Recognizing unusual transactions
As a service provider (administration office), you are aware of the practices in your industry. Determining whether a transaction is classified as unusual depends, to a great extent, on your professional opinion. Your opinion corresponds with what is considered unusual within your profession. In addition to your opinion, there are circumstances of an unusual nature which must therefore be reported.
If one of the scenarios described in the general examples below (which are not exhaustive) arises, then this is cause to further examine whether the transaction could be connected with money laundering and/or terrorist financing. If you suspect activities of money laundering or terrorist financing, then you must report it.
Red flags – Administratiekantoor
- A transaction in which the client is involved leads to a result that is clearly higher or lower than reasonably expected or to an unusually high result, compared to similar companies in the industry in which the client operates, especially if a significant portion of the turnover comprises cash sales
- There is an inexplicable discrepancy between cash flow and the flow of goods. A client achieves unusually high turnover and/or profits and it is unclear with which activities this is connected
- A transaction in which a client is involved takes place under worse terms and conditions than reasonably expected, without any acceptable explanation as to why a better structure was not chosen
- The actual picture from the financial statements does not correspond to the supporting documents. Unauthorized transactions or incorrectly registered transactions. Administrative systems which, deliberately or by virtue of their design, do not provide any adequate option for following transactions or providing adequate evidence
- Payments for services provided which seem excessive in relation to the services provided. Commission fees and/or other such incomes which seem excessively high; payments for unspecified services or loans to consultants, affiliated parties, employees or civil servants
- There is no compliance with the publication obligation or the statutory obligation – if applicable – to obtain an audit certificate for the financial statements
- Atypical advance payments of insurance premiums
- Insurance policies with premiums that seem to exceed the buyer’s financial resources
- Insurance policies with values that do not seem to match the buyer’s needs