1. Red Flag Indicators for TF7

Effective from 4/7/2021

Potentially Suspicious Activity That May Indicate Terrorist Financing Published in the FFIEC BSA/AML Examination Manual⁵

Activity Inconsistent with the Customer’s Business:

	•	Funds are generated by a business owned by persons of the same origin or by a business that involves persons of the same origin from higher-risk countries (e.g., countries designated by national authorities and FATF as non-cooperative countries and territories).
	•	The stated occupation of the customer is not commensurate with the type or level of activity.
	•	Persons involved in currency transactions share an address or phone number, particularly when the address is also a business location or does not seem to correspond to the stated occupation (e.g., student, unemployed, or self-employed).
	•	Regarding nonprofit or charitable organizations, financial transactions occur for which there appears to be no logical economic purpose or in which there appears to be no link between the stated activity of the organization and the other parties in the transaction.
	•	A safe deposit box opened on behalf of a commercial entity when the business activity of the customer is unknown or such activity does not appear to justify the use of a safe deposit box.

Funds Transfers:

	•	A large number of incoming or outgoing funds transfers take place through a business account, and there appears to be no logical business or other economic purpose for the transfers, particularly when this activity involves higher-risk locations.
	•	Funds transfers are ordered in small amounts in an apparent effort to avoid triggering identification or reporting requirements.
	•	Funds transfers do not include information on the originator, or the person on whose behalf the transaction is conducted, when the inclusion of such information would be expected.
	•	Multiple personal and business accounts or the accounts of nonprofit organizations or charities are used to collect and funnel funds to a small number of foreign beneficiaries.
	•	Foreign exchange transactions are performed on behalf of a customer by a third party, followed by funds transfers to locations having no apparent business connection with the customer or to higher-risk countries.

Other Transactions That Appear Unusual or Suspicious:

	•	Transactions involving foreign currency exchanges are followed within a short time by funds transfers to higher-risk locations.
	•	Multiple accounts are used to collect and funnel funds to a small number of foreign beneficiaries, both persons and businesses, particularly in higher-risk locations.
	•	A customer obtains a credit instrument or engages in commercial financial transactions involving the movement of funds to or from higher-risk locations when there appear to be no logical business reasons for dealing with those locations.
	•	Banks from higher-risk locations open accounts.
	•	Funds are sent or received via international transfers from or to higher-risk locations.
	•	Insurance policy loans or policy surrender values that are subject to a substantial surrender charge.

Terrorist Financing Indicators Published by FINTRAC (Canada’s Financial Intelligence Unit)⁶

	•	Transactions involving certain high-risk jurisdictions such as locations in the midst of or in proximity to, armed conflict where terrorist groups operate or locations which are subject to weaker ML/TF controls.
	•	An account opened in the name of an entity, a foundation or association, which may be linked or involved with a suspected terrorist organization.
	•	The use of funds by a non-profit organization is not consistent with the purpose for which it was established.
	•	Raising donations in an unofficial or unregistered manner.
	•	Client identified by media or law enforcement as having travelled, attempted or intended to travel to high-risk jurisdictions (including cities or districts of concern), specifically countries (and adjacent countries) under conflict and/or political instability or known to support terrorist activities and organizations.
	•	Transactions involve individual(s) or entity(ies) identified by media and/or Sanctions List as being linked to a terrorist organization or terrorist activities.
	•	Law enforcement information provided which indicates individual(s) or entity(ies) may be linked to a terrorist organization or terrorist activities.
	•	Client conducted travel-related purchases (e.g. purchase of airline tickets, travel visa, passport, etc.) linked to high-risk jurisdictions (including cities or districts of concern), specifically countries (and adjacent countries) under conflict and/or political instability or known to support terrorist activities and organizations.
	•	Individual or entity's online presence supports violent extremism or radicalization.
	•	Client donates to a cause that is subject to derogatory information that is publicly available (e.g. crowdfunding initiative, charity, non-profit organization, non-government organization, etc.).

⁵ Available at: https://bsaaml.ffiec.gov/manual/Appendices/07
⁶ Available at: https://www.fintrac-canafe.gc.ca/guidance-directives/transaction-operation/indicators-indicateurs/fin_mltf-eng