What might indicate that a unit should be audited as a high-risk entity?

A backlog in the transaction monitoring unit coupled with regulatory comments on the timeliness of Suspicious Activity Report (SAR) filings is a strong indicator that the unit may be considered a high-risk entity. This situation suggests that the unit is facing challenges in its operations, potentially leading to compliance issues. The backlog indicates that transactions may not be receiving timely scrutiny, which raises the risk of undetected suspicious activities. Additionally, regulatory comments suggest that the oversight and controls in place are under scrutiny, further highlighting the need for an audit to assess compliance and operational effectiveness.

While high employee turnover can signal issues within a unit, it does not necessarily correlate directly with risk, as turnover can be related to various non-compliance factors. Frequent training sessions might indicate a proactive approach to compliance and employee development, rather than a risk concern. A low volume of transactions processed might reflect a lack of activity rather than inherent risk, making it less relevant in identifying a need for auditing. Thus, the combination of a backlog and regulatory scrutiny distinctly underscores the potential risks associated with the unit, justifying the decision to conduct an audit.