On 9/14/2020, the Financial Action Task Force (FATF) issued a report called “Virtual Assets Red Flag Indicators of Money Laundering and Terrorist Financing.” This 24-page report was designed to help government agencies detect whether virtual assets are being used for criminal activity. Specifically, the report highlights key red flag indicators - that were identified through more than 100 case studies - that could suggest criminal behavior. The red flag indicators included in the report could assist financial institutions in detecting and reporting suspicious activity related to virtual assets.
In their release, FATF explains that key indicators indicators included in their report focus on:
Technological features that increase anonymity - such as the use of peer-to-peer exchanges websites, mixing or tumbling services or anonymity-enhanced cryptocurrencies
Geographical risks - criminals can exploit countries with weak, or absent, national measures for virtual assets
Transaction patterns - that are irregular, unusual or uncommon which can suggest criminal activity
Transaction size – if the amount and frequency has no logical business explanation
Sender or recipient profiles - unusual behavior can suggest criminal activity
Source of funds or wealth - which can relate to criminal activity
The full FATF report can be found here.