Which of the following is a common red flag indicating potential money laundering activity?

Unexplained large cash deposits without a clear source are a significant red flag for potential money laundering activity. This is because money launderers often attempt to introduce illicit funds into the financial system, and large amounts of cash can indicate attempts to disguise the origins of those funds. Such deposits raise suspicions, especially if they occur frequently or involve amounts that are inconsistent with a client's known financial activity or income level. Financial institutions are trained to scrutinize these situations, as they can point to efforts to legitimize money obtained through illegal means.

In contrast, the other options, such as clients inquiring about interest rates or regular account balance updates, generally do not indicate suspicious activity on their own. These behaviors are typical for many clients and do not provide direct evidence of illegal financial practices. Similarly, timely payments on loan installments reflect responsible financial behavior, and while they might indicate good creditworthiness, they do not raise concerns about money laundering.