If a customer changes from conservative long-term investing to day trading, what should the AML compliance officer do?

In the scenario where a customer shifts from conservative long-term investing to day trading, the most appropriate action for the AML compliance officer is to check with the account officer about the customer’s investment strategy. This step is crucial because it allows the compliance officer to gather context regarding the customer’s intentions and the rationale behind the change in their trading behavior. Understanding the customer's investment strategy helps in assessing whether the sudden shift could indicate potential risks or suspicious activities associated with money laundering or other unlawful practices.

Engaging with the account officer can provide insights into the customer’s profile and previous trading patterns, which is essential for effective monitoring. This dialogue can help the compliance officer determine if additional due diligence is needed or if the change aligns with the customer’s known financial goals.

In contrast, actions such as reporting the customer for suspicious activity prematurely or contacting them directly about high-risk activities could be considered inappropriate without first consulting with the account officer. This could lead to unnecessary escalations or misunderstandings. Similarly, while referring the customer for senior management approval may seem prudent, it is more effective to first gather relevant information to understand the situation comprehensively. This structured approach facilitates a clear, informed decision-making process within the AML compliance framework.