What does "suspicious activity" refer to in AML compliance?

In the context of AML (Anti-Money Laundering) compliance, "suspicious activity" specifically refers to transactions or behaviors that raise suspicion of illegal activity. This encompasses a range of actions that appear inconsistent with known patterns, regulatory standards, or the customer’s usual transactions. Financial institutions are trained to identify and analyze these behavioral anomalies, as they are often indicative of money laundering or other illicit financial activities.

Such activities might include sudden and unexplained funds transfers, the use of multiple accounts to conduct transactions, or transactions that lack a clear economic purpose. The identification of suspicious activity triggers further investigation and may result in the filing of a Suspicious Activity Report (SAR) to the relevant authorities. This proactive monitoring is crucial for preventing financial crimes and protecting the integrity of financial systems.

The other options describe unrelated processes; regulatory inquiries and normal activity tracking do not pertain to suspicion, while merely classifying all large transactions does not capture the nuanced nature of suspicious activity.