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We used three-dimensional (3-D) magnetic finite-element analysis (FEA) to simulate the effect of localized residual stresses on magnetic flux leakage (MFL) signals from a steel plate in the absence of a geometrical defect. We derived the local residual stress patterns from finite-element structural modeling of simulated dents. The magnetic FEA model simulates these localized residual stresses by assigning appropriate directional permeability values to the magnetically anisotropic materials. Considering the necessary simplifications required for magnetic FEA modeling, the simulated MFL patterns are in good agreement with the experimentally observed patterns associated with the stresses around a dent.