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Appendix A: Indicators of potential money laundering/terrorism financing activity

There are numerous indicators which can act as 'red flags' for reporting entities to identify potential ML/TF activity.

Although indicators alone are not proof of illicit activity, their existence should encourage further monitoring and examination. In many cases there may be multiple indicators and this should raise a reporting entity's suspicion of potential criminal activity, and influence their response to the situation.

AML/CTF officers should include these ML/TF indicators in staff training, and encourage their staff to use these indicators when describing suspicious behaviours for inclusion in suspect transaction or suspicious matter reports.

Money launderers and terrorism financiers will continuously look for new techniques to obscure the origins of illicit funds to give the appearance of legitimacy to their activities. AML/CTF officers should continually review their products, services and individual customers to ensure their internal AML/CTF systems and training remain effective.

The list below features indicators which appear within the case studies of this report, and should be treated as a non-exhaustive guide.

  • abuse of internet registration systems
  • accounts are open but remain dormant
  • activity is inconsistent with business profile
  • an individual or business client has multiple bank accounts with several institutions, but with no economic rationale for having them
  • assets purchased in a family member's name
  • available credit is maximised in a short space of time with no repayments
  • bank accounts are opened shortly after a customer's arrival in Australia
  • cash notes are second hand, in poor condition or otherwise tainted
  • cash payments used to top up cards
  • cash purchase of bank cheques
  • cash purchase of high-value assets (jewellery, motor vehicles, real estate)
  • cash purchases of bullion
  • cash purchases of high denomination euro notes
  • cash purchases of stored value cards and gift cards
  • cash withdrawals from company accounts
  • children's accounts used to facilitate the purchase of high-value assets
  • client's affairs involve a company incorporated in an offshore jurisdiction
  • client has a known or suspected gambling history
  • company accounts used only to transfer money and do not have corresponding commercial activity
  • company begins transferring funds offshore, inconsistently with its established business pattern
  • company using a remittance service to transfer funds
  • customer is known to be operating multiple accounts
  • daily cash withdrawals
  • false invoicing
  • financial activity inconsistent with the customer profile
  • financial activity occurring in unusual clusters
  • foreign exchange involved in the provision of services, inconsistently with usual business activity
  • funds withdrawn from a superannuation fund for activities not consistent with established commercial activity
  • immediate transfer of funds following cash deposits
  • incoming wire transfer with a corresponding outgoing wire transfer - appears to be a 'u-turn' transaction
  • increase in cash deposits and withdrawals
  • international transfers occur in clusters through remitters
  • international transfers to countries not associated with the established customer profile
  • international wire transfers to countries known to be high risk terrorism financing jurisdictions
  • large amounts of funds placed on stored value cards
  • large cash deposits into accounts
  • large cash deposits into bank accounts on a regular basis
  • large cash deposits into company accounts
  • large cash purchases of traveller's cheques
  • large foreign exchange transactions paid for in cash
  • large, high volume transactions are made through a remitter
  • large unexplained variances in transactional activity
  • money sent from multiple remitters by the same person in the same geographical location
  • movement of funds between bank accounts without commercial rationale
  • multiple bank cheques purchased by different individuals but payable to a common beneficiary
  • multiple cash cheques
  • multiple deposits made in the same geographical location
  • multiple low-value wire transfers
  • multiple same day transactions
  • multiple wire transfers involving a high risk drug country
  • multiple withdrawals from branches in the same geographical location
  • newly opened accounts have credit cards and other details mailed to post office boxes
  • no repayment or attempted repayment on credit
  • operation of account is inconsistent with its intended purpose
  • payments by large third party cheques endorsed in favour of the customer
  • purchase of stored value cards in cash amounts just under the reporting threshold
  • refusal to complete required documentation
  • regular deposits followed by structured cash withdrawals
  • regular loading of value onto stored value cards in the same location within a short timeframe and/or in structured amounts
  • related company is based in an offshore jurisdiction
  • rent for property is paid well in advance
  • significant change to an established financial pattern
  • structured deposits clustered over a period of time
  • structured wire transfers
  • structured withdrawals clustered over a period of time
  • third parties sending wire transfers
  • third parties used to create bank accounts
  • transactions across multiple foreign exchange outlets in the same geographical location
  • transactions across multiple reporting entities in adjacent geographical locations
  • transactions conducted in various geographical locations
  • transactions occurring in a cluster made by the same person
  • transactions that do not fit the customer profile
  • transfer of funds between related companies for non-operational reasons
  • transfer of funds into third party accounts
  • unusual payment arrangement included in the terms of contract
  • unusually large transfer of money from an individual to a company
  • United States dollars purchased in multiple structured amounts
  • use of a 'front' company
  • use of bank cheques
  • use of false identification documentation
  • use of false name
  • use of gatekeepers
  • use of internet-based payment facilities
  • use of internet to purchase stored value cards
  • use of multiple accounts
  • use of multiple post office boxes
  • use of multiple remittance service providers
  • use of third party accounts
  • use of credit card internet transactions
  • wire transfers into personal accounts appear to be from company activity
  • wire transfers involving an offshore tax haven*

*The Australian Tax Office maintains a list of jurisdictions it currently considers to be tax havens. This list is available on the Tax Office website and continues to be reviewed and updated as circumstances change.

Appendix B: Further information on money laundering/terrorism financing typologies

International AML/CTF organisations

FATF typologies work

Each year the FATF holds its global typologies exercise, which includes active participation by the APG and other regional anti-money laundering bodies. From this exercise the FATF publishes an annual typologies report, which includes selected case studies, and considers priority topics in detail. Although the FATF has conducted typologies exercises since its beginning, reports have only been made public since 1996.

Details of public FATF reports are listed below, all of which can be accessed via the FATF website.

FATF typology reports - 2008

Major topics include:

  • money laundering & terrorist financing vulnerabilities of commercial websites and internet payment systems
  • money laundering & terrorist financing risk assessment strategies
  • FATF terrorist financing typologies report.

FATF typology reports - 2007

Major topics include:

  • money laundering and terrorist financing through the real estate sector
  • laundering the proceeds of Value Added Tax carousel fraud report.

FATF typologies report - 2006

Major topics include:

  • trade based money laundering
  • report on new payment methods
  • the misuse of corporate vehicles including trust and company service providers.

FATF typologies report - 2005

Major topics include:

  • alternative remittance systems
  • money laundering vulnerabilities in the insurance sector
  • proceeds from trafficking in human beings and illegal immigration.

FATF typologies report - 2004

Major topics include:

  • wire transfers and terrorist financing
  • non-profit organisations and links to terrorist financing
  • the vulnerabilities of the insurance sector to money laundering
  • politically exposed persons
  • the role of 'gatekeepers' or non-financial professions in money laundering.

FATF typologies report - 2003

Major topics include:

  • terrorist financing
  • money laundering through the securities sector
  • the gold and diamond markets
  • insurance and money laundering
  • credit and debit cards and money laundering.

FATF typologies report - 2002

Major topics include:

  • terrorist financing
  • correspondent banking
  • corruption and private banking
  • bearer securities and other negotiable instruments
  • coordinated money laundering among organised crime groups
  • introduction of euro banknotes
  • suspicious transaction reporting and money laundering cases.

FATF typologies report - 2001

Major topics include:

  • online banking and internet casinos
  • trusts, other non-corporate vehicles and money laundering
  • lawyers/notaries, accountants and other professionals
  • the role of cash versus other payment methods in money laundering schemes
  • terrorist related money laundering.

FATF typologies report - 2000

Major topics include:

  • online banking - distinguishing legitimate banking from money laundering services offered through the internet
  • alternate remittance systems - a worldwide view of their role in money laundering
  • company formation agents and their services
  • trade related activities and money laundering.

FATF typologies report - 1999

Major topics include:

  • the single European currency and large denomination banknotes
  • offshore financial centres of non-cooperative countries or territories
  • the role of a foreign legal entity in money laundering
  • new payment technologies
  • potential use of the gold market in money laundering operations.

FATF typologies report - 1998

Major topics include:

  • new payment technologies - present status and potential vulnerabilities to money laundering
  • money remittance businesses and activities (both formal and informal)
  • other observed trends (insurance, money exchange, cross-border movements, the gold market)
  • money laundering and non-financial professions (lawyers, notaries, accountants, company formation agents, real estate agents, sellers of high-value items).

FATF typologies report - 1997

Major topics include:

  • attempts to estimate the size of the money laundering problem
  • principal sources of illegal proceeds laundered
  • main money laundering methods detected in the banking, non-bank financial institution and non-financial business sectors
  • electronic funds transfers and their vulnerability to money laundering
  • new money laundering counter-measures (legislative, regulatory, etc.)
  • key money laundering trends in non-FATF members.

FATF typologies report - 1996

Major topics include:

  • money laundering trends involving the insurance and securities industries.
Last modified: 08/12/2014 16:20