Organized crime groups often use front companies to disguise the origin and destination of their illicit funds, and to integrate them into the legitimate economy. Front companies are businesses that appear to be engaged in lawful activities, but are actually controlled by criminals for money laundering purposes.
One reason why organized crime groups use front companies is to gain control over an entire sector of the economy, such as construction, transportation, or gambling. By using multiple front companies, they can create a network of interrelated businesses that can manipulate prices, evade taxes, and influence public contracts. This can give them a competitive advantage over legitimate businesses, and allow them to launder large amounts of money through seemingly legitimate transactions.
Another reason why organized crime groups use front companies is to comingle their illicit funds with those of legal businesses. By using the bank accounts of front companies, they can deposit cash from criminal activities along with the revenues from legitimate operations, making it harder to trace the source of the funds.
They can also transfer funds between different front companies, or use them to pay for goods and services, creating layers of transactions that obscure the money trail.
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CAMS Study Guide - 6th Edition, Chapter 2, Section 2.2, page 43
A Guide to the 6th Anti-Money Laundering Directive, Part 2, page 9
Money Laundering and Financial Crimes, Chapter 2, page 29

According to the Basel Committee on Banking Supervision's Customer Due Diligence for Banks1, banks should have policies and procedures to identify and manage high-risk customers, such as those who provide false or incomplete information, have complex or opaque beneficial ownership structures, or are involved in large or unusual transactions. In such cases, banks should apply enhanced due diligence measures, such as obtaining additional information or documentation, verifying the source and purpose of funds, conducting more frequent and intensive monitoring of account activity, and reporting any suspicious transactions to the relevant authorities. Therefore, the best course of action for the bank in this scenario is to implement enhanced due diligence procedures to monitor the account for suspicious activity, as option B suggests.
Option A is not recommended, as it would imply that the bank accepts the customer without verifying his identity and background, which would expose the bank to money laundering and terrorist financing risks.
Option C is not advisable, as it would terminate the relationship without investigating the origin and destination of the funds, which could hinder the efforts of law enforcement agencies to trace and recover illicit assets. Option D is also not appropriate, as it would involve sending a check to a customer whose address and identity are not confirmed, which could facilitate money laundering and fraud.
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5: Customer due diligence for banks - Bank for International Settlements, October 2001, pages 8-9, 13-14.

Mutual Legal Assistance Treaties (MLATs) are agreements between two or more countries that provide the legal framework for the exchange of information and evidence in criminal and related matters. MLATs enable law enforcement authorities and prosecutors to obtain evidence, information, and testimony abroad in a form admissible in the courts of the requesting state. MLATs also establish the procedures and channels for making and receiving requests for assistance, as well as the grounds and conditions for granting or denying such requests. MLATs are an important tool for international cooperation and information exchange to combat transnational crimes, such as money laundering, terrorist financing, fraud, and corruption.
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1: Treaties and Agreements - U.S. Department of State
2: Mutual legal assistance treaty - Wikipedia
3: International Exchange of Information Manual - GOV.UK
4: Convention on Mutual Administrative Assistance in Tax Matters

The compliance officer should recommend an audit for cash transactions since the last compliance review, as this would help to identify the extent of the problem, the root causes, and the potential risks involved. The audit would also provide evidence for corrective actions and remedial measures to prevent future occurrences of non-compliance. The compliance officer should not recommend terminating or suspending the teller's employment, as this would be premature and disproportionate without a thorough investigation and due process. The compliance officer should not recommend formally reprimanding the branch manager, as this would not address the underlying issues and could create a hostile work environment.
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ACAMS CAMS Certification Study Guide, 6th Edition, Chapter 5, page 1251 ACAMS CAMS Certification Video Training Course, Module 5, Lesson 12 ACAMS CAMS Certification Exam Outline, Domain 5, Task 33