Cash-intensive business

Laundering needs a plausible explanation for cash. A business that normally handles cash can add illegal money to its daily takings and deposit the total, and the bank has little way to tell the two apart. Because true sales are hard to verify, overstated revenue is easy. Banks treat such customers as higher risk and compare deposits against peers, using the expected turnover for the type, size, location and opening hours, along with stock purchases and staff numbers. Red flags include deposits well above industry norms, rises with no seasonal or marketing reason, unusual note denominations and cash paid in at distant branches. The risk also covers tax evasion through underreported sales. Most such businesses are legitimate. Peer benchmarks for turnover are what let a reviewer say a deposit total looks wrong.

A small car wash deposits about 80,000 a month in cash, and the bank's periodic review compares it with peers. Peers of similar size and location bring in around 30,000. Water bills, staff numbers and opening hours do not fit the volume. The relationship manager asks for sales records and till data, and the explanation is weak, so the file goes to the investigations team for a decision on a suspicious transaction report.