Three Red Flags of Possible Money Laundering Operations

Dollar bills 

Photo by Sharon McCutcheon on Unsplash

A retired supervisory special agent with the Drug Enforcement Agency (DEA), Brian Shanahan has been involved in the civil service sector for more than two decades. During his time with the DEA, Brian Shanahan oversaw several agents responsible for domestic and international drug trafficking and money laundering operations.

Accountants and other financial professionals are at risk of unintentionally supporting money laundering operations when they are unaware of possible red flags. Below are several warning signs of a potential money laundering operation that financial professionals must be aware of:

Inconsistent Information
Whenever documents cannot be verified, accountants and other professionals must be wary of a business being involved in money laundering. On top of that, a single business having multiple tax IDs is a potential red flag, as are clients who shield the identities of business owners and partners.

Reluctance to Provide Information
Any hesitancy from a client regarding the sharing of data or information is a major red flag of money laundering, according to the Financial Action Task Force. Ideally, clients should feel comfortable answering any financial questions posed by accountants, and should provide extra information to professionals when asked.

Unusual Money Transactions
Financial transactions between two or more parties with no clear business relationship is often cause for concern. The same is true of high cost of sales numbers when compared with the business’ size, or use of a small, rural bank when a big-city one might be more appropriate.