Series 14: 8.4.2. Red Flags

8.4.2. Red Flags

FinCEN and a group of other federal agencies developed and published a long list of red flags, most involving attempts to conceal the beneficial owners of a business or the purpose of a transaction, activities having an unusual pattern or repetitiveness, or activities with no apparent relationship to the firm’s business. Here are a few examples:

• A customer is a trust, shell company, or private investment company that is reluctant to provide information on controlling parties and underlying beneficiaries.

• Multiple wire transfers initiated by foreign nonbank financial institutions direct U.S. banks to remit funds to other jurisdictions that bear no apparent business relationship with that foreign nonbank financial institution.

• A foreign correspondent bank exceeds the expected volume in its client profile for funds transfers, or an individual company exhibits a high volume and pattern of funds transfers that is inconsistent with its normal business activity.

• Funds