• Money laundering puts large sums of illegal money into the hands of criminals who use such funds on financial and political crises and upheavals.
• Money launderers would often set up Ponzi schemes which entice people to withdraw their savings from the traditional deposit takers and fund managers into their scheme. This tends to undermine the official financial and banking system of the countries in which they operate.
• When they succeed, they introduce large amounts of money into the economy without an immediate corresponding rise in goods and services, resulting in hyperinflation. As a result, weak third world countries may not be able to absorb the shocks and their economies may crumble.
• Money laundering has been found to be a significant source of funds to international terrorist organisations. They use the resources to engage in terrorist activities that lead to wanton destruction of human lives and properties. In countries where money launderers and terrorists gain a strong foothold, they become failed states.
• Money launderers could use their ill-gotten money to finance coups de tat in countries facing hardships or poverty.
(5 point @ 1 mark each = 5 marks)

• Ghana has joined other well-meaning countries in the fight against money laundering and terrorism financing.
• Ghana has subscribed to the world anti-money laundering and terrorism financing organisation and is implementing the 48 FAFT recommendations.
• Ghana is also a member of GIABA the West African organisation fighting against money laundering and terrorism financing.
• Ghana has entered into a treaty with other countries for collaboration in the arrest, prosecution and confiscation of assets illegally acquired by money launderers. The proceeds from sale are shared among collaborating countries.
• Ghana has passed the anti-money laundering law and anti-money laundering regulation, all in the fight against money laundering.
• Many organisations are in the forefront in the fight against money laundering in Ghana, including EOCO, the Financial Intelligence Centre, and other Security Agencies such as Ghana Immigration Service and Interpol.
(Any 5 points @ 1 mark each = 5 marks)

• The anti-money laundering laws and regulations require auditors to report suspicious transactions and activities to the Financial Intelligence Centre. However, the code of ethics requires the auditors to maintain confidentiality in client relationships. This can result in ethical conflicts namely duty to report to the authorities and duty of confidentiality to the client. This conflict may be particularly sharp where an auditor suspects the client of money laundering.
• Under the anti-money laundering, there is a requirement to report even a suspicion of money laundering which would likely conflict with the auditor’s duty of confidentiality to the client.
• The situation is further complicated by the need to avoid “tipping off” the client that the auditors suspect to be engaged in money laundering which could make it very difficult for an auditor to decide whether they have a duty to report their suspicions as it would be hard to gather evidence of money laundering without “tipping the client off”.
• If such an ethical conflict cannot be resolved, then the auditor may consider obtaining professional advice from the ICAG or from legal advisors. This can generally be done without breaching the fundamental principle of confidentiality if the matter is discussed anonymously with the ICAG, or under legal privilege with a legal adviser.
• The ethical rules also make provision for exceptions under the confidentiality where the auditor can disclose information when required by the law, in this case the anti-money laundering law.     (Any 4 points)

• Appointment of a money laundering officer (MLRO) and implementation of internal reporting procedures.
• Train individuals to ensure they are aware of the relevant legislation, know how to recognize and deal with potential money laundering, how to report suspicions to the MLRO.
• Establish internal procedures appropraiate to forestall and prevent money laundering, and make relevant individuals aware of the procedures.
• Verify the identity of new and existing clients and maintain evidence of identification that is customer due diligence measures
•  Maintain records of client identification and any transactions undertaken for or with the client.
• Report suspicions of money laundering to the Financial Intelligence Centre. (FIC)

The indications of possible money laundering are;

• Broadly, transactions that appear inconsistent with a client’s know legitimate (business or personal) activities or means: unusual deviations from normal account and transactions patterns.
• Any situation where personal identity is difficult to determine.
• Unauthorised or improper recorded transactions; inadequate audit trails.
• Unconventionally large currency transactions, particularly in exchange for negotiable instruments or for the direct purchase of funds transfer services.
• Apparent structuring of transactions to avoid dealing with identification requirements or regulatory record-keeping and reporting thresholds.
• Transactions passed through intermediaries for no apparent business reason.
• Introduction of a client by an overseas associate or financial institution based in a county or jurisdiction known for drug trafficking and production, other financial services are bank secrecy.               (1 mark each for any 5 valid points)

• There is the need for ethical guidance on money laundering because there is conflict between the accountant professional duty of confidentiality in relation to his client’s business.
• The duty to report suspicions of money laundering to the appropriate authorities is required by law.
• Disclosures in bad faith or without reasonable grounds would possibly lead to the accountant being sued for breach of confidence.
• Professional Accountants are not in breach of their professional duty of confidentiality if they report in good faith their knowledge or suspicions of money laundering to the appropriate authority.
• Auditor’s duty of confidentiality will be breached if they report in good faith, any money laundering knowledge or suspicions to the authority. Statutory protection also applies where reports are made in good faith.