📘 Identifying Red Flags and Transactions
Step Type: Text
What learners will learn: OFAC red flags.
Step Description:
This step outlines common red flags that may indicate a potential OFAC violation or suspicious activity, helping financial institution staff recognize behavior inconsistent with a customer’s known profile or legitimate business activity.
Summary of Content:
Learners will review behavioral and transactional indicators that may warrant closer review or escalation under OFAC compliance procedures. Red flags include unusual customer behavior, high-volume cash transactions, patterns inconsistent with a customer’s business, or the use of financial products in unexpected ways (e.g., credit card advances funding wire transfers). Particular attention is given to activity involving large, unexplained deposits or withdrawals, structuring, unexpected third-party payments, and transactions designed to avoid direct scrutiny (e.g., night deposit use). Recognizing and reporting these red flags is critical to preventing financial crime and complying with economic sanctions programs.
Key Topics Covered:
Transactions inconsistent with a customer’s typical behavior or industry
Use of unrelated third parties to fund accounts or repay credit
Dormant or inactive accounts suddenly used for large transactions
Frequent large cash withdrawals or deposits lacking a business explanation
Back-to-back loans and unusual credit arrangements between unrelated parties
Use of separate tellers or night deposits to conduct large transactions discreetly
Suspicious uses of credit cards (e.g., repeated cash advances or positive balances)
Signs of structuring, layering, or attempts to avoid CTR/SAR thresholds
Cash transactions involving counterfeit notes or forged instruments
Foreign currency or negotiable instruments purchased in large amounts by cash
Importance of verifying, documenting, and escalating red flags through internal OFAC procedures
📘 Identifying Red Flags
Step Type: MultiChoice
What learners will learn: OFAC red flags.
Step Description:
OFAC has identified key red flags that banks should watch for. In this step, we’ll explore examples and test knowledge through interactive questions.
Summary of Content:
Learners review various transactional behaviors and customer patterns that may indicate suspicious activity. Topics include transactions inconsistent with customer profiles, unexpected third-party involvement, unusual credit behaviors, and activity that does not constitute a red flag.
Key Topics Covered:
OFAC red flags in credit and deposit account activity
Suspicious transaction examples
What is and isn’t a red flag
Application of red flag identification in context
📘 Red Flags: Transactions 1
Step Type: Streak
What learners will learn: OFAC red flags for transactions.
Step Description:
OFAC has identified specific red flags related to customer transactions. In this step, we will review some of these transactions.
Summary of Content:
This step presents a range of suspicious behaviors that may occur in customer transactions, such as large or frequent cash movements, atypical financial activity, and methods used to obscure sources of funds.
Key Topics Covered:
Unjustified large cash withdrawals or deposits
Transfers involving unrelated third parties
Attempts to disguise total cash amounts
Dormant account anomalies
📘 Red Flags: Transactions 2
Step Type: True or False
What learners will learn: OFAC red flags for transactions.
Step Description:
In this step, we'll explore other common red flags associated with customer transactions.
Summary of Content:
Learners assess true or false statements covering red flag scenarios such as the use of night deposit facilities, coordinated teller visits, use of counterfeit notes, and suspicious credit behavior.
Key Topics Covered:
Suspicious cash deposit and withdrawal behavior
Risky use of credit and charge card features
Potential money laundering patterns
Indicators of evasive or obscure behavior
📘 Other Transactions and Customer Accounts
Step Type: Text
What learners will learn: Red flags for other transactions and customer accounts.
Step Description:
Red flags can also emerge in various types of transactions and customer accounts. In this section, we will examine these red flags and their manifestations.
Summary of Content:
This text-based resource highlights unusual account activity and customer behaviors that fall outside expected profiles. These patterns can signal potential fraud, concealment, or criminal financial activity.
Key Topics Covered:
Discrepancies with customer profiles
Unusual address or signatory changes
Use of funds from religious or charitable entities
Credit card misuse indicators
📘 Red Flags: Other Transactions
Step Type: Streak
What learners will learn: Other red flag transactions.
Step Description:
This step highlights additional transactional and account-based red flags that may indicate potential OFAC violations or suspicious activity. These scenarios help staff identify behaviors inconsistent with a customer’s profile or risk appetite.
Summary of Content:
Learners will explore non-standard red flags related to customer profiles, payment behavior, and account use. These include unexplained large transfers, use of pseudonyms or numbered accounts, mismatched credit card behaviors, third-party collateral with no clear connection, and indicators of terrorism financing or abuse of charitable funds. Unusual use of trustee or nominee accounts, frequent address changes, and dealings with high-risk jurisdictions are also emphasized. These red flags help institutions identify activity that may violate OFAC or AML/CFT obligations—even if the behavior does not immediately trigger a report.
Key Topics Covered:
Account activity inconsistent with known customer profile (age, income, business type)
Refusal or inability to justify transaction purposes when questioned
Dealings with known or suspected terrorist-affiliated countries, entities, or persons
Frequent changes to address or account signatories
Quick withdrawals/transfers by young account holders (possible terrorism financing)
Rapid movement of charitable or religious funds toward asset purchases or transfers
Credit cards sent to addresses unrelated to the customer or business
Refunds processed without underlying sales activity
Use of intermediaries from jurisdictions with weak AML/CFT laws
Transactions potentially violating foreign exchange regulations
Wire transfers with missing beneficiary information
Payment orders with false or incomplete sender data
Commercial use of pseudonyms or numbered accounts
Holding untraceable shares or pledging assets without a clear reason
Excessive use of trustee/nominee accounts inconsistent with the business model
📘 Red Flags: Customer Accounts
Step Type: True or False
What learners will learn: Red flags for customer accounts.
Step Description:
Let's look more closely now at common red flags identified by OFAC regarding customer account activity.
Summary of Content:
Learners examine scenarios involving false information, suspicious transfers, nominee accounts, and other behaviors that may signal financial crime risks or non-compliance.
Key Topics Covered:
Suspicious account structuring and pseudonyms
Unverifiable ownership or activity
High-risk collateral guarantees
Patterned trustee or nominee accounts
📘 Nature of Business, Origination of Funds and Clients
Step Type: Text
What learners will learn: Red flags related to nature of business and origination of funds and clients.
Step Description:
OFAC has identified red flags concerning the nature of a business, the source of its funds, and its clients for business customers. In this section, we will explore these red flags and how they typically manifest.
Summary of Content:
This step explains how business structures, funding sources, and client behavior may signal red flags under OFAC. It prepares learners to scrutinize the legitimacy of business operations and detect anomalies in financial transactions.
Key Topics Covered:
Suspicious ownership and transaction structures
High-risk funding sources
Unusual client behavior
Concealed ownership and urgency in transactions
📘 Red Flags: Nature of Business, Origination of Funds, and Clients
Step Type: MultiChoice
What learners will learn: Nature of business, origination of funds, and clients red flags.
Step Description:
This step covers red flags related to the nature of a business, the origin of funds, and client behavior. These indicators help frontline and compliance staff identify transactions or relationships that may warrant further investigation.
Summary of Content:
Learners will examine scenarios where the structure or behavior of a business, the source of funding, or the client’s conduct raises suspicion. Red flags include overly complex business ownership structures without economic justification, use of suspicious documentation, unusual third-party funders, or activity inconsistent with income or business profile. Additional indicators include clients attempting to obscure ownership, pushing for rushed transactions, or demonstrating evasive behavior. Recognizing these red flags is critical for risk-based compliance and maintaining due diligence under OFAC and AML/CFT obligations.
Key Topics Covered:
Overly complex or opaque business ownership without economic rationale
Business dealings involving high-risk jurisdictions for money laundering or terrorism financing
Use of suspicious or false documents in support of transactions
Activity levels inconsistent with the nature of the business or known income
Funding from third parties with no clear relationship or justification
Cash-heavy funding sources inconsistent with stated business or individual profiles
Use of non-financial institutions as lenders without logical explanation
Clients changing advisers frequently without cause
Clients selecting distant advisers without business reason
Requests for transaction shortcuts or unnecessary urgency
Attempts to obscure true ownership or involved parties
Clients known to have convictions related to acquisitive crimes
📘 Mastery Test: Identifying Red Flags
Step Type: Crossword
What learners will learn: OFAC red flags.
Step Description:
Let's test your knowledge of the Identifying Red Flags (OFAC) course with this Mastery Test!
Summary of Content:
This crossword serves as a final knowledge check for the entire module. It reinforces the key red flags across accounts, transactions, funding sources, customer behavior, and business operations.
Key Topics Covered:
Common red flag terminology
Transaction and customer behavior indicators
Source of funds concerns
Business and account structure risks