A new customer has just been onboarded in a securities firm. After a few weeks, there are unusual trading patterns that are being flagged. Which pattern is most concerning to the compliance officer?
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A. B. C. D.D
The most concerning trading pattern for a new customer who has been recently onboarded in a securities firm is option B: The customer engages in large trading in securities that are liquid or highly priced from the trading account.
The reason why option B is more concerning is that the customer is engaging in trading that involves securities that are either highly liquid or highly priced. This means that the potential gain from these trades is significant, which can make them an attractive target for money laundering or other illicit activities.
Customers who engage in large trades of highly liquid or highly priced securities may be attempting to launder money by purchasing these securities and then selling them for cash. This is because these types of securities can be easily converted into cash, making them a preferred target for money launderers.
In contrast, the other options (A, C, and D) may not necessarily be indicative of money laundering. Option A describes a customer who accumulates securities of a low volume counter in small increments on a weekly basis. This behavior is not necessarily illegal or suspicious, as it may be part of a legitimate investment strategy.
Option C describes a customer who receives many incoming wire transfers from related parties to the trading account. While this behavior may be suspicious, it may also be a legitimate activity, such as receiving payments from business partners or family members.
Option D describes a customer who repeatedly trades in securities that are low priced and low volume counters. This behavior may be indicative of a legitimate investment strategy, as some investors prefer to invest in lower-priced securities that they believe have growth potential.
In conclusion, while all of these trading patterns should be monitored and investigated by the compliance officer, option B is the most concerning, as it may be indicative of money laundering or other illicit activities.