Red Flag Indicators Of Money Laundering
Crime is not always physical but can be committed financially too. Money laundering cases are on the rise, and we don’t know whom to blame. The government is implementing the right regulations, and companies are coming up with effective AML transaction software and systems to detect financial crimes. There is nothing more to be done in order to prevent financial breaches. When you ask a professional about the same, they will suggest a few red flag indicators to look out for. No matter what type of transaction is done by what type of company, you should always be cautious of these flags.
- Unusual Transactions From Bank Accounts: One of the most common red flags that directs you towards the possibility of illicit activities happening is unusual transactions from the bank. Financial institutions record the type of transactions people do in their past, and if any transaction seems unusual, it can be a red flag that something is fishy.
- High-Volume Transactions Without Legal Explanation: Usually, high-volume transactions are done in extreme cases, and financial institutions perform a legal check with the account holder if they are aware. The phone check is followed by a legal reason they are transacting an inappropriately high amount, and if they fail to give a convincing reason, it can be taken as an alert.
- Account Holders Belong To High-Risk Areas: Some countries and particular regions are added to the list of high-risk areas. During the AML transaction check, if you find that an inappropriate amount of money is transacted from one of the high-risk areas, take it as an immediate red flag. Money laundering cases are not specifically focused on personal reasons but are sometimes performed to support terrorism. This can put the reputation of financial institutions at risk. So, take the hint and act accordingly.
- Discrepancies In Account Verification: Every account holder goes through account verification. With the help of the right software and systems, the account verification is done on the basis of past records and credibility. If any account holder is not clearing the certification process, it can be because of one of many illegal reasons. So, it acts as a clear red flag that helps you prevent any potential illegal activity.
- Unusually Small Deposits To Multiple Accounts: Financial institutions should look out for any unusual deposits to different accounts from one account. Such transactions directly point towards doubts. Based on the nature of past transactions, if an account holder is acting weird with their transactions, it's time to confront them. Financial institutes can always barge into awkward financial activities and ask for explanations. This gives the account holder a chance to prove their innocence.
Smart Infotech comes up with an effective anti-money laundering system or software that keeps the financial institutions in a loop with the illegal activities. AML-TRACE is widely used by financial institutions, real estate, dealers of precious stones, and different organizations to protect their finances. Have a look at the features of the software to understand its uses.