Red Flags (Sanctions)

A red flag is a pointer, not proof. Common ones include a customer who will not name the end user or final destination of goods, payments that arrive from or go to unrelated third countries, and goods that do not fit the buyer’s usual business. In shipping, a vessel that changes name, or one that goes dark for long stretches, is a flag. Ownership signs count too, such as a company recently passed to a relative of a listed person, or a structure with no business reason. Payment flags include amounts split to avoid a limit, or instructions to leave out details that a screening filter would catch. Regulators, standard-setters and industry bodies publish lists of indicators, and firms add their own from past cases. Staff who see a flag escalate it, and a firm may file a report. Evasion is built to pass a name check, so behaviour is often the only visible clue.

A freight forwarder banking with a regional lender starts shipping electronic components to a small trading firm in a transit hub, a country with no electronics industry. Payments come from a third company in another country. The bank notes three red flags: an odd destination, an unrelated payer, and no explanation. It asks for end-user details and holds further payments until they arrive.