Which of the following is an example of a red flag in financial transactions?

A sudden increase in account activity inconsistent with a customer's usual behavior is considered a red flag in financial transactions because it may indicate that the account is being used for illicit activities, such as money laundering. Such a spike can suggest that the funds involved are not typical for that account holder and may require further scrutiny to ensure they are not derived from illegal sources. Financial institutions are trained to monitor account activities closely, and when patterns deviate from the customer's known behavior—especially in terms of significant increases in deposits, withdrawals, or transfers—this can be a signal that warrants investigation.

Other options do not present similar concerns; for instance, a steady increase in account balance over time could simply reflect normal saving habits or investments. Frequent withdrawals that match expected income or regular deposits from a consistent source indicate predictable financial behavior and are considered normal activities, not red flags. Thus, it is the unusual, drastic changes in account behavior that serve as a warning sign for potential financial misconduct.