According to the Financial Action Task Force (FATF) - the independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering and terrorist financing – Red Flags can be divided into four categories: client, source of funds, professional advice and the nature of the transaction.

AML checks, or Anti-Money Laundering checks, are a crucial part of the financial system and are required by various regulatory bodies around the world. These checks are designed to prevent money laundering, terrorist financing, and other illegal activities. The specific AML checks required may vary depending on the jurisdiction and the nature of the business.

Encouraged by both the FATF and the FCA, a risk-based approach requires that firms thoroughly assess the money laundering threat posed to their business and deploy an appropriate amount of resources to counter it. This is a proactive approach that should enable companies to detect and diffuse any risk of money laundering before it can take place, whilst using resources efficiently.

AML controls, also known as anti-money laundering controls, are measures put in place by financial institutions to detect and prevent money laundering activities. These controls aim to ensure that the institution is not unknowingly facilitating or participating in illegal financial transactions. AML controls typically involve the implementation of strict customer identification and verification procedures, monitoring of customer transactions for suspicious activities, and reporting of any suspicious transactions to the relevant authorities.