporting thresholds. Multiple small transactions conducted on a daily basis can be an attempt to evade regulatory scrutiny. Given the suspicious nature of this activity, a referral to AML Investigations would be appropriate to further investigate the individuals, the source of funds, and the purpose behind the transactions.

In summary, while all the answer choices have elements that may warrant scrutiny, the option that would most likely require a referral to AML Investigations for further review is:

B. Payments received on the account reference unknown companies in the instructions.

This scenario raises concerns about the legitimacy of the payments and the possibility of fraudulent or illicit activity. Referring this situation to AML Investigations would help assess the risks involved and investigate the source of funds to ensure compliance with anti-money laundering regulations.