Which action would indicate a potential money laundering scheme when observed by a securities brokerage firm manager?

The identification of a client structuring transactions to avoid reporting is a strong indicator of a potential money laundering scheme. Structuring, often referred to as "smurfing," involves breaking down large amounts of money into smaller, less suspicious amounts to evade reporting requirements. This behavior is typically associated with attempts to conceal the true nature and source of illicit funds.

For a securities brokerage firm, recognizing structuring is crucial because it suggests that the client may be attempting to bypass the regulatory obligations that exist to detect and prevent money laundering. Such actions undermine the integrity of financial systems and are a red flag that necessitates further investigation and potential reporting to the relevant authorities.

Other actions, while they may raise questions, do not inherently indicate an intention to launder money. For example, a single large cash deposit may be suspicious, but it alone does not prove malicious intent or avoidance of reporting. An inquiry about filing a Currency Transaction Report (CTR) or a customer denying completion of a transaction due to CTR implications could be based on genuine concerns or misunderstandings rather than nefarious activities. In essence, the act of structuring is the clearest signal of an attempt to manipulate financial transactions to evade detection by regulatory entities.