Which practice can indicate potential money laundering?

Transferring money through foreign banks is a practice that can indicate potential money laundering for several reasons. Money laundering often involves moving funds across borders to obscure their origins. Transactions through foreign banks can mask the source of the funds and make it difficult for authorities to trace them back to illegal activities. Additionally, certain jurisdictions may have less stringent regulations and oversight, which attracts those wishing to disguise illicit funds.

In contrast, using local currency for transactions can be a standard business practice and does not inherently raise red flags. Investing in community projects typically demonstrates a commitment to social responsibility and may not relate to money laundering at all. Living an extravagant lifestyle alone could point to wealth accumulation, but in the absence of other suspicious activities or a lack of known income sources, it does not necessarily indicate money laundering. Thus, the act of moving money through foreign banks is more clearly associated with efforts to conceal the source of illicit funds.