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

Zeta & Co, an audit firm, discovers during the audit of Kalo Ltd that a director has deposited cash of unknown origin into the company's account. The audit senior suspects money laundering. Under typical international anti-money laundering frameworks (such as FATF-based regimes), to whom should the senior first report the suspicion within the firm?

The senior should report the suspicion internally to the firm's money laundering reporting officer or equivalent nominated person. That person assesses the information and decides whether to file a report with the authorities. Telling the client, the director or the bank risks tipping off and breaches confidentiality.

  1. AThe firm's money laundering reporting officer (or equivalent nominated person)Correct
  2. BThe audit committee of Kalo Ltd
  3. CThe director who made the deposit
  4. DThe audit client's bankers

Explanation

Firms are expected to have an internal reporting channel, typically a nominated officer (MLRO), who evaluates the suspicion and decides whether to report to the authorities. Reporting to the client's audit committee or director risks tipping off, and the bank is not an appropriate recipient.

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