ACCA Applied Knowledge · Business and Technology · Regulation and financial crime
An accountant in practice suspects that a client's funds come from criminal activity. Which of the following is the correct action under typical anti-money laundering reporting procedures?
The accountant should report the suspicion to the firm's MLRO. The MLRO then decides whether an external report to the authorities is needed. Confronting the client could amount to tipping off, and staying silent would breach the legal duty to report suspicions.
- AReport the suspicion internally to the firm's money laundering reporting officer (MLRO)Correct
- BConfront the client and ask them to explain the source of the funds before taking any action
- CStop work and say nothing to anyone, to avoid the risk of tipping off the client
Explanation
Staff who suspect money laundering report it internally to the MLRO, who decides whether to submit a report to the relevant authority. Confronting the client risks tipping off. Saying nothing to anyone would fail the duty to report.
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