Red Flags: Money Laundering and Terrorist Financing
After the passage of the PATRIOT Act, FinCEN coordinated an effort with five federal banking agencies to provide guidance in developing and examining anti-money laundering compliance programs across the financial industry. One result of that effort was the compilation of a long list of suspicious activities they call red flags, which may indicate money laundering or terrorist financing and demand particular scrutiny. Most of these flagged activities involve attempting to hide the identity of a business or the purpose of a transaction, having an unusual pattern or repetitiveness, or having no apparent relationship to the firm’s business. Here are a few examples:
- • Insufficient or suspicious information:
- » A company is reluctant to provide information about the nature of the business when opening a new account.
- » A customer makes frequent or large transactions and has no record of past or present employment experience.
- • Efforts to avoid reporting or recordkeeping requirements:
- » A customer tries to persuade an e