MSBs are frequently accused of being high risk for money laundering because they offer services that can facilitate the movement and conversion of illicit funds, such as currency exchange, money transmission, cheque cashing, and online payment. However, not all MSBs pose the same level of risk, and the degree of regulatory oversight and compliance requirements for MSBs may differ significantly depending on the jurisdiction they operate in. Some countries may have robust anti-money laundering (AML) regimes for MSBs, while others may have weak or inconsistent regulations, or even no regulations at all. This creates challenges and vulnerabilities for MSBs that operate across borders, as they may face different expectations and obligations from different authorities, or encounter gaps or loopholes in the AML framework. Moreover, some MSBs may operate informally or illegally, without registering or obtaining licenses from the relevant regulators, making them harder to detect and supervise. Therefore, MSBs are often perceived as high risk for money laundering, as they may be exploited by criminals who seek to take advantage of the regulatory discrepancies or deficiencies among countries.
References:
Understanding risks and taking action for money service businesses1
What Is A Money Services Business?2
Money Services Business (MSB) Information Center3
Money Services Business (MSB): Types, Examples, & AML Compliance4

According to the ACAMS Study Guide 6th Edition, Chapter 2, page 37, one of the red flags of money laundering or terrorist financing is the use of nominees, trusts, or third parties to hide the identity, ownership, or control of the funds or assets involved in the transaction. Nominees are individuals or entities that act on behalf of the actual or beneficial owners of a company, trust, or account, and may be used to conceal the source, destination, or purpose of the funds or assets. Nominees may also be used to evade taxes, sanctions, or regulatory requirements.
In this case, the compliance officer is unable to verify the identity of the beneficial owners of the company, and only information on the nominee owners was provided. This raises the suspicion that the company may be involved in money laundering or terrorist financing activities, and that the nominee owners may be acting as fronts or intermediaries for the actual or beneficial owners. The compliance officer should conduct further due diligence on the company, the nominee owners, and the beneficial owners, and report any suspicious or unusual activity to the relevant authorities.
References:
ACAMS Study Guide 6th Edition, Chapter 2, page 37
Beneficial Ownership Meaning and Regulation - Investopedia
What is a nominee shareholder? | LawBite

https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/wolfsbergstandards/10.%20Wolfsberg-Private-
2.4 Senior Management Approval
The bank's internal policies should indicate whether, for any one or more among these categories, Senior Management must approve entering into new relationships.
Relationships with Politically Exposed Persons may only be entered into with the approval of Senior Management.

A large cash deposit is a potential indicator of money laundering, especially if it is inconsistent with the customer's profile or behavior. Therefore, the bank should ask the customer about the source and purpose of the funds, and verify the information if possible. In this case, the customer claims to have sold a used car and received cash, which may be a reasonable explanation. However, the bank should not rely solely on the customer's statement, but should also monitor the account for any further cash transactions or suspicious activity that may indicate money laundering. For example, the bank should check if the customer withdraws the cash soon after the deposit, transfers the funds to other accounts or jurisdictions, or engages in structuring or smurfing to avoid reporting thresholds.
The bank should not do nothing, as this may expose the bank to regulatory or reputational risks, or facilitate money laundering. The bank should also not file a Suspicious Transaction Report (STR) unless there are other grounds to suspect money laundering, as this may be premature or unnecessary. The bank should not close the account before another issues arise, as this may be disproportionate or discriminatory, and may also alert the customer to the bank's suspicion.
References:
* [ACAMS Study Guide for the CAMS Certification Examination, 6th Edition], Chapter 4: Conducting or Supporting the Investigation Process, pp. 103-104, 107-108.
* Customer Identification Program - Overview, Federal Financial Institutions Examination Council, April
2018, pp. 1-2, 4-5.
* Suspicious Activity Reporting - Overview, Federal Financial Institutions Examination Council, April
2018, pp. 1-2, 4-5.
* 18 AML Analyst Interview Questions (With Example Answers), ResumeCat, accessed on February 9,
2024.