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Top 10 AML Red Flags - Expert Roundup

Apr 02, 2024 Niamh Hunter Updated On: April 9, 2024
Top 10 AML Red Flags - Expert Roundup

Businesses need to keep their eyes peeled for Anti-Money Laundering AML red flags but as banking systems become increasingly complex, interconnected and international this is only getting more difficult.

It is this complexity that creates opportunities for criminals to deploy new tactics within financial crimes. Criminals exploit these complexities to launder money, making it challenging for authorities to trace illicit activities and hold perpetrators accountable, facilitating illegal operations under the radar.

Stay one step ahead and protect your business with our expert breakdown of the ten AML red flags that criminals manipulate to their advantage. 

Explanation of AML Red Flags

AML red flags are indicators or warning signs of potential illicit financial activities. 

They align with the standards set by the Financial Action Task Force (FATF) to combat money laundering and terrorism financing. These flags include unusual transactions, high-risk country involvement, cash-intensive activities, and customer behaviour anomalies. 

They are crucial in identifying suspicious transactions because they highlight behaviours or patterns inconsistent with legitimate financial activities. 

By scrutinising new clients, customers, and suppliers for these red flags, financial institutions can detect and report potentially illicit transactions, thereby disrupting the flow of illicit funds and aiding law enforcement in investigating and prosecuting money laundering and terrorism financing activities.

Top 10 AML Red Flag Indicators

Take a look at the ten key indicators that suggest there could be more due diligence needed to secure compliance during AML checks:

Unusual Transactions

Transactions that are unusually large, frequent, or complex, especially when they deviate from a customer's typical behaviour or are inconsistent with the customer's profile or business activities.


Splitting transactions into multiple smaller transactions to avoid triggering reporting thresholds or to obscure the true source or destination of funds.

High-Risk Countries

Transactions involving countries known for high levels of corruption, terrorism financing, or other illicit activities, particularly when they lack a clear business rationale.

Cash Intensive Transactions

Conducting large cash transactions, especially if the customer's business or profile is not consistent with such activity, or if there is a lack of supporting documentation.

Unusual Customer Behaviour

Customers who exhibit suspicious behaviour, such as reluctance to provide identification, providing false or inconsistent information, or attempting to avoid AML controls.

Third-Party Payments

Transactions involving third parties with no apparent connection to the customer's legitimate business activities, especially if they involve countries or entities with higher AML risks.

Shell Companies and Nominee Accounts

Transactions involving shell companies, nominee accounts, or complex corporate structures designed to obscure the true ownership or purpose of the funds.

Politically Exposed Persons (PEPs)

Transactions involving PEPs, their family members, or close associates, may present higher corruption or bribery risks.

Unexplained Wealth

Sudden influxes of wealth without a clear legitimate source or business justification, such as significant increases in account balances or asset purchases.

Geographical Red Flags

Transactions involving jurisdictions with weak AML regulations, lack of transparency, or a history of financial crime, particularly if the transaction involves funds moving in or out of these jurisdictions.

Financial institutions and organisations implementing AML protocols should remain vigilant for these red flags and conduct enhanced due diligence when necessary to mitigate the risk of money laundering and other financial crimes.

How Red Flag Alert Supports Businesses with AML Compliance

At Red Flag Alert, we are passionate about demystifying data and creating an accessible platform that provides every business with clear, actionable data. 

Our AML checks are run through multiple data bureaus to provide an unmatched level of detail and accuracy, whilst our AI powered facial recognition and document verification software analyse over 250 data points and provide an accuracy rate of 99.998%.

We provide a full suite of enhanced due diligence checks which include PEPs, sanctions and adverse media. These check in real time but also continue to monitor for any changes and automatically warn you should this be the case.

Lengthy compliance processes can deter clients, but Red Flag Alert resolves this issue, transforming procedures with speed and efficiency.

Our services have transformed businesses’ checks, ensuring swift verification across onboarding, leading to rapid turnaround times and an increased level of satisfaction, all whilst meeting regulatory requirements. 

Through the Red Flag Alert platform, businesses can make informed decisions regarding high-risk customers with key data in a matter of seconds. 

Once the AML red flags have been identified, and the necessary checks are complete, businesses utilise our secure cloud-based storage of audit trail workflow data to ensure ongoing AML compliance monitoring and easy documentation.

Our global monitoring tools mitigate risks associated with international operations, and our powerful AI algorithms continue to enrich data to provide unique insights into businesses. 

Enhanced customer experience, protect brand reputation, and maintain compliance with Red Flag Alert’s free trial today.

Published by Niamh Hunter April 2, 2024
Niamh Hunter

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