This NDT method is accomplished by inducing a magnetic field in a ferromagnetic material and then dusting the surface with iron particles (either dry or suspended in liquid). Surface and near-surface flaws disrupt the flow of the magnetic field within the part and force some of the field to leak out at the surface. Iron particles are attracted and concentrated at sites of the magnetic flux leakages. This produces a visible indication of defect on the surface of the material.  The adjacent images demonstrates a component before and after inspection using dry magnetic particles.
Magnetic Particle

Magnetic Particle indication of a crack
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Crack is not visible