Red-flag indicator

A published, attributable observation that a transaction or relationship warrants further enquiry, drawn from patterns seen in past cases.

also known as: red flag, risk indicator
reviewed: 2026-08-20

Indicators are recognition aids, not tests. Almost every one has an innocent explanation, and any single indicator standing alone usually means nothing; their value is cumulative and contextual.

The discipline that makes them useful is attribution. An indicator quoted from a named advisory, with its issuing authority and year, can be weighed against the facts that produced it. An unattributed list of warning signs cannot, and is one of the ways compliance folklore propagates.

Where this term is used

How is correspondent banking used to evade sanctions? — Using a chain of banks that each know only their own customer, so that a payment for a restricted party reaches a currency it could not access directly, without any bank in the chain seeing the whole transaction.
What is a ship-to-ship transfer? — Transferring cargo directly between two vessels at sea, rather than through a port, so that the cargo changes hands where there is no port authority, no customs entry and no independent record.
What is trade misinvoicing? — Trade misinvoicing is misstating the price, quantity or description of goods on trade documents, so that value moves across a border in a direction and an amount the paperwork does not admit.

Related terms

Typology — A published study describing how a category of illicit activity is actually carried out, built from case material contributed by member jurisdictions.
Customer due diligence — The ongoing process of understanding a customer's identity, ownership, expected activity and risk, and checking that actual activity remains consistent with it.
Enhanced due diligence — Additional scrutiny applied where risk is assessed as higher, including deeper enquiry into source of funds, ownership and the purpose of specific transactions.

Sources

Trade-Based Money Laundering: Risk Indicators. Financial Action Task Force and Egmont Group, 2021.
Guidance to Address Illicit Shipping and Sanctions Evasion Practices. U.S. Department of State, U.S. Department of the Treasury and U.S. Coast Guard, 2020. Global maritime advisory, 14 May 2020.

All glossary terms