Financial Crime World

Suspicious Transaction Detection: A Step-by-Step Guide

Identifying suspicious transactions requires a thorough examination of facts, context, and ML-TF indicators. In this guide, we’ll walk you through the process of detecting and preventing criminal activity in financial institutions.

Understanding Context is Key

When evaluating a transaction, it’s essential to examine not only the facts but also the context surrounding the event. This includes information such as:

  • Customer account history
  • Occupation
  • Expected turnover
  • Any other relevant factors that can help determine what is considered normal or unusual

Examples of Suspicious Behavior

Experts have identified several examples of suspicious behavior, including:

  • Customers asking questions about reporting thresholds
  • Changing the purpose of transactions
  • Receiving payments from unrelated parties

These behaviors can raise red flags and indicate potential criminal activity.

ML-TF Indicators: Warning Signs of Unusual Activity

In addition to context, experts also emphasized the importance of ML-TF indicators – warning signs that can raise suspicion and indicate unusual activity. These indicators include:

  • Cash transactions
  • Trade-based money laundering
  • Sector-specific red flags such as those related to:
    • Banking
    • Securities
    • Real estate

The presence of a single indicator may not necessarily be evidence of criminal activity, but it should prompt additional assessment and analysis by financial institutions.

Structuring: A Tactic Used by Criminals

Financial institutions are advised to remain vigilant against structuring – designing transactions to evade reporting or record-keeping requirements. This tactic can be used by criminals to launder money or finance terrorist activities.

Conclusion

Identifying suspicious transactions requires a thorough examination of facts, context, and ML-TF indicators. By following these guidelines, financial institutions can help prevent criminal activity and ensure the integrity of the financial system.

Key Takeaways

  • Context is essential in evaluating suspicious transactions
  • Multiple factors should be considered when assessing potential criminal activity
  • ML-TF indicators are warning signs that can raise suspicion
  • Structuring is a tactic used by criminals to evade reporting or record-keeping requirements
  • Financial institutions must remain vigilant against structuring and other forms of money laundering and terrorist financing.