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

The MLRO of Harlow & Co has received an internal report that a client, Westmere Trading, may have laundered criminal proceeds. The MLRO concludes the suspicion is reasonable. Which action is most appropriate?

The MLRO should file a suspicious activity report with the relevant authority without alerting the client. Mentioning it in the audit report, discussing it with the client or its audit committee, or explaining a resignation could constitute tipping off.

  1. AMake a suspicious activity report to the relevant authority and avoid alerting the client to the reportCorrect
  2. BWait until the audit report is signed and then include a reference to the suspicion in the auditor's report
  3. CResign immediately and tell the client the reason for resignation
  4. DDiscuss the suspicion with the client's audit committee before deciding whether to report

Explanation

Where suspicion is reasonable the MLRO must make an external report to the designated authority and must not tip off the client. Disclosing the report in the auditor's report or telling the client or its committee could amount to tipping off and would delay the statutory reporting.

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