5 AML Red Flags Financial Institutions Need to Look for AML Compliance

The constant progress in technology has brought many benefits to us. However, it is also backfiring with a rise in fraudulent activities. That's because cyber thieves see it as an opportunity to conduct crimes, as it has become easier for individuals to transact with just a few clicks. And to hinder such situations, financial institutions use anti-money laundering software. This software can also benefit the organization in many other ways, including preparing for a smooth AML compliance audit. As complying with AML regulations is necessary for financial institutions, they must also address the below-stated AML red flags. 

A Client Doesn't Share Their Information

The financial transactions or account opening transactions call for a lot of valuable information. However, the clients who are to be suspected are the ones who hide the bigger picture. This can include information regarding their identity, the source of funds, and beneficial order. It can also comprise details on their choice of payment information.

There Are Unusual Transactions

Individuals who want to launder their money could perform unusual monetary activities. Your organization must look for inconsistent activities, including using foreign or multiple accounts. You can suspect other events like unjustified payments from third parties or transactions involving big amounts.

Transfers From Sleeping Accounts

Though money transfer is normal, unusual transactions can also be susceptible. This gives you enough reasons to keep an eye on dealings to track unusual forms of money transfer. For example, a sleeping account has suddenly started performing several transactions. 

One Individual With Multiple Accounts

You cannot unsee a client with multiple accounts under the same name. You need to observe them because there could be chances of a money mule scam. Often called a smurfer, a money mule is an individual who moves or transfers illegally obtained money in someone else's name. As money launders use money mules, someone with over two accounts transacting can be suspected.

The Client Is a Politically Exposed Person

Individuals with associates and families in high positions can have the possibility of indulging in corruption. As a result, there can be a risk of them attempting money laundering for any exchange favors. A PEP or politically exposed person is an individual in charge of performing a prominent job role—for example, senior government executives and government ministers.

Drawing the Bottom Line

This article aimed to familiarize you with the possible red flag transactions for anti-money laundering. Giving you a quick review, these can include individuals who don't share much of their information. The list includes PEPs, individuals with multiple accounts, unusual transfers, and transactions from sleeping accounts.

 
If you want to simplify your transactions to comply with anti-money laundering regulations, you can use AML-TRACE. This software can help reduce the possibilities of transactions for money laundering. Moreover, with its ease of identifying threats, you can also stay worry-free for AML compliance audits.