The two tricolours believed to have upset drowning victim Oswald Bradley were erected in trees on a small island on Bessbrook Pond last week.
Sinn Fein had called for their removal, saying they were seen as "overtly sectarian, intimidating and threatening" by the community in what is a mixed Co Armagh village.
"The issue is one that is causing contention because in Bessbrook particularly there is a mixed community," Sinn Fein MLA Mickey Brady had said last week. "I think you have to respect the culture and nature of the people who live in that area. These flags, some may consider them as overtly sectarian, intimidating and threatening, and I think what we do not want to do in relation to this is perpetuate division."
Last night Mr Brady spoke of his sadness over the death of Mr Bradley.
"The terrible news at the loss of a life at Bessbrook Pond is tragic. A family is grieving tonight and a community is in shock," he said.
TUV leader Jim Allister said the flags should have been removed by the authorities.
"The thoughts and prayers of many will be with the grieving Bradley family in Bessbrook," he said. "This is a most tragic incident, made more so by the fact that inaction over the provocative erection of Irish tricolours led directly to this loss of life. These flags ought go have been removed by the lawful authorities. Bessbrook suffered so much at the hands of the IRA and now further republican aggression led to this death."
In recent months there has been controversy about a Union flag being erected in the grounds of a Catholic Church in Dervock, Co Antrim, and in recent days an SDLP councillor described the erection of an Ulster flag at the entrance to St Louis Grammar School in Ballymena as "provocative".