Home › AML Case Studies › AML Red Flags

AML Red Flags (2025) – Complete Beginner-Friendly List

AML red flags are signals that a customer, account, or transaction may involve potential money laundering, terrorist financing, fraud, or other financial crime risks.

This 2025 guide breaks down AML red flags into simple, easy-to-understand categories used by real compliance teams worldwide.

1. Customer Behavior Red Flags

• Unwilling to provide ID or documentation
• Overly nervous, evasive, or inconsistent behavior
• Uses third parties to avoid providing personal info
• Gives vague or unverifiable information
• Pushes staff to skip KYC checks
• Unusual interest in AML controls or thresholds

2. Transaction-Related Red Flags

• Large cash deposits not consistent with profile
• Multiple small deposits (“structuring” or “smurfing”)
• Frequent fund transfers with no clear purpose
• Transactions just below reporting thresholds
• Sudden movement of high-value funds without reason
• Incoming funds from unrelated or high-risk countries

3. Account Activity Red Flags

• Dormant account suddenly becomes active
• Unusual volume of deposits followed by immediate withdrawals
• Multiple accounts under one customer without explanation
• Use of business account for personal banking or vice versa
• Accounts controlled by unknown third parties

4. Geographic Red Flags

• Transactions involving high-risk jurisdictions
• Connections to sanctioned countries
• Frequent transfers to secrecy/tax haven locations
• Use of offshore structures with unclear purpose

5. Industry and Business Red Flags

• Cash-intensive businesses with unclear revenue streams
• Businesses that do not match transaction behavior
• High-risk sectors (gaming, crypto, remittance, gambling)
• Unregistered or shell companies
• Companies with nominee directors or secretive ownership

6. Source-of-Funds / Source-of-Wealth Red Flags

• Customer unable to explain source of funds
• SoW documents inconsistent or unverifiable
• Large funds from unrelated third parties
• Wealth inconsistent with customer profile or occupation

7. Sanctions Red Flags

• Potential matches on sanctions lists (OFAC, EU, UN, OFSI)
• Customer has aliases similar to sanctioned individuals
• Complex corporate structures with hidden beneficial owners
• Business conducted with restricted industries or countries
• Connections to embargoed products or controlled goods

8. PEP (Politically Exposed Persons) Red Flags

• PEPs with unexplained personal wealth
• PEP-linked companies receiving large unexplained funds
• Family members or close associates involved in high-value transactions
• Adverse media linking PEP to corruption or financial crime

Frequently Asked Questions (FAQ)

Are red flags proof of crime?

No. Red flags indicate risk, not guilt. They trigger additional checks or escalation.

What should analysts do when they find multiple red flags?

Document findings, escalate to AML or investigations teams, and avoid clearing the alert without proper review.

Are red flags the same in all countries?

The categories remain similar globally, but risk levels can vary depending on regulations and local crime trends.