ACCA Strategic Professional · Advanced Audit and Assurance (International) · Money laundering

Brightwell & Co, an audit firm, is reviewing its anti-money laundering arrangements. The managing partner asks who in the firm should receive internal reports of suspicions of money laundering from staff, and who decides whether an external report is made to the authorities. Which arrangement is consistent with good practice for firm procedures?

Staff should report suspicions internally to the firm's money laundering reporting officer, who assesses the information and decides whether to report externally to the authorities. This gives a central, consistent judgement and avoids tipping off the client, which reporting to the client's governance bodies would risk.

1. AStaff report internally to the firm's nominated money laundering reporting officer (MLRO), who evaluates the report and decides whether to make an external reportCorrect
2. BStaff report suspicions directly to the client's audit committee, which decides whether to inform the authorities
3. CEach engagement partner decides alone whether to report, and the MLRO is told only after the external report is made
4. DStaff report directly to the authorities and must not tell anyone in the firm, to avoid tipping off