ACCA Strategic Professional · Advanced Audit and Assurance (International) · Code of Ethics for Professional Accountants

An audit firm's staff member, Priya, is concerned that a partner is ignoring evidence of suspected money laundering by a client. She reports her concern internally to the firm's money laundering reporting officer (MLRO). The MLRO decides to file a suspicious activity report with the national authority. Priya then tells the client's finance director that a report has been made so that the director can 'clear the matter up'. What is the most accurate assessment of Priya's action?

Priya's action is inappropriate because telling the client that a suspicious report has been made is tipping off, an offence that can prejudice an investigation. Her internal report to the MLRO discharged her reporting duty, but did not permit disclosure to the client.

1. AAppropriate, because it gives the client a chance to explain and improves transparency
2. BAppropriate, because internal reporting to the MLRO has discharged her responsibility, so she may then discuss it freely
3. CInappropriate, because she may have committed the offence of tipping off, which can prejudice an investigationCorrect
4. DInappropriate only because she should have reported directly to the police instead of the MLRO