Which of the following is a red flag indicator of The Retainer involves?

• A. A client transaction history that does not have documentation to support company activities
• B. Transactions that are unusual with regards to the type of operation and the transaction's typical size, frequency or execution
• C. The creation of complicated ownership structures or structures with involvement of multiple countries when there is no legitimate or economic reason
• D. A well-documented and routine transaction history

Answer: (B)

In AML, you look for activity that doesn’t fit how a client normally behaves. For a retainer arrangement, payments are usually predictable and aligned with the service scope. The strongest red flag is when the way money moves is unusual—types of transactions, the amounts, how often they occur, or the timing of execution that don’t match the expected pattern. Such irregularities can signal efforts to disguise the source of funds, to layer transactions, or to move money across borders, all of which warrant heightened scrutiny and due diligence. While other issues like missing documentation or complex ownership can raise concern in general, they aren’t as directly tied to the retainer’s typical activity as unusual transaction patterns. A well-documented, routine history, on the other hand, suggests legitimate activity and wouldn’t be a red flag.