When a new CD is established, then that CD is used as collateral on a loan, I've always known that to be a potential sign of money laundering according to BSA. Question is, how new must or can the CD be and still be considered "new"? Hope that makes sense.

Thank you.

What is the source of funds? That would be the main thing I would look at if you think that is a high risk for money laundering.

In this case, cash was brought in. What if a customer takes money from an existing Checking account and purchases the CD with those funds and that backs the CD? Would that be considered not as risky?

Cash would be more suspicious to me than direct deposit of payroll, accumulated into an account and then transferred to a CD for collateral on a loan. But then again, what is the source of funds for the cash? Did they sell a boat or are they part of the cartel?

You have to look at the whole picture. Where did the money in the checking account come from?