To what extent can a financial institution or creditor use an automated solution to satisfy the requirement to detect red flags?
The final Red Flags Rules do not require the use of any specific technology, systems, processes, or methodology. Financial institutions and creditors may use automated solutions if they effectively detect red flags in connection with account openings and existing covered accounts, but are not required to do so. An automated system, however, may have to be supplemented by other policies and procedures that do not rely upon automation. For example, in some instances, the detection of fraudulent or altered identifying documentation may require the manual review of those documents by employees of a financial institution or creditor.
