ACCA Strategic Professional · Advanced Audit and Assurance (International) · Money laundering
During the audit of Brightwell Plc, the engagement partner concludes there are reasonable grounds to suspect that a customer's payments were proceeds of crime. The client's finance director asks whether the firm has reported anything to the authorities. What is the appropriate response?
The firm should not reveal whether a report has been made. Disclosing a suspicion report or a possible investigation to the client is tipping off, which is an offence and may prejudice the authorities' work. Staff should seek guidance from the money laundering reporting officer on handling client questions.
- AConfirm that a report has been made so that the client can cooperate fully
- BAvoid disclosing whether a report was made, as doing so could constitute tipping offCorrect
- CExplain the report in detail but ask the director to keep it confidential
- DWithdraw immediately from the audit and tell the director the reason is a suspected offence
Explanation
Tipping off is an offence in most regimes: disclosing that a report has been made or an investigation is contemplated may prejudice it. Option A and C disclose the report. Option D communicates the suspicion through the reason for withdrawal, which also risks tipping off.
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