Customer opened account with large check from the sale of house (ironically, this house was shut down and bought by the city because drugs were being dealt out of it). Has numerous police records for possession of drug paraphenlia. Customer is now coming in and withdrawing large amounts of cash that have added up to over $15,000 in the last two weeks. I can only assume that he is dealing/buying drugs with it, but have no proof. Is this SAR reportable? I was reviewing a SAR report and I'm not even sure what area I would check at this point.

Depending on how long the account has been open, could you use-
"Transaction out of pattern for customer"?

There's always the ol' "transaction with no apparent business or economic purpose".

I'm just wondering why you opened the account with this knowledge. If you didn't know it at the time, I would consider closing the account based on the fact that you aren't comfortable with the activity. File your SAR and send the good-bye letter.

of course, just closing the account and having them move on is always an option

All information is factual. There was an article in the local paper about the house being bought by the city. The customer was the owner of the property, but it was a rental property. Occupants were dealing drugs but the customer did nothing to stop it. I also looked through the local court cases and found information on his being charged with having drug paraphenilia. There have been no deposits into his account since it was opened two weeks ago.

I'm not sure about SAR filing on this one - I'd need to be convinced. I'm guessing your argument is that, while he was paid by the city for the house, you suspect that his equity in the property was built by knowingly accepting drug proceeds for rent. It's a bit of a stretch since you don't know the ownership history of his house, how he's accepting rent (if at all), how he's paying his loan (if applicable), etc.

Even if he's laundering money (which is debatable), it does not necessarily mean he's doing it at your bank. I can see an argument for the "promotion" prong of money laundering, but it is predicated upon using illegal funds to further illegal activity.

Still, if you're gung ho about I'd suggest using "Money Laundering - Suspicion Concerning Source of Funds" and "Other suspicious activities: Transaction with no apparent...". I'd also add "Money Laundering - Other" and put "Suspicious concerning Use of Funds" in the description field.

We are now up to $25,000 in cash withdrawals in the last month. My suspicions are that he is using the funds to support a drug habit. I'm on the fence about filing at this point in that I don't believe money laundering is going on, but I do have a gut that some other illegal activity is.

Go with Dani's suggestion of "transaction with no apparent business or economic purpose" and file. You should also consider closing the account.