Red flags when identifying the person or entity
We have identified the following red flags relevant to our business and when identifying persons or entities.
- There is an inability to properly identify the client or there are questions surrounding the client’s identity.
- The client refuses or tries to avoid providing information required, or provides information that is misleading, vague, or difficult to verify.
- The client refuses to provide information regarding beneficial owners or provides information that is false, conflicting, misleading or substantially incorrect.
- The identification presented by the client cannot be verified (e.g. it is a copy)
- There are inconsistencies in the identification documents or different identifiers provided by the client, such as address, date of birth or phone number.
- Client produces seemingly false information or identification that appears to be counterfeited, altered or inaccurate.
- Client displays a pattern of name variations from one transaction to another or uses aliases.
- Client alters the transaction after being asked for identity documents.
- The client provides only a non-civic or non-residential address such as a post office box or disguises a post office box as a civic/residential address for the purpose of concealing their physical residence.
- Common identifiers (e.g. addresses, phone numbers, etc.) used by multiple clients that do not appear to be related.
- Common identifiers (e.g. addresses, phone numbers, etc.) used by multiple clients conducting similar transactions.
- Transactions involve individual(s) or entity(ies) identified by media, law enforcement and/or intelligence agencies as being linked to criminal activities.
- Attempts to verify the information provided by a new or prospective client are difficult.
Red flags related to client behaviour
We have identified the following red flags relevant to our business and relating client behaviour
- Client makes statements about involvement in criminal activities.
- Evidence of untruthfulness on behalf of the client (e.g. providing false or misleading information).
- Client exhibits nervous behaviour.
- The client refuses to provide information when required, or is reluctant to provide information.
- Client has a defensive stance to questioning.
- Client presents confusing details about the transaction or knows few details about its purpose.
- Client avoids contact with reporting entity employees.
- The client refuses to identify a source for funds or provides information that is false, misleading, or substantially incorrect.
- The client exhibits a lack of concern about higher than normal transaction costs or fees.
- Client makes inquiries/statements indicating a desire to avoid reporting or tries to persuade the reporting entity not to file/maintain required reports.
- Insufficient explanation for source of funds.
Red flags surrounding the financial transactions in relation to the person/entity profile
We have identified the following red flags relevant to our business and financial transactions in relation to the person/entity profile
- The transactional activity far exceeds the projected activity at the beginning of the relationship.
- The transactional activity (level or volume) is inconsistent with the client’s apparent financial standing, their usual pattern of activities or occupational information (e.g. student, unemployed, social assistance, etc.).
- The transactional activity is inconsistent with what is expected from a declared business (e.g. business account has no normal business-related activities, such as the payment of payrolls or invoices).
- Client appears to be living beyond their means.
- Large and/or rapid movement of funds not commensurate with the client’s financial profile.
- Rounded sum transactions atypical of what would be expected from the client.
- Size or type of transactions atypical of what is expected from the client.
- The client’s address or employment address are outside the local service area without a reasonable explanation.
- There is a sudden change in client's financial profile, pattern of activity or transactions.
- Client uses notes, monetary instruments, or products and/or services that are unusual for such a client.
Red flags related to products and services
We have identified the following red flags relevant to our business and our products and services
- Holding multiple accounts at several financial institutions for no apparent reason.
- Suspected use of a personal account for business purposes, or vice-versa.
- Client appears to have recently established a series of new relationships with different financial entities.
- A product and/or service opened on behalf of a person or entity that is inconsistent based on what you know about that client.
- Accounts used for pass-through activities (e.g. to receive and subsequently send funds to beneficiaries).
- Use of multiple foreign bank accounts for no apparent reason.
- Frequent and/or atypical transfers between the client’s products and accounts for no apparent reason.
- The same individual(s) holds signing authority for accounts held by multiple entities where there is no legal reason or sufficient explanation for such an arrangement.
- Accounts held by multiple entities either headquartered at the same location or having the same directors/signing authorities for no apparent reason.
Red flags related to change in account activity
We have identified the following red flags relevant to our business and changes in account activity:
- A business account has a change in ownership structure with increases in transactional activity and no apparent explanation.
- An inactive account begins to see financial activity (e.g. deposits, wire transfers, withdrawals).
- Accounts that receive relevant periodical deposits and are inactive at other periods without a logical explanation.
- Abrupt change in account activity.
Red flags based on a typical transactional activity
We have identified the following red flags relevant to our business and typical account activity:
- The client has multiple products at the same institution, atypical of what would be expected.
- A series of complicated transfers of funds that seems to be an attempt to hide the source and intended use of the funds.
- Transactions displaying financial connections between individuals or businesses that are not usually connected (e.g. a food importer dealing with an automobile parts exporter).
- Transaction is unnecessarily complex for its stated purpose.
- Client presents notes or financial instruments that are packed, transported or wrapped in an uncommon way.
- A client’s transactions have no apparent business or economic purpose.
- Transaction consistent with publicly known trend in criminal activity.
- Client presents musty, odd smelling or extremely dirty bills.
- Transaction involves a suspected shell entity (an entity that does not have an economical or logical reason to exist).
- Atypical transfers by client on an in-and-out basis, or other methods of moving funds quickly, such as a cash deposit followed immediately by a wire transfer of the funds out.
- Funds transferred in and out of an account on the same day or within a relatively short period of time.
Red flags related to transactions structured below the reporting or identification requirements
We have identified the following red flags relevant to our business and transactions structured below the reporting or identification requirements
- Client appears to be structuring amounts to avoid client identification or reporting thresholds.
- Client appears to be collaborating with others to avoid client identification or reporting thresholds.
- Multiple transactions conducted below the reporting threshold within a short time period.
- Client makes inquiries that would indicate a desire to avoid reporting.
- Client exhibits knowledge of reporting thresholds.
Red flags involving wire transfers (including electronic funds transfers)
We have identified the following red flags relevant to our business and wire transfers
- Client is unaware of details surrounding incoming wire transfers, such as the ordering client details, amounts or reasons.
- Client does not appear to know the sender of the wire transfer from whom the wire transfer was received, or the recipient to whom they are sending the wire transfer.
- The client requests wire transfers or receives wire transfers to or from multiple beneficiaries that do not correspond to the expected use of the account type or business account.
- Client is accompanied by individuals who appear to be sending or receiving wire transfers on their behalf.
- Client attempts to specify the routing of an international wire transfer.
- Client utilises structured cash transactions to send wire transfers in an effort to avoid record keeping requirements.
- Funds are deposited or received into several accounts and then consolidated into one before transferring the funds outside the country.
- Immediately after transferred funds have cleared, the client moves funds, to another account or to another individual or entity.
- Multiple clients have sent wire transfers over a short period of time to the same recipient.
- Large wire transfer or high volume of wire transfers are conducted or received through the account that does not fit the expected pattern of that account.
- Large and/or frequent wire transfers between senders and receivers with no apparent relationship.
- Client sending to, or receiving wire transfers from, multiple clients.
Red flags related to transactions that involve higher risk jurisdictions
We have identified the following red flags relevant to our business and higher risk jurisdictions
- Transactions with jurisdictions that are known to produce or transit drugs or precursor chemicals or are sources of other types of criminality.
- Transactions with jurisdictions that are known to be at a higher risk of money laundering.
- Transaction/business activity involving locations of concern, which can include jurisdictions where there are ongoing conflicts (and periphery areas), countries with weak money laundering/terrorist financing controls, or countries with highly secretive banking or other transactional laws such as transfer limits set by a government.
- Transactions involving any countries deemed high risk or non-cooperative by the Financial Action Task Force.
- Client makes frequent overseas transfers, not in line with their financial profile.
Red flags related to use of other parties
We have identified the following red flags relevant to our business and other parties
- Transactions that involve parties not typically associated with a transaction
- The reason for a third party acting on behalf of another person or entity does not make sense based on what you know about the client or the third party.
- Multiple deposits which are made to an account by non-account holders.
- Unrelated parties sending email money transfers or other forms of electronic transfers to the same beneficiary with no apparent relation to the recipient.
- A client conducts transaction while accompanied, overseen or directed by another party.
- A client makes numerous outgoing payments to unrelated parties shortly after they receive incoming funds.
- Wire transfers, deposits or payments to or from unrelated parties (foreign or domestic).
- Client appears or states to be acting on behalf of another party.
- Account is linked to seemingly unconnected parties.
- An individual maintains multiple accounts, or maintains accounts in the names of family members or corporate entities with no apparent business or other purpose.
- An individual or entity other than the stated account holder conducts the majority of the transaction activity which seems unnecessary or excessive.
- Client is involved in transactions or account activity that are suspicious but refuses or is unable to answer questions related to the account or transactions.
Red flags specifically related to terrorist financing
We have identified the following red flags relevant to our business and terrorist financing.
- Transactions involving certain high-risk jurisdictions such as locations in the midst of or in proximity to, armed conflict where terrorist groups operate or locations which are subject to weaker money laundering controls.
- An account opened in the name of an entity, a foundation or association, which may be linked or involved with a suspected terrorist organisation.
- The use of funds by a non-profit organisation is not consistent with the purpose for which it was established.
- Raising donations in an unofficial or unregistered manner.
- Client identified by media or law enforcement as having travelled, attempted or intended to travel to high-risk jurisdictions (including cities or districts of concern), specifically countries (and adjacent countries) under conflict and/or political instability or known to support terrorist activities and organisations.
- Transactions involve individual(s) or entity(ies) identified by media and/or sanctions lists as being linked to a terrorist organisation or terrorist activities.
- Law enforcement information provided which indicates individual(s) or entity(ies) may be linked to a terrorist organisation or terrorist activities.
- Client conducted travel-related purchases (e.g. purchase of airline tickets, travel visa, passport, etc.) linked to high-risk jurisdictions (including cities or districts of concern), specifically countries (and adjacent countries) under conflict and/or political instability or known to support terrorist activities and organisations.
- Individual or entity’s online presence supports violent extremism or radicalisation.
- Client donates to a cause that is subject to derogatory information that is publicly available (e.g. crowdfunding initiative, charity, NPO, NGO, etc.).