Information Sharing

Information Sharing

Recognizing unusual transactions

As a service provider, you are familiar with the practices within your line of business. Whether a transaction is considered unusual, depends largely on your professional judgment. Your professional judgment is consistent with what is considered unusual within your profession. In addition to your judgment, there are situations that are unusual by nature and should therefore be reported.

Information

If a situation occurs as described in the general examples below (not exhaustive), then this is a reason to further examine whether the transaction could possibly be related to money laundering, terrorist financing and/or associated predicate offences. If you have reason to assume that money laundering or terrorist financing may be involved, you must report this (promptly) to the FIU.

Red flags – identification and verification

  • The client makes use of (possibly) counterfeit or false ID documents
  • It is difficult to establish the identity of the client or the UBO
  • The client presumably provides incomplete or incorrect information
  • The client has an unclear or changing business address / the correspondence address differs from the regular address
  • The client cancels the transaction because you ask for his identity
  • A person other than the buyer makes his identity available for the purpose of the purchase
  • The client uses a front man

Red flags – relationship between client and service provider

  • The service required by the client does not fit within the normal pattern of services provided by the service provider
  • The client displays exceptional knowledge of anti-money laundering or terrorist financing rules or policies
  • The client is nervous for no apparent reason or is unable / unwilling to give a concrete or logical answer about himself, the origin or destination of the money and / or those involved in the transaction
  • The usual reasons that exist for engaging the service provider appear to be absent
  • The client is willing to pay a fee for the services of the service provider that is substantially higher than what is usual
  • The client appears to have changed service providers (notary, lawyer, tax adviser or accountant) a number of times in a short period of time, without a reasonable explanation
  • The relationship between the client and a previous service provider appears to have been rejected or terminated, with no reasonable explanation
  • The client himself falls under the definition of service provider as referred to in Article 1 of the AML/CFT State Ordinance but deliberately does not report or refuses to provide such information
  • The client is involved in transactions that do not fit in the normal professional or business practice of the client, with no apparent reason
  • The client is involved in transactions that are unusual due to their size, nature, frequency or execution
  • The client, the intermediary or a third party is not willing to provide the requested information, for example about the origin of funds, unless there is a strong pressure to do so
  • The assignment (exclusively) relates to the safekeeping of documents or other goods or the deposit of large amounts of money
  • A good is traded several times in a short period of time
  • The client is involved in transactions with predictable losses
  • Unusual early redemption of assets, especially with the request to pay third parties which appear to have no relation with the client
  • (Cash) purchases of assets, quickly followed by loans with these assets as collateral
  • Unauthorized mixing between business use and private use
  • The client requests service provider to cooperate with suspected fraudulent transactions

Red flags – related to the financial transactions

  • The client prefers assets that leave no traces, such as cash, bearer paper, bearer policies
  • Buying or selling at prices that deviate significantly from market prices
  • Payment traffic shows an unusual pattern. The funds available to the client come from unclear sources or the sources indicated by the client are unlikely or insufficiently documented
  • Large lump sum payments from abroad; unusual (currency) transactions, for example for cash, bearer checks, bearer papers or money transfers
  • The service provider receives funds from the client with the request to pass these funds on to a third party while there are no documents available allowing the service provider to verify the legitimacy of the continued payments
  • Payment through an (unknown) third party or transfer of money if the identity of the account holder and the beneficiary of the account and / or the future investor (for whom the money is transferred) is not the same
  • Loan for which security is obtained from a foreign (legal) person, where the relationship with the client is not clear
  • The client uses financing outside the regular financial sector (e.g. cash loans from abroad)
  • The client has foreign bank accounts
  • The client uses an unnecessarily complex legal business structure (e.g. foreign companies or trusts)
  • The client has assets of which the origin is unclear
  • The client originates from outside the region without an explanation
  • The client requests payment in cash in foreign currency

Red flags – related to legal entities and structures

  • The client uses or wishes to use of one or more intermediary, foreign or acquired legal entities or companies without there being or appearing to be legitimate tax, legal or commercial reasons
  • The client wishes establish various legal entities or companies in a short period of time for the benefit of another person, without there being or appearing to be legitimate tax, legal or commercial reasons for doing so
  • The client wishes to establish or take over a legal entity or company with an (intended) questionable purpose description or a business practice that does not appear to be related to the clients’ normal professional / business practice or other activities, or with a purpose description for which a permit is required, while the client has no intention of obtaining this permit, without a possible acceptable explanation for the service provider
  • The client uses legal entities or companies whose control structure is not transparent or whose character or layout is suitable to conceal the identity of the ultimate beneficiary owner (UBO) (e.g. bearer shares, trusts, foreign legal entities), without a possible acceptable explanation for the service provider
  • Frequent changes in legal structures and / or frequent changes of directors of legal entities or companies. There is a complex legal structure that does not seem to serve a real purpose
  • The long-term establishment of legal persons or companies

Red flags -related to real estate and other registered property

  • Transactions regarding a registered property financed by means of a (mortgage) loan, for which the amount deviates significantly (upwards or downwards) from the compensation to be paid in return, without a possible acceptable explanation for the service provider
  • The registered properties are or have been traded multiple times in a short period of time with unusual high profit margins, without a possible acceptable explanation for the service provider
  • Transactions regarding a registered property to, by or through residents or companies from countries or states that do not adequately comply with the recommendations of the FATF
  • Transactions without mortgage financing, in particular where the origin of the funds is unclear or no underlying loan agreement is available or where different loan terms are used (for example, different interest, security)
  • Transactions regarding a registered property where several mortgages have been or will be established on the same collateral for no apparent reason