We have put together a list of the top 5 general red flags that are common across all sectors but remember red flags may vary by sector so it is important to keep on top of the guidance issued by your sector supervisor.

What are red flags in AML?

AML red flags are common warning signs alerting you to a suspicious action/transaction that may involve money laundering.

Top 5 AML red flags:

1. New clients who avoid contact

If a customer refuses to answer questions about themselves or gives multiple excuses why they cannot supply the required information, then this should be considered a red flag.  

2. Unusual transactions

Clients trying to launder funds may carry out unusual transactions. Look out for activity that is inconsistent with the expected behaviour/profile of a client, such as large cash payments, unexplained payments from a third party, or use of multiple or foreign accounts. These are all considered red flags.

3. Unusual source of funds

Transactions involving large amounts of cash or private funding could indicate money laundering, even more so if identifying the source could be difficult e.g., cash deposits or complex crypto assets.

4. Unexplained urgency to process a transaction

As mentioned above you should be particularly alert if a transaction appears unusual for the customer’s profile, and one of the most common examples is an unexplained request for urgency to process.

5. Geographic concerns

If your firm is not local to the customer, why are they contacting you? Unexplained connections with – and movement of money between – jurisdictions should also raise suspicions.