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. Appendix F of their Examination Manual compiles a long list of suspicious activities it calls “red flags,” which may indicate money laundering or terrorist financing and demand particular scrutiny. Most of these flagged activities involve attempts to hide the identity of a business or the purpose of a transaction; activities having an unusual pattern or repetitiveness; or activities that have 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 nonba