Using cash to buy multiple cashier's checks over a period of time is considered suspicious activity of money laundering. This method is commonly known as structuring, where individuals or entities use cash to buy multiple monetary instruments such as cashier's checks in small amounts, to avoid reporting requirements.
This behavior could be an attempt to evade transaction monitoring and reporting requirements by a financial institution. Additionally, the fact that the account also receives multiple electronic transfers for the same amount could be a red flag for money laundering as it is a common technique used to layer or disguise the origin of illicit funds.
Reference: Certified Anti-Money Laundering Specialist (the 6th edition) Study Guide, page 100-101.

The best course of action for the FI in this scenario is to consider retaining qualified, experienced legal counsel. This is because the investigation request from the local law enforcement agency may involve complex legal issues, such as confidentiality, privacy, data protection, and cooperation obligations. The FI may need to balance the interests of the customer, the law enforcement agency, and the FI itself, and ensure that it complies with the applicable laws and regulations in responding to the request. The legal counsel can advise the FI on the scope, validity, and implications of the request, and help the FI to prepare and submit the required information in a timely and appropriate manner. The legal counsel can also protect the FI from any potential liability or litigation arising from the investigation.
References:
* 1: Requests by Law Enforcement for Financial Institutions to Maintain Accounts and/or Conduct Transactions1
* 2: Answers to Frequently Asked Questions Regarding Suspicious Activity Reporting and Other Anti-Money Laundering Considerations2
* 3: ACAMS Study Guide for the CAMS Certification Examination3

According to the ACAMS Study Guide for the CAMS Certification Exam (6th edition), page 215, one of the best practices for banks to prevent and detect mortgage fraud is to conduct internal investigations when there are red flags or suspicions of fraud involving bank employees. The investigation should include reviewing the employee's loan files, interviewing the employee and other relevant parties, verifying the information and documents provided by the employee, and documenting the findings and actions taken. Filing a suspicious activity report (SAR) may be appropriate after the investigation is completed and the bank has reasonable grounds to suspect fraud. Filing a police report or initiating civil litigation may also be options depending on the outcome of the investigation and the bank's policies, but they are not the first steps to take when the bank suspects an employee of mortgage fraud.
References:
ACAMS Study Guide for the CAMS Certification Exam (6th edition), page 2151 Mortgage Fraud: Understanding and Avoiding It2 Mortgage Fraud: What You Need To Know3

Before sharing customer records within the same jurisdiction, an FI should consider the legal and regulatory framework that governs the protection of personal data and the disclosure of client information. Different jurisdictions may have different laws and rules regarding the privacy and confidentiality of customer data, the consent and notification requirements for data sharing, the purposes and scope of data sharing, and the safeguards and accountability measures for data protection. An FI should ensure that it complies with the applicable restrictions and obligations when sharing customer records within the same jurisdiction, and that it does not violate the rights and expectations of its customers.
References:
* CAMS Study Guide - 6th Edition, Chapter 3, Section 3.4, page 83
* CAMS Dumps Certified Anti-Money Laundering Specialist (the 6th edition), Question 352, page 8
* CAMS Dumps Certified Anti-Money Laundering Specialist (the 6th edition), Question 352, page 8

According to the ACAMS CAMS Certification Video Training Course1, one of the red flags for money laundering is "transferring funds to or from foreign countries or jurisdictions that are known to have weak anti-money laundering standards or are considered high-risk for money laundering or terrorist financing" (Module 2, Lesson 3, Part 2). This is also consistent with the suspicious activity report (SAR) criteria, which require financial institutions to report transactions that "involve funds derived from illegal activity or are intended or conducted to hide or disguise funds or assets derived from illegal activity" or "involve the use of the financial institution to facilitate criminal activity" (31 CFR § 1020.320(a)(2)). Therefore, the customer's request to transfer funds to accounts in three different foreign jurisdictions should be the focus of the SAR, as it may indicate an attempt to launder money or finance terrorism.
References:
* ACAMS CAMS Certification Video Training Course
* [31 CFR § 1020.320 - Reports by banks of suspicious transactions]