What should a staff member do if they detect a red flag in a transaction?

When a staff member detects a red flag in a transaction, it is essential to try to resolve the issue before processing. This step is crucial for compliance and risk management within the financial institution. Identifying red flags indicates that the transaction may pose some risk related to regulatory requirements or potential fraud. By attempting to resolve the issue first, the staff member ensures that any anomalies are addressed, maintaining the integrity of the transaction and upholding the institution's legal obligations.

This approach allows for a thorough investigation into the suspicious activity and helps to safeguard the institution from potential violations of laws such as anti-money laundering regulations. Properly addressing red flags can lead to a more informed decision on whether to proceed with the transaction or report it further, ensuring compliance with internal policies and regulatory frameworks.