ACCA Strategic Professional · Advanced Audit and Assurance (International) · Money laundering
During the audit of Calder Ltd, a staff member of the audit firm, Priya, notices a series of unusual cash deposits that she suspects may represent proceeds of crime. Under typical anti-money laundering reporting arrangements consistent with the ACCA syllabus, what should Priya do first?
Priya should report her suspicion internally to the firm's MLRO. The MLRO assesses it and decides whether to report externally. Confronting the client risks tipping off, and materiality does not remove the duty to report suspicions of money laundering.
- AConfront the finance director and ask for an explanation of the deposits
- BReport her suspicion to the firm's money laundering reporting officer (MLRO)Correct
- CReport the matter directly to the law enforcement authority without telling anyone at the firm
- DIgnore the matter because the amounts are below audit materiality
Explanation
Staff must make an internal report to the firm's MLRO, who then decides whether an external report to the authorities is required. Confronting the client risks tipping off. Going directly to the authorities bypasses the firm's internal process. Materiality is irrelevant to money laundering reporting.
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