Anticipated Anti-Money Laundering Warning Signals to Keep an Eye on in 2025

In the realm of e-commerce, red flags for money laundering include multiple high-value purchases that don't align with normal buyer behavior, large or frequent refunds, especially using different payment methods, and the use of fake or unverifiable customer information. To learn more about AML red flags in real estate, check out our guide here. For more on money laundering and fraud in e-commerce, read our guide here.

Recently, Germany's BaFin fined payment provider Ratepay €25,000 for suspected money laundering. This underscores the importance of vigilance in the fight against financial crimes.

Training employees to spot red flags can be invaluable in preventing money laundering. Good AML programs include transaction monitoring systems to analyze transaction volumes, patterns, and frequencies in real time, flagging anything that seems off.

Examples of AML red flags include big, unexplained transactions, sudden changes in transaction behavior, the involvement of high-risk jurisdictions, or clients being reluctant to provide necessary documentation. Ongoing monitoring is a second line of defense in spotting AML red flags and is essential for keeping tabs on suspicious client behavior over time.

AML red flags aren't just about a gut feeling; they start with solid Customer Due Diligence (CDD) practices. Before onboarding a new client, businesses need to verify the client's identity, understand where their money is coming from, and figure out their associated risk level for money laundering, terrorist financing, and proliferation financing. If the client is high risk, like a beneficial owner is a politically exposed person (PEP) or a customer has ties to a high-risk jurisdiction, you'll need to use Enhanced Due Diligence (EDD), which includes even more thorough checks.

Reusable KYC solutions make it possible to securely share verified user data for overlapping customers, improving conversion rates without sacrificing compliance. Identify AML risks with Sumsub by screening users against global watchlists for sanctions, PEPs, and adverse media. Sumsub ID allows users to create a secure digital identity profile with stored, verified documents and data, leading to higher pass rates, fewer drop-offs, and stronger compliance standards.

Companies should pay extra attention to customers with suspicious personal information, questionable sources of funds, atypical transactions, and irrational choice of legal representative. They should ensure that their customers aren't on any sanction lists or present in adverse media. Data analytics and machine learning are key to detecting red flags and recognizing suspicious patterns.

In the digital age, the use of virtual assets (e.g., cryptocurrencies) without proper Travel Rule compliance and KYC coverage can increase AML-associated risks.

Estonia and Germany implement the European Union’s AML framework, notably the 6th AML Directive (6AMLD) effective from 2025, which sets harmonized requirements for customer due diligence (CDD), transaction monitoring, and risk assessment across member states.

Both Estonia and Germany require strict CDD including identification and verification of customers and beneficial owners, screening against sanction and politically exposed persons (PEP) lists, and ongoing monitoring of client activities. From 2025, CDD processes must incorporate digital onboarding, eKYC technologies, and continuous client monitoring to detect suspicious behavior effectively.

Transaction monitoring must be fully automated with AI-supported systems that score transactions, apply filters for sanctions, and perform PEP monitoring. Financial institutions in both countries are required to implement systems that continuously analyze transactional data for unusual patterns and report suspicious activities immediately through Suspicious Activity Reports (SARs).

Risk-based approaches are mandatory in both countries. Institutions must conduct AML/CFT risk assessments periodically, incorporating current money laundering and terrorist financing risks, customer profiles, product/service risks, and geographies of operation. These assessments should be updated after significant changes in risk profiles, ensuring control measures are proportionate and effective.

In summary, Estonia and Germany’s AML regulations conform to the enhanced EU AML framework from 2025, focusing on automated, continuous CDD and transaction monitoring, coupled with rigorous, updated risk assessments to address evolving money laundering and financing risks.

Recently, the Money Laundering Data Bureau in Estonia revoked B2BX Digital Exchange OÜ's operating license for failures in customer due diligence, transaction monitoring, and risk assessments. Real estate is another potentially high-risk sector for money laundering, with red flags including anonymous buyers, the use of shell companies, buyers or funds in jurisdictions with weak AML regimes, high levels of corruption, or known support of terrorism. If a customer receives or sends money to unusual geographic locations that have nothing to do with their background or area of expertise, this can be considered a red flag.

If something doesn't seem right after flagging a suspicious activity, the next step is to file a FIU report (a SAR or an STR) with the relevant authorities. Companies should implement Know Your Customer (KYC) checks and Customer Due Diligence (CDD) procedures to identify overly secretive clients.

In the domain of finance and wealth management, it's crucial to be aware of red flags such as unexplained large transactions, sudden changes in transaction patterns, or clients who are reluctant to provide necessary documentation, which might indicate potential money laundering activities.
Just like in e-commerce, businesses offering investment services should deploy trained employees, transaction monitoring systems, and ongoing monitoring to identify AML red flags, ensuring compliance with regulations and minimizing financial risks.
Education and self-development in areas like personal finance and business can provide valuable insights into recognizing and preventing money laundering and fraud, especially when it comes to understanding the importance of customer due diligence and ongoing monitoring.
Beyond traditional businesses, sectors like casino-and-gambling and sports may also face AML challenges, as they often deal with large, unexplained transactions, sudden changes in client behavior, or strange geographic locations that don't align with the client's background or area of expertise.