Flag It Up The Negotiator – Flag it up
Here are some of the red flags of potential money laundering activity. Although this list is not exhaustive, it contains some of the most common red flags across all professions.
You should make sure you are familiar with these indicators, and be on alert for them when dealing with both new and existing clients.
Transactions:
Are transactions unusual because of their size, frequency or the manner of their execution, in relation to the client’s known business type?
Structures:
Do activities involve complex or illogical business structures that make it unclear who is conducting a transaction or purchase?
Assets:
Does it appear that a client’s assets are inconsistent with their known legitimate income?
Resources:
Are a client’s funds made up of a disproportionate amount of private funding, bearer’s cheques or cash, in relation to their socioeconomic profile?
Identity:
Has a client taken steps to hide their identity, or is the beneficial owner difficult to identify?
Behaviour:
Is the client unusually anxious to complete a transaction or are they unable to justify why they need completion to be undertaken quickly?
Political Status:
Is the client engaged in unusual private business given that they hold a prominent public title or function? Or do they have ties to an individual of this nature?
Documents:
Are information or documents being withheld by the client or their representative, or do they appear to be falsified?
Geographical Area:
Is the collateral provided, such as property, located in a high-risk country, or are the client or parties to the transaction native to or resident in a high-risk country?
Choice of Professional:
Have you, or other professionals involved been instructed at a distance, asked to act outside of your usual speciality, or offered an unusually high fee?
The Financial Action Task Force (FATF) website has more information on potential indicators of money laundering, as well as up to date information on high-risk jurisdictions.
